**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-KSB**





x
            Annual
                Report Pursuant to Section 13 or 15(D) of the Securities Exchange
                Act of
                1934


for
      the
      fiscal year ended December 31, 2007.





o
            Transition
                Report Under Section 13 or 15(D) of the Securities Exchange Act of
                1934


for
      the
      transition period from _____ to _____





Commission
      file number: 0-49936





**ST.
      JOSEPH, INC.**





(Exact
      name of Small Business Issuer as specified in its charter)





COLORADO
            CH47-0844532(State
                or other jurisdiction
            (IRS
                Employer Identification No.)of
                incorporation or organization)





4870
                S. Lewis, Suite 250, Tulsa, OK
            74105(Address
                of principal executive offices)
            (Zip
                Code)





Issuer's
      telephone number, including area code: (918) 742-1888





Securities
      registered under Section 12(b) of the Exchange Act: None





Securities
      registered under Section 12(g) of the Exchange Act: Common Stock, par value
      $0.001 per share





Check
      whether the issuer (1) 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. x Yes o No





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act. o Yes x No





State
      issuer's revenues for its most recent fiscal year ended December 31, 2007,
      was
      $2,485,279.





Based
      on
      the closing sale price of $0.41 on March 25, 2008, the aggregate market value
      of
      the voting stock held by non-affiliates of the registrant was
      $1,791,654.90.





As
      of
      March 25, 2008 there were 7,406,802  shares
      of
      the registrant’s Common Stock issued and outstanding.





Transitional
      Small Business Disclosure Format (check one): Yes o No x





**ST.
      JOSEPH, INC.**


**Form
      10-KSB**


**For
      the Fiscal Year Ended December 31, 2006**





**TABLE
      OF CONTENTS**





**PART
                I**
            2**ITEM
                1. DESCRIPTION OF BUSINESS**
            3**ITEM
                2. DESCRIPTION OF PROPERTY**
            5**ITEM
                3. LEGAL PROCEEDINGS**
            5**ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**
            6**PART
                II**
            6**ITEM
                5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS**
            6**ITEM
                6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS
                OF OPERATIONS**
            9**ITEM
                7. FINANCIAL STATEMENTS.**
            15**ITEM
                8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                FINANCIAL DISCLOSURE**
            15**ITEM
                8A. CONTROLS AND PROCEDURES**
            15**ITEM
                8B. OTHER INFORMATION.**
            16**PART
                III**
            16**ITEM
                9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT**
            16**ITEM
                10. EXECUTIVE COMPENSATION**
            20**ITEM
                11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT**
            22**ITEM
                12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                INDEPENDENCE**
            23**ITEM
                13. EXHIBITS**
            24**ITEM
                14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**
            26


i


**PART
      I**





**FORWARD
      LOOKING STATEMENTS**





This
      Form
      10-KSB, the other reports, statements, and information that we have previously
      filed or that we may subsequently file with the Securities and Exchange
      Commission and public announcements that we have previously made or may
      subsequently make include, may include, incorporate by reference or may
      incorporate by reference certain statements that may be deemed to be
“forward-looking statements” within the meaning of the Private Securities
      Litigation Reform Act of 1995. These forward-looking statements relate to such
      matters as, among other things, our anticipated financial performance, business
      prospects, technological developments, new products, future distribution or
      license rights, international expansion, possible strategic alternatives, new
      business concepts, capital expenditures, consumer trends and similar matters.





Forward
      looking statements necessarily involve known and unknown risks, uncertainties
      and other factors that may cause our actual results, levels of activity,
      performance, or achievements to be materially different from any future results,
      levels of activity, performance, or achievement expressed or implied by such
      forward-looking statements. In some cases, you can identify forward-looking
      statements by terminology such as "may," "will," "should," "could," "intend,"
      “expect,” “anticipate,” “assume”, “hope”, “plan,” “believe,” “seek,” "estimate,"
      "predict," “approximate,” "potential," "continue", or the negative of such
      terms. Statements including these words and variations of such words, and other
      similar expressions, are forward-looking statements. Although we believe that
      the expectations reflected in the forward-looking statements are reasonable
      based upon our knowledge of our business, we cannot absolutely predict or
      guarantee our future results, levels of activity, performance, or achievements.
      Moreover, neither we nor any other person assumes responsibility for the
      accuracy and completeness of such statements.





We
      note
      that a variety of factors could cause our actual results and experience to
      differ materially from the anticipated results or other expectations expressed
      in our forward-looking statements. The risks and uncertainties that may affect
      the operations, performance, development and results of our business include,
      but are not limited to, the following: changes in consumer spending patterns;
      changes in consumer preferences and overall economic conditions; the impact
      of
      competition and pricing; the financial condition of the suppliers and
      manufacturers from whom we source our merchandise; economic and political
      instability in foreign countries or restrictive actions by the governments
      of
      foreign countries in which suppliers and manufacturers from whom we source
      products are located or in which we may actually conduct or intend to expand
      our
      business; changes in tax laws, or the laws and regulations governing direct
      or
      network marketing organizations; our ability to hire, train and retain a
      consistent supply of reliable and effective participants in our direct or
      network marketing operation; general economic, business and social conditions
      in
      the United States and in countries from which we may source products, supplies
      or customers; the costs of complying with changes in applicable labor laws
      or
      requirements, including without limitation with respect to health care; changes
      in the costs of interest rates, insurance, shipping and postage, energy, fuel
      and other business utilities; the reliability, longevity and performance of
      our
      licensors and others from whom we derive intellectual property or distribution
      rights in our business; the risk of non-payment by, and/or insolvency or
      bankruptcy of, customers and others owing indebtedness to us; threats or acts
      of
      terrorism or war; and strikes, work stoppages or slow downs by unions affecting
      businesses which have an impact on our ability to conduct our own business
      operations.





Forward-looking
      statements that we make, or that are made by others on our behalf with our
      knowledge and express permission, are based on knowledge of our business and
      the
      environment in which we operate, but because of the factors listed above, actual
      results may differ from those in the forward-looking statements. Consequently,
      these cautionary statements qualify all of the forward-looking statements we
      make herein. We cannot assure the reader that the results or developments
      anticipated by us will be realized or, even if substantially realized, that
      those results or developments will result in the expected consequences for
      us or
      affect us, our business or our operations in the way we expect. We caution
      readers not to place undue reliance on these forward-looking statements, which
      speak only as of their dates, or on any subsequent written and oral
      forward-looking statements attributable to us or persons acting on our behalf
      are expressly qualified in their entirety by these cautionary statements. We
      do
      not undertake any obligation to release publicly any revisions to such
      forward-looking statements to reflect events or circumstances after the date
      hereof or thereof or to reflect the occurrence of unanticipated events.


2


**ITEM
      1. DESCRIPTION OF BUSINESS**





**Our
      Background and Business Development**





St.
      Joseph, Inc. (“us,” “we,” “our” or the “Company”) was organized under the laws
      of the State of Colorado on March 19, 1999, as Pottery Connection, Inc. Our
      Company was originally organized to produce and sell pottery of all forms,
      as
      well as arts and crafts.





On
      March
      19, 2001, we changed our corporate name to St. Joseph Energy, Inc. in
      anticipation of changing our business purpose to the exploration and development
      of oil and gas properties. However, after unsuccessful investing in two oil
      wells located in the State of Louisiana, we elected to abandon that endeavor
      and
      return to our original business purpose.





On
      November 6, 2003, we changed our corporate name to St. Joseph, Inc. We acquired
      Staf*Tek Services, Inc. (“Staf*Tek”) as a wholly owned subsidiary on January 2,
      2004. We presently conduct all of our business through Staf*Tek.




**Acquisition
      Strategy**




In
      January 2006, our Board decided to pursue suitable candidates for future
      acquisition that potentially create value for our existing shareholders. The
      Company hopes to acquire other operating companies as subsidiaries. Acquisition
      targets may be in sectors other then the Company’s current sector of providing
      employment agency services. Although not the Company’s goal, the Company would
      also consider a reverse merger, if it were seen to be a growth opportunity
      for
      our existing shareholders.





To
      date,
      we have not consummated any acquisition and cannot provide any assurance that
      we
      will be successful in this endeavor. Any acquisition may be structured as a
      share exchange and may result in significant dilution to our existing
      shareholders.




**Staf*Tek
      Services, Inc.**




Staf*Tek
      was organized under the laws of the State of Oklahoma on January 2, 1997. 
On December 2, 2003, we acquired all of the issued and outstanding shares of
      common stock of Staf*Tek stock in exchange for (1) 380,500 shares of our Series
      A Preferred Shares (“Series A Shares”); (2) 219,500 shares of our common stock;
      and (3) $200,000 in cash.  The acquisition closed on January 2, 2004, at
      which time Staf*Tek became a wholly owned subsidiary of St. Joseph.




Our
      Series A Shares have a stated value of $3.00 per share.  Each holder of
      Series A Shares is entitled to receive a dividend equal 6.75% of the stated
      value of the Series A Shares payable on each anniversary of the date of issuance
      of such shares.   We paid $39,104 in Series A Stock dividends and
      accrued $39,104 during the year ended December 31, 2007.




The
      convertible preferred A stock may be converted to the Company's common stock
      at
      the rate of one share of convertible preferred A stock for one share of common
      stock at any time by the shareholder. The convertible preferred A stock can
      be
      called for redemption by the Company no sooner than two (2) years after the
      date
      of issuance, and only if the Company's common stock is trading on a recognized
      United States stock exchange for a period of no less than thirty consecutive
      trading days at a market value of $5.00 or more per share. However, as of this
      date, the stock has not traded at that amount.  As of December 31, 2007,
      the Company had paid the $200,000 cash, which was owed under the terms of the
      Agreement.




Staf*Tek
      specializes in the recruiting and placement of professional technical personnel,
      as well as finance and accounting personnel on a temporary and permanent
      basis.  Staf*Tek provides its customers with employee candidates with
      information technology (“IT”) skills in areas ranging from multiple platform
      systems integration to end-user support, including specialists in programming,
      networking, systems integration, database design , help
      desk
      support , including
      senior and entry level finance and accounting candidates . Staf*Tek's candidate databases contain information on the candidates experience,
      skills, and performance and are continually being updated to include information
      on new referrals and to update information on existing candidates. 
Staf*Tek responds to a broad range of assignments from technical one-person
      assignments to major projects including, without limitation, Internet/Intranet
      development, desktop applications development, project management, enterprise
      systems development, SAP implementation and legacy mainframe projects. 
Staf*Tek also provides employee candidates computer training, online
      assessments, certification and the opportunity to be tested and certified in
      over50
      skill
      sets.




3




Staf*Tek
      was founded on the premise that there is an increasing demand for high quality
      outsourced professional services.  Staf*Tek's business premise combines
      client service orientation and commitment to quality.  Staf*Tek is
      positioned to take advantage of what we believe are two converging trends in
      the
      outsourced professional services industry — increasing demand for
      outsourced professional services by corporate clients and increasing the supply
      of professionals interested in working on an outsourced basis.  Staf*Tek
      believes that its business premise allows it to offer challenging yet flexible
      career opportunities, attract highly qualified, experienced professionals and,
      in turn, attract clients with varying professional needs.




Staf*Tek
      is primarily a regional professional service firm that provides experienced
      and
      highly qualified personnel who can demonstrate diversity, and flexibility in
      the
      work force.  Staf*Tek has determined that its market is primarily in the
      Tulsa, Oklahoma area.




Supply
      of Professionals




Concurrent
      with the growth in the demand for outsourced services, Staf*Tek is of the
      belief, based on discussions with its associates that the number of
      professionals seeking work on a project and non-project basis has increased
      due
      to a desire for:




o
            More
                flexible hours and work arrangements, coupled with competitive wages
                and
                benefits; and


o
            Challenging
                engagements that advance careers, develop skills, and add to
                experience.




Staf*Tek
      maintains its own database of approximately 20,000 trained independent contract
      professionals.  Once a professional is placed, he or she either becomes an
      employee of our Company or the client's employee.




Marketing
      and Recruiting




Staf*Tek
      markets its temporary and permanent staffing services to business clients as
      well as employment candidates. Marketing and recruiting directed to business
      clients and employment candidates consists primarily of yellow pages
      advertisements, classified advertisements, websites, internet job
      sites, trade shows and website promotion on the Internet.




We,
      and
      our subsidiaries have registered the following domain names: getsmartonline.com,
      staftek.com, stafmedglobal.com, confidentialsearch.com and stjosephinc.com.




Management
      of the Staf*Tek’s temporary and permanent staffing operations is coordinated
      from our headquarters in Tulsa, Oklahoma. Our headquarters provides support
      and
      centralized services related to administrative, marketing, public relations,
      accounting and training.




Competition




Staf*Tek’s
      temporary and permanent staffing services face competition in attracting clients
      as well as high-quality specialized employment candidates.  The temporary
      and permanent placement businesses are highly competitive, with a number of
      firms offering services similar to those provided by Staf*Tek on a national,
      regional or local basis.  In many areas the local companies are the most
      successful competitors.  The most significant competitive factors in the
      temporary and permanent placement businesses are price and the reliability
      of
      service, both of which are often a function of the availability and quality
      of
      professional personnel.  We believe that Staf*Tek derives a competitive
      advantage from its extensive experience  and
      commitment to the specialized employment market, temporary employees placed
      by
      it are, in fact, Staf*Tek’s employees for all purposes while they are working on
      assignments.  Once a professional is permanently placed, he or she either
      becomes an employee of Staf*Tek or of Staf*Tek’s client.  During the
      temporary phase, Staf*Tek pays the related costs of employment, such as workers'
      compensation insurance, state and federal unemployment taxes, social security
      and certain fringe benefits. Staf*Tek provides access to voluntary health
      insurance coverage to interested employees.


4




Major
      Clients




We
      are
      dependent on a small number of clients for a majority of our revenues. During
      our year ended December 31, 2007, approximately 79% of our revenues were derived
      form our largest client and all of our revenues were derived from a total of
      five clients




Employees
      and Revenue Generating




We
      currently have six paid employees, and no part-time employees. We also have
      22
      full-time revenue **-** generating
      contractors and no part-time revenue generating contractors.




Reports
      to Security Holders





We are
      subject to the informational requirements of the Securities Exchange Act of
      1934, as amended (the "Exchange Act"), and in accordance with the Exchange
      Act
      we file reports, proxy statements and other information with the Securities
      and
      Exchange Commission (the "Commission"). Our security holders or any member
      of
      the public may inspect and copy the reports, proxy statements and other
      information filed by us with the Commission at the public reference facilities
      maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
      D.C. 20549, as well as the Commission's Regional Offices. Our security holder
      or
      any member of the public may also call the Commission at 1-800-SEC-0330 for
      more
      information about the public reference room, how to obtain copies of documents
      by mail or how to access documents electronically on the Commission's Web site
      at ( http://www.sec.gov ).





**ITEM
      2. DESCRIPTION OF PROPERTY**





We
      lease
      approximately 3400 square feet of office space from a non-affiliated third
      party
      at 4870 South Lewis, Suite 250, Tulsa, OK 74105. Our monthly lease payment
      is
      $3,870. The lease commenced May 1, 2004 and expires April 30, 2008.





**ITEM
      3. LEGAL PROCEEDINGS**





As
      previously disclosed in a current report on Form 8-K, filed with the SEC on
      June
      20, 2007, on June 8, 2007, we filed a complaint against our former President,
      CEO and Director John H. Simmons in the United States District Court for the
      District of Colorado, Civil Action No. 07-CV-01208. The complaint alleged,
      among
      other things, that Mr. Simmons breached his fiduciary duties by diverting
      Company funds for personal and recreational use and acquiring shares of our
      common stock without adequate consideration. We are seeking damages against
      Mr.
      Simmons of not less than $75,000, attorneys’ fees, costs of litigation, interest
      and tremble damages. On August 27, 2007, this suit was dismissed due to
      jurisdictional reasons and the parties agreed to move the case to
      Texas.





On
      October 11, 2007, we refiled this lawsuit United States District Court, Northern
      District of Texas, Dallas Division, Civil Action No. 307CV1718-R for the same
      causes of action and asking for the same relief. Although we believe that our
      claims against Mr. Simmons are meritorious, there can be no assurance that
      we
      will prevail in this litigation. At this time, we cannot estimate any possible
      loss from this litigation in the event that we do not prevail.





On
      October 3, 2007, Mr. Simmons filed a lawsuit in United States District Court,
      Dallas County, Civil Action No. DC-07-11801 against the Company, its officers,
      and other individuals.  The complaint alleged, among other things, that the
      Mr. Simmons 1,900,000 options were converted and that the Company failed to
      repay a $96,000 promissory note and breached a duty to indemnify Mr. Simmons
      in
      relation to previously filed litigation. The complaint also makes a variety
      of
      accusations against Company’s officers and other individuals, including
      accusations that these individuals breached fiduciary duties with regard to
      Mr.
      Simmons, engaged in fraud and conspiracy to commit fraud, and converted shares
      and options owned by him. Mr. Simmons seeks unspecified damages, both
      actual and exemplary, against the Company and the other defendants.  The
      Company believes that Mr. Simmons accusations are without factual basis and
      intends to vigorously defend against the lawsuit.   The costs of defending
      against the complaint could be substantial; however we are unable to
      predict an exact amount, or even a meaningful estimate, at this
      time.


5


As
      previously disclosed in a quarterly report on Form 10-QSB, filed with the SEC
      on
      November 20, 2006, on July 28, 2006, Zachary Karo, a former employee, filed
      a
      lawsuit against the Company and its subsidiary Staf*Tek Services, Inc. in the
      district court in Tulsa County, Oklahoma, Case No. CJ 2006 04713, in connection
      with stock options allegedly granted to Mr. Karo. Mr. Karo alleges that he
      was
      granted an option to purchase up to 25,000 shares of the Company’s common stock
      at $0.10 per share but that management refused to issue Mr. Karo such shares
      upon his attempt to **** exercise
      of the alleged option. A motion was made by the Company **** and
      granted with prejudice to dismiss the case. **** Mr. Karo
      refilled to vacate the dismissal, which was subsequently vacated and a hearing
      is set for April 1, 2008 to rule on the motion for dismissal. Mr. Karo is
      seeking damages, actual and exemplary, against the Company in an amount in
      excess of $10,000. Management denies that Mr. Karo was owed such stock options.
      The Company has engaged local counsel and intends to vigorously defend this
      action on the basis brought by the plaintiffs. The costs of defending against
      the complaint could be substantial; however management is unable to estimate
      an
      amount at this time.





On
      July
      11, 2007, Vial, Hamilton, Koch & Knox, LLP brought a lawsuit against the
      Company to recover fees for legal services rendered in the amount of less than
      $50,000 it alleged performed on behalf of the Company in the state court in
      Dallas County, Texas under the case number CC-07-10120-C. The Company was served
      with the complaint on July 19, 2007. Plaintiff is seeking damages against the
      Company of less than $50,000, attorneys’ fees, interest and costs of litigation.
      The invoice we received from Vial, Hamilton, Koch & Knox, LLP dated July 27,
      2007 states that the amount we owed as of that date was $9,617.84. The Company
      has engaged legal representation, but has not yet made any determination
      regarding the merits of, or possible defenses to, the claim, and is unable
      to
      predict a meaningful estimate of the costs of the case.





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





No
      matter
      was submitted to a vote of our shareholders during the fourth quarter of the
      fiscal year covered by this report.




**PART
      II**





**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





Our
      common stock is traded on the OTC Bulletin Board under the symbol STJO.OB.





The
      following table shows the high and low bid information for our common stock
      for
      each quarter during 2006 - 2007.




QUARTER
            
            LOW
                BID
            
            HIGH
                BIDQuarter
                ending December 31, 2007
            
            $
            0.25
            
            $
            0.35Quarter
                ending September 30, 2007
            
            $
            0.26
            
            $
            1.00Quarter
                ending June 30, 2007
            
            $
            0.70
            
            $
            1.15Quarter
                ending March 31, 2007
            
            $
            0.86
            
            $
            1.55Quarter
                ending December 31, 2006
            
            $
            0.75
            
            $
            1.55Quarter
                ending September 30, 2006
            
            $
            1.01
            
            $
            1.55Quarter
                ending June 30, 2006
            
            $
            1.15
            
            $
            2.70Quarter
                ending March 31, 2006
            
            $
            2.25
            
            $
            3.00




The
      above
      information was obtained from the NASD. Because these are over-the-counter
      market quotations, these quotations reflect inter-dealer prices, without retail
      mark-up, markdown or commissions and may not represent actual transactions.
      There is currently no public trading market for our preferred
      stock.





As
      of
      December 31, 2007, representing the last trading day of our most recently
      completed fiscal quarter, there were 7,406,802 shares of common stock issued
      and
      outstanding, held by approximately 210 shareholders of record. Within the
      holders of record of our common stock are depositories, such as Cede & Co.,
      that hold shares of stock for several brokerage firms which, in turn, hold
      shares of stock for a multitude of additional beneficial owners. Accordingly,
      it
      is impossible for us to determine exactly how many beneficial stockholders
      we
      actually have. As of December 31, 2007, there were 386,208 shares of our Series
      A Convertible Preferred Stock issued and outstanding, held by four shareholders
      of record.


6


As
      of
      December 31, 2007, there were 760,000 outstanding options or warrants to
      purchase shares, and 386,208 securities convertible into, shares of the
      Company's Common Stock. The options may be converted into common shares at
      a
      weighted average exercise price of $0.61 per share and the preferred shares
      may
      be converted into common shares on a one for one basis.





**Dividend
      Policy**





We
      have
      never paid a cash dividend on our common stock nor do we anticipate paying
      cash
      dividends on our common stock in the near future. It is our present policy
      to
      not to pay cash dividends on our common stock but to retain earnings, if any,
      to
      fund growth and expansion. Any payment of cash dividends of the common stock
      in
      the future will be dependent upon our financial condition, results of
      operations, current and anticipated cash requirements, plans for expansion,
      as
      well as other factors the Board of Directors deems relevant.





**Penny
      Stock**





Our
      common stock is subject to the provisions of Section 15(g) and Rule 15g-9 of
      the
      Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly
      referred to as the "penny stock rule." Section 15(g) sets forth certain
      requirements for transactions in penny stocks, and Rule 15g-9(d) (1)
      incorporates the definition of "penny stock" that is found in Rule 3a51-1 of
      the
      Exchange Act. The Securities and Exchange Commission ("SEC") generally defines
      "penny stock" to be any equity security that has a market price less than $5.00
      per share, subject to certain exceptions. If our Common Stock is deemed to
      be a
      penny stock, trading in the shares will be subject to additional sales practice
      requirements on broker-dealers who sell penny stocks to persons other than
      established customers and accredited investors. "Accredited investors" are
      persons with assets in excess of $1,000,000 or annual income exceeding $200,000,
      or $300,000 together with their spouse. For transactions covered by these rules,
      broker-dealers must make a special suitability determination for the purchase
      of
      such security and must have the purchaser's written consent to the transaction
      prior to the purchase. Additionally, for any transaction involving a penny
      stock, unless exempt, the rules require the delivery, prior to the first
      transaction, of a risk disclosure document, prepared by the SEC, relating to
      the
      penny stock market. A broker-dealer also must disclose the commissions payable
      to both the broker-dealer and the registered representative, and current
      quotations for the securities. Finally, monthly statements must be sent
      disclosing recent price information for the penny stocks held in an account
      and
      information on the limited market in penny stocks. Consequently, these rules
      may
      restrict the ability of broker-dealers to trade and/or maintain a market in
      our
      Common Stock and may affect the ability of our shareholders to sell their
      shares.





**Equity
      Compensation Plan**





The
      following table sets forth information as of December 31, 2006 with respect
      to
      compensation plans under which we are authorized to issue shares of our common
      stock, aggregated as follows:


o
      all
      compensation plans previously approved by security holders; and


o
      all
      compensation plans not previously approved by security holders.





Equity Compensation Plan InformationPlan category
            
            Number of securities to be
              issued upon exercise of
              outstanding options,
              warrants and rights
            
            Weighted-average exercise
              price of outstanding
              options, warrants and rights
            
            Number of securities
              remaining available for
              future issuance under equity
              compensation plans
              (excluding securities
              reflected in column (a))(a)
            
            (b)
            
            (c)Equity
                compensation plans approved by security holders
            
            
            410,000
            (1)
            $
            1.05
            
            
            715,000Equity
                compensation plans not approved by security holders
            
            
            350,000
            (2) (3)
            $
            0.10
            
            
            0


7





(1)
            On
                August 24, 2006, we adopted our 2006 Stock Option Plan, which reserved
                1,125,000 shares of our common stock for issuance pursuant to the
                plan. On
                August 24, 2006, our Board of Directors granted stock options to
                our
                officers, directors and employees pursuant to the plan to purchase
                410,000
                share of our common stock at an exercise price of $1.05 per share
                and a
                term that ends on August 24, 2011.





(2)
            On
                August 24, 2006, our Board of Directors ratified the issuance and
                grant of
                previously-approved non-qualified stock options to purchase 700,000
                shares
                of our common stock with an exercise price of $0.10 per share and
                a term
                that ends on March 23, 2009 to various individuals who were board
                members
                at the time of the grant of the options and cancelled options to
                purchase
                1,900,000 shares of our common stock.





(3)
            On
                October 28, 2003, our Board of Directors granted stock options to
                purchase
                200,000 shares of our common stock at an exercise price of $0.10
                per share
                and a term that ends on October 28, 2008; and on March 24, 2004,
                our Board
                of Directors granted stock options to purchase 150,000 shares of
                our
                common stock at an exercise price of $0.10 per share and a term that
                ends
                on March 23, 2009.





**Cancellation
      of Stock Options**





Between
      October 28, 2003 and March 23, 2004, our Board of Directors approved the grant
      of stock options to each of our then Directors, John H. Simmons, Bruce E.
      Schreiner, Kenneth L. Johnson, Dr. Milton Harbuck, Kimberly Samon, Gerald
      McIlhargey and Jerry Malone (each, an “Optionee”) in consideration for services
      provided to our Company as Directors. Each option was exercisable immediately
      at
      the exercise price of $0.10 per share and expires on the tenth day after an
      Optionee’s removal from our Board of Directors for reasons other than for a
      voluntary resignation.





As
      disclosed in the Current Report on Form 8-K filed by the Company on August
      30,
      2006, at the annual meeting of our Board of Directors on August 24, 2006, our
      Directors reviewed the options previously granted by our Board Directors to
      the
      Optionees in consideration for services provided to our Company as Directors.
      After careful and exhaustive deliberation, our Directors concluded that the
      options granted to Mr. Simmons as consideration for providing the same
      directorial services as the other Optionees was not fair and reasonable to
      our
      shareholders. Specifically, our Board of Directors concluded that the amount
      of
      options granted to Mr. Simmons, which was 2,000% more than the amount of options
      granted the other Optionees individually, and 333% more than the amount of
      options granted to the other Optionees in the aggregate was unduly excessive,
      unreasonable, and unfair to our shareholders. Therefore, our Board of Directors
      resolved to void 1,900,000 options previously granted to Mr.
      Simmons.




In
      connection with the cancellation of the options previously granted to Mr.
      Simmons, our Board of Directors cancelled 250,000 shares of our common stock
      that were previously issued to Mr. Simmons pursuant to the exercise of these
      now
      cancelled options.





In
      the
      same meeting, our Directors concluded that the grant of 100,000 options to
      each
      Optionee was fair and reasonable, and accordingly ratified the issuance of
      100,000 options to each Optionee, including Mr. Simmons. To the extent that
      the
      issuance of the 1,900,000 options which have been voided by resolution of our
      Board of Directors is deemed fair, we may have contingent liability for
      cancelling Mr. Simmons’ options and shares.





**Recent
      Sale of Securities**





Set
      forth
      below is information regarding the sale of equity securities during the year
      ended December 31, 2007 that were not registered under the Securities Act of
      1933, as amended (the "Securities Act"), and which were not previously disclosed
      either in a quarterly report on Form 10-QSB or on a current report on Form
      8-K.





From
      November 2007 through December 31, 2007, the Company sold 214,000 shares of
      its
      common stock at $0.30 per share to five accredited investors pursuant to the
      exemption afforded by Section 4(2) of the Securities Act of 1933, as amended.
      The Company received gross proceeds of $64,200 from such sales.


8


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





**GENERAL**





The
      following discussion should be read in conjunction with our audited Consolidated
      Financial Statements and accompanying Notes, included herein. Except for the
      historical information contained herein, the discussion in this report contains
      certain forward-looking statements that involve risks and uncertainties, such
      as
      statements of our business plans, objectives, expectations and intentions as
      of
      the date of this filing. The cautionary statements about reliance on
      forward-looking statements made earlier in this document should be given serious
      consideration with respect to all forward-looking statements wherever they
      appear in this report, notwithstanding that the "safe harbor" protections
      available to some publicly reporting companies under applicable federal
      securities law do not apply to us as an issuer of penny stocks. Our actual
      results could differ materially from the results anticipated in these statements
      as a result of a variety of factors, including those discussed in our filings
      with the Securities and Exchange Commission and as discussed in the sections
      under the heading "Risk Factors" in this Report.





Any
      reference to "we," "us" and "our" herein shall mean St. Joseph, Inc., together
      with its consolidated subsidiary, Staf*Tek Services, Inc.





**Overview**





The
      Company's ability to continue as a going concern is contingent upon the
      successful completion of additional financing arrangements, and the development
      of operational solutions to achieve and maintain profitable operations.
      Management plans to finance the operating and capital requirements of the
      Company through business alliances, such as strategic or financial transactions
      with third parties, the sale of securities, or other financing arrangements.
      Amounts raised will be used for working capital purposes, to further develop
      the
      Company's services, and to provide financing for marketing and promotion of
      the
      Company's business. While the Company is expending its best efforts to achieve
      the above plans, there is no assurance that any such activity will generate
      funds that will be available for operations.





These
      conditions raise substantial doubt about the Company's ability to continue
      as a
      going concern. The Company's financial statements do not include any adjustments
      related to the recoverability and classification of recorded asset amounts
      or
      the amounts and classification of liabilities that may be necessary should
      the
      Company be unable to continue in existence. (See "Risk Factors" and "Financial
      Statements Footnote 1.")





For
      the
      year ended December 31, 2007, St. Joseph, Inc. had generated revenues of
      $2,485,279, which is down from $2,597,324 for the year ended December 31, 2006.
      The decrease is primarily due to the decrease in revenues due the loss in
      Staf*Tek’s contracted employees. For the year ending December 31, 2007,
      Staf*Tek's total service revenues decreased by $112,045 when compared to the
      total service revenues for 2006.





Since
      inception Staf*Tek business has been the recruiting and the placement of
      professional technical personnel on a temporary and permanent basis in the
      Tulsa, Oklahoma area. Staf*Tek assists their clients with projects that require
      specialized expertise ranging from multiple platform systems integration to
      end-user support, including specialists in programming, networking, systems
      integration, database design and help desk support, as well as providing
      qualified candidates in senior
      and entry level finance and accounting.


9


**Results
      of Operations for the Twelve Months Ended December 31, 2006 and 2007**




**For the Year Ended******
              ****
              **December
                  31, 2007**
              
              **December
                  31, 2006**
              
              Change
              
              Change$
              
              % of
                Revenue
              
              $
              
              % of
                Revenue
              
              $
              
              %Net
                  Revenues
              
              $
              2,458,279
              
              
              100.00
              %
              $
              2,597,324
              
              
              100.00
              %
              
              (139,045
              )
              
              (5.35
              )%Cost
                  of Revenues
              
              
              1,994,271
              
              
              81.12
              %
              
              2,143,175
              
              
              82.51
              %
              
              (148,904
              )
              
              (6.95
              )%Gross
                  Margin (Loss)
              
              
              491,008
              
              
              19.97
              %
              
              454,149
              
              
              17.49
              %
              
              36,859
              
              
              8.12
              %Operating
                  ExpensesSelling,
                  General and Administrative Expenses
              
              
              494,459
              
              
              20.11
              %
              
              762,575
              
              
              29.36
              %
              
              (268,116
              )
              
              (35.16
              )%Depreciation
                  and Amortization
              
              
              3,100
              
              
              0.13
              %
              
              19,034
              
              
              0.73
              %
              
              (15,934
              )
              
              (83.71
              )%Loss
                  on goodwill impairment
              
              
              258,525
              
              
              10.52
              %
              
              0
              
              
              0.00
              %
              
              258,525
              
              
              100
              %Total
                  Operating Expenses
              
              $
              756,084
              
              
              30.76
              %
              $
              781,609
              
              
              30.09
              %
              
              25,525
              
              
              3.27
              %Loss
                  from Operations
              
              $
              (265,076
              )
              
              (10.78
              )%
              
              (327,460
              )
              
              (12.61
              )%
              
              (62,384
              )
              
              (19.05
              )%Other
                  Income (Expense)Interest
                  Income
              
              
              1
              
              
              0.00
              %
              
              63
              
              
              0.00
              %
              
              (62
              )
              
              (98.41
              )%Realized
                  gain (loss) from marketable securities
              
              
              0
              
              
              0.00
              %
              
              (7,707
              )
              
              (0.30
              )%
              
              7,707
              
              
              (100.00
              )%Interest
                  Expense
              
              
              (28,880
              )
              
              (1.17
              )%
              
              (29,663
              )
              
              (1.14
              )%
              
              783
              
              
              (2.64
              )%Net
                  Other Expense
              
              $
              (329,012
              )
              
              (13.38
              )%
              $
              (37,307
              )
              
              (1.44
              )%
              
              (291,705
              )
              
              781.90
              %Loss
                  before provision for income tax
              
              
              (335,563
              )
              
              (13.65
              )%
              
              (364,767
              )
              
              (14.04
              )%
              
              29,204
              
              
              (8.01
              )%Provision
                  for Income Taxes
              
              
              0
              
              
              
              
              
              0
              
              
              
              
              
              0Net
                  Income (Loss)
              
              $
              (335,563
              )
              
              (13.65
              )%
              $
              (364,767
              )
              
              (14.04
              )%
              
              29,204
              
              
              (8.01
              )%


Net
      Revenues





Net
      Revenues for the twelve months ended December 31, 2007 decreased to $2,485,279
      from $2,597,324 for the twelve months ended December 31, 2006. The decrease
      in
      net revenues of $112,045, or approximately 5.35%, over the 2006 period is due
      primarily to decreased revenues generated by the loss of newly contracted
      employees since the prior period.





Cost
      of Revenues





Cost
      of
      Revenues for the twelve months ended December 31, 2007 decreased to $1,994,271
      from $2,143,175 for the twelve months ended December 31, 2006. The overall
      decrease in cost of revenues of $148,904, or approximately 6.95%, over the
      2006
      period is directly attributable to the cost associated with the decrease in
      number of newly contracted employees described above.





Gross
      Margin





The
      overall gross margin for the twelve months ended December 31, 2007 increased
      to
      $491,008 from $454,149 for the twelve months ended December 31, 2006. The
      overall increase in gross margin of $36,859 or approximately 8.12% over the
      2006
      period is directly attributable to reduced costs in hiring and retaining our
      newly contracted employees.





Operating
      Expenses





Total
      operating expenses for the twelve months ended December 31, 2007 decreased
      to
      $497,559 from $781,609 for the twelve months ended December 31, 2006. Reasons
      for the overall decrease in operating expenses of $284,050 or approximately
      36.34%, over the 2006 period is covered below in our discussions of General
      and
      Administrative Expenses and Stock-Based Compensation.


10





General
      and Administrative Expenses





General
      and administrative expenses for the twelve months ended December 31, 2007
      decreased to $494,459 from $762,575 for the twelve months ended December 31,
      2006. The decrease in general and administrative expenses of $268,116 or
      approximately 35.16%, over the 2006 period is due primarily to the reduction
      in
      administrative staff and the reduction in goodwill noted below.





Stock-Based
      Compensation – Common Stock Options Granted





We
      did
      not grant any common stock options in the twelve months ended December 31,
      2007.





Loss
      on Goodwill Impairment





The
      Company recorded a non-cash goodwill impairment charge of $258,525 in the
      accompanying consolidated financial statements for the year ended December
      31,
      2007. Following the impairment charge, there is no goodwill balance remaining
      at
      December 31, 2007.





Total
      Operating Losses





Total
      operating losses for the twelve months ended December 31, 2007 decreased to
      $265,076 from $327,460 for the twelve months ended December 31, 2006. The
      overall decrease in operating losses of $62,384, or approximately 19.05% over
      the 2006 period is due primarily to a reduction in non-revenue generating staff
      and reduction in goodwill.





Net
      Other Expenses





Net
      other
      expenses for the twelve months ended December 31, 2007 increased to $329,012
      from $37,307 for the twelve months ended December 31, 2006. The overall increase
      in our other expenses of $291,706, or approximately 781.9% over the 2006 period
      is primarily due to the write off of $258,525 in goodwill
      impairment.





Interest
      Income





Interest
      income for the twelve months ended December 31, 2007 decreased to $1 from $63
      for the twelve months ended December 31, 2006.





Interest
      Expense





Interest
      expense for the twelve months ended December 31, 2007 decreased to $28,880
      from
      $29,663 for the twelve months ended December 31, 2006. The overall decrease
      in
      our interest expense of $783 or approximately 2.63% over the 2006 period is
      due
      primarily to the decrease of interest bearing debts.





Gain/Loss
      on Sale of Securities





We
      have a
      loss of $0 from the sale of securities for the twelve months ended December
      31,
      2007 compared to a loss of $7,707 for the twelve months ended December 31,
      2006.
      This change is due primarily to the liquidation of all securities during the
      year ended December 31, 2006.





Net
      Loss





Net
      Loss
      for the twelve months ended December 31, 2007 decreased to $335,563 from
      $364,767 for the twelve months ended December 31, 2006. This decrease in net
      loss of $29,204 or approximately 8.01% over the 2006 period is due primarily
      to
      the elimination of Goodwill Impairment.





**Liquidity
      and Capital Resources**




December 31, 2007
            
            December 31, 2006Net
                cash used in operating activities
            
            $
            53,039
            
            $
            72,901Net
                cash provided by investing activities
            
            
            0
            
            
            11,092Net
                cash provided by financing activities
            
            $
            241,414
            
            
            20,578





11





General





For
      the
      twelve months ended December 31, 2007, we had negative cash flows resulting
      from
      $53,039 of cash used in our operating activities, $0 of cash provided by our
      investing activities and $241,414 of cash provided by our financing activities.
      Accordingly, for the twelve months ended December 31, 2007, our funds from
      operations were sufficient to cover our daily operations as further explained
      below.





Cash
      Flows from Operating Activities





Net
      cash
      used in our operating activities of $53,039 for the twelve months ended December
      31, 2007 was primarily attributable to the net loss and offset by depreciation
      expense, stock based compensation, decreases in accounts receivable and
      increases in accounts payable.





Cash
      Flows from Investing Activities





Net
      cash
      provided by our investing activities of $0 for the twelve months ended December
      31, 2007.





Cash
      Flows from Financing Activities





Net
      cash
      provided by our financing activities of $241,414 for the twelve months ended
      December 31, 2007 was proceeds from exercised stock options, proceeds from
      sale
      of common stock and proceeds from sale of preferred stock.





During
      the three months ended March 31, 2007, the Company sold 166,667 shares of Series
      B Convertible Preferred Stock. Each share of Series B Convertible Preferred
      Stock was convertible to one share of common stock and had a yield of 15%
      dividend per annum, payable monthly on a calendar basis. The Series B
      Convertible Preferred Stock was sold at $1.20 per share. On the transaction
      date, the fair value of the common stock was $1.45 per share, resulting in
      a
      beneficial conversion feature. The intrinsic value of the imbedded beneficial
      conversion feature related to the option for conversion into the Company’s
      common stock totaled $41,667. Because the Series B Convertible Preferred Stock
      could not be converted for a period of six months, the beneficial conversion
      charge was capitalized as prepaid compensation expense and amortized to
      stock-based compensation expense over the six **-** month
      period.





In
      December 31, 2007 and pursuant to letter agreements as of the same date, we
      effected the conversion of three promissory notes and all of our outstanding
      shares of our Series B Preferred Stock into shares of our common stock. In
      this
      conversion, 1,143,590 shares of our common stock were issued to four persons
      at
      a conversion price of $0.30 per share. In this conversion, 216,667 shares of
      Series B Stock held by two holders valued at $260,000 and unpaid dividends
      of
      $19,500 on this stock were converted into 931,667 shares of our common stock.
      The valuation of the Series B Stock was determined pursuant to the rights and
      preferences of the stock stated in our Articles of Incorporation. The Series
      B
      Stock received by the Company in the conversion was cancelled and the Company
      now has no issued and outstanding shares Series B Stock. As holders of the
      Series B Stock were entitled to 15% preferred dividends, our management
      determined it was in the best interests of the Company to effect the conversion
      of these shares.





Internal
      Sources of Liquidity





For
      the
      twelve months ended December 31, 2007, the revenues generated from our
      operations were insufficient to fund our daily operations. Gross profit for
      fiscal year 2006 was $491,008, which was insufficient to meet our operating
      expenses of $497,559 for the same period. There is no assurance that funds
      from
      our future operations will meet the requirements of our daily operations in
      the
      future. In the event that funds from our operations will be insufficient to
      meet
      our operating requirements, we will need to seek other sources of financing
      to
      maintain liquidity.





External
      Sources of Liquidity





We
      actively pursue all potential financing options as we look to secure additional
      funds to both stabilize and grow our business operations. Our management will
      review any financing options at their disposal, and will judge each potential
      source of funds on its individual merits. There can be no assurance that we
      will
      be able to secure additional funds from debt or equity financing, as and when
      we
      need to, or if we can, that the terms of such financing will be favorable to
      us
      or our existing stockholders.


12


At
      December 31, 2007, we have debt owing to related parties in the aggregate amount
      of $73,120 as summarized in Note 2 to the financial statements.





At
      December 31, 2007, we have debt owing to non-related parties (net of unamortized
      discount) aggregating $195,000 as summarized in Note 4 to the financial
      statements.





Our
      business plan involves, in part, increasing the number of employees placed
      both
      on a temporary and permanent basis. Such increased placement is expected to
      result in increased profit to us, although it also results in increased
      short **-** term **** cash
      needs. We have utilized net revenues, the proceeds from a number of private
      sales of our equity securities, the exercise of options, the issuance of
      promissory notes and our line of credit to meet our working capital
      requirements. We are reluctant to incur further debt and intend to rely upon
      net
      revenues and private sales of equity securities to meet our liquidity needs
      for
      the next 12 months.





During
      2008, we expect to grow our revenues without significant increases in our
      selling, general and administrative expenses, which we expect will have a
      positive effect on our financial statements as compared to 2007. Our liquidity
      and capital resources, as well as business prospects, are all subject to the
      risks disclosed below, among others.





RISK
      FACTORS





Our
      business prospects are subject to various risks and uncertainties that impact
      our business. The most important of these risks and uncertainties are as
      follows:





*Our
      auditor has expressed substantial doubt as to our ability to continue as a
      going
      concern. An inability to continue as a going concern would likely lead to a
      loss
      of your entire investment.*





Our
      independent certified public accountant's report on our financial statements
      for
      the fiscal years ended December 31, 2006 and 2007 contains an explanatory
      paragraph indicating that we have incurred recurring losses, and as of December
      31, 2007, had negative working capital and a net capital deficiency. These
      factors raise substantial doubt about our ability to continue as a going
      concern. The accompanying financial statements do not include any adjustments
      that might result from the outcome of this uncertainty.





***We
      operate solely through our subsidiary, Staf*Tek Services, Inc.; our revenues
      are
      dependent on the performance of our subsidiary.***





We
      operate and generate revenues solely through our subsidiary, Staf*Tek. St.
      Joseph, Inc. has not generated any revenues since its inception and does not
      expect to generate any revenues in the future. Our success depends on the
      success of Staf*Tek and there is no assurance that we can achieve profitability
      through Staf*Tek in the future. Our performance will depend on our ability
      to
      manage this anticipated growth effectively by hiring key management personnel,
      implementing and maintaining operational, administrative, marketing and control
      systems on a timely basis, building and maintaining our network infrastructure,
      conducting successful marketing and sales programs, attracting and retaining
      qualified employees and having access to working capital to support the growth
      in inventory, receivables, capital requirements and operating costs necessitated
      by the assumed increased sales.





***From
      time to time, we may need additional capital to meet the objectives of our
      business plan, and there is no assurance that we will be able to raise such
      capital or that such financing will be on terms that*** ***are
      favorable or acceptable to us.***





We
      have
      taken steps to increase the placement of employees. However, the placement
      of
      temporary employees requires substantial additional capital to fund our working
      capital needs. When an employee is placed on a temporary basis, an invoice
      is
      generated for the placement fee, which may not be paid for a number of weeks
      while the employment costs are immediately incurred. Thus, even though, in
      the
      long run, our success in placing temporary employees will enhance our revenues;
      in the short term, our increasing placement of temporary employees is decreasing
      our liquidity. Accordingly, to remain viable, we must substantially increase
      our
      revenues, raise additional capital, increase our credit facilities, and/or
      reduce our operations. In the event that our plans or assumptions change or
      prove to be inaccurate, or if delays increase the payment of our placement
      fees,
      we may be required to raise additional funds through the issuance of equity
      securities, in which case the percentage ownership of our current stockholders
      will be diluted. Such equity securities may also have rights, preferences or
      privileges senior to common stock. Furthermore, there can be no assurance that
      additional financing will be available when needed on terms favorable to us
      or
      at all. If
      we are
      unable to raise more money, our growth could be impeded ,
      and our
      business could be materially adversely affected.


13





***Our
      failure to effectively manage growth could have a material adverse effect on
      our
      business and operations*** **.**





We
      expect
      our business to grow, and such growth could occur rapidly at an uneven pace.
      Such growth will place a significant strain on our management systems and
      resources. We will need to continue to improve our operational and financial
      systems and managerial controls and procedures, and we will need to continue
      to
      expand, train and manage our workforce. We will have to maintain close
      coordination among our technical, accounting, finance, marketing and sales
      personnel.




***If
      we lose key personnel or fail to integrate replacement personnel successfully,
      our ability to manage our business could be impaired.***




Our
      future success depends upon the continued service of our key management and
      other critical personnel such
      as
      John Blackmon .
      Whether
      we are able to execute our business strategy effectively will depend in large
      part on how well key management
      and other personnel perform in their positions and are integrated within our
      company. There is no assurance that we have will be able to retain these key
      management and personnel. The loss of any key employee could result in
      significant disruptions to our operations, the successful implementation and
      completion of company initiatives and the results of our operations. In
      addition, the integration of replacement personnel could be time consuming,
      may
      cause additional disruptions to our operations and may be unsuccessful.




***Factors
      outside of our control may adversely affect our operations and operating
      results.***





The
      demand for our temporary and permanent staffing services is highly dependent
      upon the state of the economy and upon the staffing needs of our clients. Any
      variation in the economic condition or unemployment levels in the United States
      or in the economic condition of the region where our clients are located, or
      in
      any specific industry may severely reduce the demand for our services and
      thereby significantly decrease the our revenues and profits. Furthermore, our
      temporary and permanent staffing services business consists of the placement
      of
      individuals seeking temporary and permanent employment. There can be no
      assurance that qualified candidates for employment will continue to seek
      employment through Staf*Tek. Qualified candidates generally seek temporary
      or
      permanent positions through multiple sources, including Staf*Tek and its
      competitors. Any shortage of qualified candidates could materially adversely
      affect our revenues.





***Our
      market is competitive*** ***,*** ***and our financial results and financial condition could be adversely affected
      if
      we are unable to anticipate or react to this
      competition.***





The
      market for temporary and permanent staffing services is highly competitive
      and,
      because it is a service business, the barriers to entry are quite low. There
      are
      many competitors, some of which have greater resources than us, and new
      competitors are constantly entering the market. In addition, long-term contracts
      form a negligible portion of our revenues. Therefore, there can be no assurance
      that we will be able to retain clients or market share in the future. Nor can
      there be any assurance that we will, in light of competitive pressures, be
      able
      to remain profitable or maintain our current profit margins. If we fail to
      compete successfully in this highly competitive market, our business, financial
      condition, and results of operations will be materially and adversely
      affected.





***We
      depend on attracting and retaining qualified candidates; during periods of
      economic growth, our costs to do so increase and it becomes more difficult
      to
      attract and retain people.***





The
      success of our staffing services depends on our ability to attract and retain
      qualified employees for placement with our customers. Our ability to attract
      and
      retain qualified personnel could be impaired by rapid improvement in economic
      conditions resulting in lower unemployment and increases in compensation. During
      periods of economic growth, we face growing competition for retaining and
      recruiting qualified personnel, which in turn leads to greater advertising
      and
      recruiting costs and increased salary expenses. If we cannot attract and retain
      qualified employees, the quality of our services may deteriorate and our
      reputation and results of operations could be adversely
      affected.


14


***Our
      inability to attract and retain qualified employees could have a material
      adverse effect on our business, financial condition and results of
      operations.***





Our
      business involves the delivery of professional services and is very labor
      intensive. Our success depends in large part upon our ability to attract,
      develop, motivate and retain highly skilled technical employees. We can
      experience high turnover of our personnel and are often required to recruit
      and
      train replacement personnel as a result of a changing and expanding work force.
      Accordingly, we may experience increased compensation costs that may not be
      offset through either increased productivity or higher customer pricing.
      Furthermore, the market for IT services change rapidly because of technological
      innovation, new product introductions, changes in customer requirements,
      evolving industry standards and many other factors. New products and new
      technology often render existing information services or technology
      infrastructure obsolete, excessively costly or otherwise unmarketable. As a
      result, our success depends on our ability to attract and retain qualified
      employee candidates who are knowledgeable and familiar with these new products
      and technologies. We cannot guarantee that we will be successful in recruiting
      and retaining sufficient numbers of qualified employee candidates in the future,
      especially when we need to expand our services in a short time period. Our
      inability to attract and retain qualified personnel, or increases in wages
      or
      other costs of attracting, training or retaining qualified personnel, could
      have
      a material adverse effect on our business, financial condition and results
      of
      operations.





***79%
      of our revenues come from one client.***





During
      our year ended December 31, 2007, approximately 79% of our revenues were derived
      from our largest client. The loss of this client or the decline in business
      from
      this client would have a material adverse effect on our revenues and profits.
      Accordingly, any events that create an adverse affect on this clients operations
      or financial performance may also create a material adverse effect on our
      revenues and profits.





***Our
      revenues are generated by only five clients.***





At
      the
      present time, our revenues come from only five clients. The loss of any of
      these
      clients or the decline in business from any of these clients will have a
      material adverse effect on our revenues and profits.




**ITEM
      7. FINANCIAL STATEMENTS.**





Our
      Financial Statements and supplementary data are included beginning immediately
      following the signature page to this Report. See Item 13 for a list of the
      Financial Statements and financial statement schedules included with this
      filing.




**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**





None.




**ITEM
      8A. CONTROLS AND PROCEDURES**





DISCLOSURE
      CONTROLS AND PROCEDURES





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





As
      required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the
      "Exchange Act"), we carried out an evaluation of the effectiveness of the design
      and operation of our disclosure controls as of the end of the period covered
      by
      this report, December 31, 2007. This evaluation was carried out under the
      supervision and with the participation of Gerry McIlhargey, our Chief Executive
      Officer and Kenneth L. Johnson, our acting Chief Financial Officer,
      (collectively, the "Certifying Officers"). Based upon that evaluation, our
      Certifying Officers concluded that as of the end of the period covered by this
      report, December 31, 2007, our disclosure controls and procedures are effective
      in meeting our requirements as to the disclosure of material information
      relating to us and required to be included in our periodic filings with the
      SEC.


15


INTERNAL
      CONTROL OVER FINANCIAL REPORTING





Further,
      as required by Rule 13a-15(d) of the Exchange Act and under the supervision
      and
      with the participation of our Certifying Officers, we carried out an evaluation
      as to whether there has been any change in our internal control over financial
      reporting during our fiscal year ended December 31, 2007. Based upon this
      evaluation, we have concluded that there has not been any change in our internal
      control over financial reporting during our fiscal year ended December 31,
      2007,
      that has materially affected, or is reasonably likely to materially affect,
      our
      internal control over financial reporting.





Internal
      control over financial reporting is a process designed by, or under the
      supervision of, our principal executive and principal financial officers, or
      persons performing similar functions, and effected by our board of directors,
      management and other personnel, to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial statements
      for external purposes in accordance with generally accepted accounting
      principles. Internal control over financial reporting includes those policies
      and procedures that: (i) pertain to the maintenance of records that in
      reasonable detail accurately and fairly reflect the transactions and
      dispositions of our assets; (ii) provide reasonable assurance that transactions
      are recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that our receipts
      and expenditures are being made only in accordance with authorizations of our
      management and directors; and (iii) provide reasonable assurance regarding
      prevention or timely detection of unauthorized acquisition, use or disposition
      of our assets that could have a material effect on the financial statements.





**ITEM
      8B. OTHER INFORMATION.**





None.





**PART
      III**





**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
      WITH
      SECTION 16(A) OF THE EXCHANGE ACT**





The
      following information sets forth the names of the directors, executive officers,
      promoters control persons of the Company, their present positions with the
      Company, and their biographical information.





Name
            
            Age
            
            Position(s)
                Held
            
            Date
                Service BeganGerald
                McIlhargey
            
            60
            
            President,
                Chief Executive Officer and Director
            
            March
                2004Kenneth
                L. Johnson
            
            48
            
            Secretary,
                Treasurer and Director
            
            April
                2000Bruce
                Schreiner
            
            53
            
            Director
            
            October
                2003Donal
                Ford
            
            52
            
            Director
            
            August
                2006Maureen
                O’Brien
            
            59
            
            Director
            
            August
                2006John
                Blackmon
            
            52
            
            President
                of Staf*Tek Services Inc.
            
            June
                2004





*Gerald
      McIlhargey* –
      Mr. McIlhargey has been a Director of St. Joseph since March of 2004. Mr.
      McIlhargey has spent over 26 years in management consulting for public
      companies. In his various management roles, Mr. McIlhargey has extensive
      experience in Marketing and Manufacturing as well as the Financing of Public
      Companies. Mr. McIlhargey has had a key role with several public companies,
      including International Corona Resources, Collingwood Energy, Sense Technologies
      Inc. and Male Leaf Petroleum. Mr. McIlhargey received a Bachelor of Education
      degree from Simon Fraser University in British Columbia, Canada in
      1972.





*Kenneth
      L. Johnson* –
      Mr. Johnson has been a Director and Secretary/Treasurer of the Company since
      April of 2000. Mr. Johnson has been the Secretary/Treasurer and Director of
      Staf*Tek from December of 2003, to the present. For the past nine years, Mr.
      Johnson has been employed as a senior support representative with College
      Bookstore Management Systems (CMBS), a division of Nebraska Book Co., Inc.
      A
      provider of point of sale and inventory control computer software for the
      college bookstore industry. Mr. Johnson is involved in product development,
      customer support and training. Mr. Johnson graduated from Hastings College
      in
      1985, earning a Bachelor of Arts Degree in Business
      Administration.


16


*Bruce
      E. Schreiner, CPA* –
      Mr. Schreiner, CPA, has been a Director of the Company since October of 2003.
      Mr. Schreiner has also been a Director of Staf*Tek Services, Inc. since October,
      2003, to the present. Mr. Schreiner is a partner in the accounting firm of
      Schroeder & Schreiner, P.C. He served as an Agent with the Internal Revenue
      Service for over five years, culminating in an appointment to the Technical
      and
      Review Staff of Omaha, Nebraska, for the Nebraska District. Mr. Schreiner is
      a
      member of the American Institute and Nebraska Society of Certified Public
      Accountants and the Grand Island Area Chamber of Commerce. Mr. Schreiner is
      currently on the Board of Directors of Sense Technologies, Inc., a public
      company. Mr. Schreiner graduated magna cum laude from Hastings College in 1975
      earning a Bachelor of Arts Degree in both Economics and Business Administration
      with emphasis in accounting.





*Donal
      Kent Ford* –
      Mr. Ford has been a Director of the Company since August 24, 2006. For the
      past
      ten years Mr. Ford has been President of Pinnacle Financial Services, Inc.,
      a
      Third Party Administrator for Pension and Profit Sharing Plans located in
      Lantana, FL. Mr. Ford is a Credentialed Member of the American Society of
      Pension Actuaries and is actively involved in the South Florida Benefits
      Council. Mr. Ford has a Bachelor of Science in Business Administration from
      the
      University of Florida and a Doctor of Chiropractic from Life University.
 He is also a Certified Pension Consultant with the American Society of
      Pension Professionals and Actuaries.





*Maureen
      O’Brien* –
      Ms. O’Brien has been a Director of the Company since August 24, 2006. For the
      past two years Ms. O'Brien has worked as Executive Assistant to David Core,
      CEO
      of Pinnacle Financial Services, Inc. For seven years prior to that Ms. O'Brien
      specialized in start up ventures with Real Applications, Inc.




*John
      Blackmon* –
      Mr. Blackmon has been Staf*Tek’s President since August 24, 2006. Recently he
      has expanded staffing services to include senior and entry-level finance and
      accounting services.  Before joining Staf*Tek, Mr. Blackmon was a Senior
      Manager of IT with MCI/WorldCom.  Mr. Blackmon joined MCI/WorldCom, now
      Verizon, in 1997 in the Operations organization and was quickly moved to the
      IT
      organization where his responsibilities included operations management,
      management of both technical and support organizations, and progressing to
      lead
      the development and implementation of all E*Commerce application solutions
      for
      the Wholesale division of WorldCom.




**Term
      of Office**





Our
      directors are elected for a one-year term to hold office until the next annual
      general meeting of our shareholders, or until removed from office in accordance
      with our bylaws and applicable law. Our officers are appointed by our Board
      of
      Directors and hold office until removed by the Board.





**Family
      Relationships**





There
      are
      no family relationships among the our officers and directors, nor are there
      any
      arrangements or understanding between any of the directors or officers of our
      Company or any other person pursuant to which any officer or director was or
      is
      to be selected as an officer or director.





**Involvement
      in Certain Legal Proceedings**





During
      the past five years, no present or former director, executive officer or person
      nominated to become a director or an executive officer of the
      Company:





(1)
            was
                a general partner or executive officer of any business against which
                any
                bankruptcy petition was filed, either at the time of the bankruptcy
                or two
                years prior to that time;





(2)
            was
                convicted in a criminal proceeding or named subject to a pending
                criminal
                proceeding (excluding traffic violations and other minor
                offenses);





(3)
            was
                subject to any order, judgment or decree, not subsequently reversed,
                suspended or vacated, of any court of competent jurisdiction, permanently
                or temporarily enjoining, barring, suspending or otherwise limiting
                his
                involvement in any type of business, securities or banking activities;
                or





(4)
            was
                found by a court of competent jurisdiction (in a civil action), the
                Securities and Exchange Commission or the Commodity Futures Trading
                Commission to have violated a Federal or state securities or commodities
                law, and the judgment has not been reversed, suspended or
                vacated.


17


In
      February of 2004, St. Joseph's Board of Directors elected to establish an
      Advisory Board to advise the Board of Directors on new business development,
      procedures, technologies, new business practices and effective businesses
      practices with respect to professional employer organization. The Advisory
      Board
      Member's biographies are as follows:





David
      Goler, 58, was appointed to the Advisory Board on February 3, 2004. For the
      past
      ten years Mr. Goler has worked for Pinnacle Financial Services, Inc. as National
      Marketing Director.





John
      Hershenberg, 44, was appointed to the Advisory Board on February 3, 2004. Mr.
      Hershenberg. For the past seven years, has worked for Inercore, a national
      marketing firm dedicated to the marketing support of Professional Employer
      Organizations.





Ted
      Key,
      29, was appointed to the Advisory Board on March 23, 2004. For the past seven
      years Mr. Key worked with Lincoln Financial Advisors focusing on investment
      planning and most recently Professional Employer Organization
      division.





John
      K.
      Lucas, 56, was appointed to the Advisory Board on February 3, 2004. In the
      past
      five years Mr. Lucas has been Regional Chief Executive Officer for Lincoln
      Financial Advisors Corporation.





Brian
      R.
      Smith, 41, was appointed to the Advisory Board on February 3, 2004. Mr. Smith
      is
      a retired Army Major, and, for the past seven years, has worked in the
      Professional Employers Organization Industry with Lincoln Financial Advisors
      Corporation.





Members
      of the Advisory board are appointed by our Board of the Directors and serve
      until removed by the Board of Directors.




**Committees
      of the Board of Directors; Meetings**





During
      the year ended December 31, 2007, the entire Board met seven times and acted
      seven times by unanimous written consent. During fiscal year 2007, no director
      attended fewer than 75% of the aggregate number of meetings of the Board and
      committees on which such director served.





The
      Board
      has two standing committees, the Audit Committee and the Compensation Committee.
      The Board does not have a separate Nominating Committee and performs all of
      the
      functions of that committee.





**The
      Audit Committee**





The
      Audit
      Committee has as its primary responsibilities the appointment of the independent
      auditor for the Company, the pre-approval of all audit and non-audit services,
      and assistance to the Board in monitoring the integrity of our financial
      statements, the independent auditor's qualifications, independence and
      performance and our compliance with legal requirements. The Audit Committee
      has
      adopted a written charter **,** which
      was mailed to its shareholders in 2006. During the year ended December 31,
      2007,
      the Audit Committee met one time. Bruce Schreiner, Donal Ford, and Maureen
      O’Brien are the current members of the Audit Committee.





Since
      we
      are not a "listed" company, we are not subject to rules requiring the members
      of
      our Audit Committee to be independent; however we use the rules of The NASDAQ
      Stock Market in determining whether directors are independent for disclosure
      purposes. Based on its review of the applicable rules of The NASDAQ Stock Market
      governing audit committee membership, the Board believes that all members of
      the
      Audit Committee are "independent" within the meaning of such rules.





The
      Securities and Exchange Commission (“SEC”) requires a company to disclose
      whether it has an "Audit Committee Financial Expert" serving on its audit
      committee. Based on its review of the criteria of an Audit Committee Financial
      Expert under the rule adopted by the SEC, the Board believes that one member
      of
      the Audit Committee, Mr. Schreiner, qualifies as an Audit Committee Financial
      Expert. Each of the other current members have made significant contributions
      and provided valuable service to St. Joseph and its stockholders as members
      of
      the Audit Committee and the Board believes that each of them has demonstrated
      that he is capable of (i) understanding generally accepted accounting principles
      ("GAAP") and financial statements, (ii) assessing the general application of
      GAAP principles in connection with the accounting for estimates, accruals and
      reserves, (iii) analyzing and evaluating our financial statements, (iv)
      understanding internal controls and procedures for financial reporting, and
      (v)
      understanding audit committee functions, all of which are attributes of an
      Audit
      Committee Financial Expert under the rule adopted by the SEC. Given the business
      experience and acumen of these individuals and their service as members of
      the
      Audit Committee, the Board believes that each of them is qualified to carry
      out
      all duties and responsibilities of the Audit Committee.


18


**Compensation
      Committee**





The
      Compensation Committee recommends to the Board annual salaries for senior
      management and reviews all company benefit plans. During the year ended December
      31, 2007, the Compensation Committee met one time and reviewed the compensation
      of all St. Joseph employees. The current members of the Compensation Committee
      are Bruce Schreiner, Kenneth Johnson, and Donal Ford.





**Compliance
      with Section 16(a) of the Securities Exchange Act of 1934**





Section
      16(a) of the Securities Exchange Act of 1934 (the "34 Act") requires our
      officers and directors and persons owning more than ten percent of our Common
      Stock to file initial reports of ownership and changes in ownership with the
      Securities and Exchange Commission ("SEC"). Officers, directors and persons
      who
      are the beneficial owners of more than 10% of the common stock of the Company
      are required by SEC regulation to furnish us with copies of all Section 16(a)
      forms they file. Based solely upon review of the copies of such reports
      furnished to us during, and with respect to, the fiscal year ended December
      31,
      2007 or any written representations we received from a director, officer, or
      beneficial owner of more than 10% of our common stock that no other reports
      were
      required during that period, we believe that, for the fiscal year ended December
      31, 2007, all Section 16(a) filing requirements applicable to our reporting
      persons were met, with the following exceptions: Mr. Blackmon has not yet filed
      a Form 3, although we expect one to be filed in the near future.





**Code
      of Ethics**





We
      have
      adopted a code of ethics that applies to our principal executive officer,
      principal financial officer, principal accounting officer or controller, and
      persons performing similar functions. The code of ethics can be viewed on our
      website: www.stjosephinc.com .


19


**ITEM
      10. EXECUTIVE COMPENSATION**




**Summary
      Compensation Table**





The
      following table sets forth information concerning the compensation of our named
      executive officers during 2006 and 2007:




**Summary
      Compensation Table**


Name
                and
                Principal
                Position
              
              Year
              
              Salary
                ($)
              
              Bonus
                ($)
              
              Stock
                Awards
                  ($)
              
              Option
                Awards
                ($)
              
              Non-
                Equity
                  Incentive
                Plan
                Com-
                pensation
                ($)
              
              Non-
                Qualified
                  Deferred Compen-
                sation
                  Earnings
                ($)
              
              All
                  other
                Compen-
                sation
                ($)
              
              Total
                ($)(a)
              
              (b)
              
              (c)
              
              (d)
              
              (e)
              
              (f)
              
              (g)
              
              (h)
              
              (i)
              
              (j)GeraldMcIlhargey
                President,
                  CEO and Director
              
              
              2006
                2007
              
              
              -
                -
              
              
              -
                -
              
              
              -
                -
              
              $
              36,300
                -
              (1)
              
              -
                -
              
              
              -
                -
              
              
              -
                -
              
              $
              36,300
                -Kenneth
                  L. Johnson, Secretary, Treasurer and Director
              
              
              2006
                2007
              
              
              -
                -
              
              
              -
                -
              
              
              -
                -
              
              $
              18,150
                -
              (2)
              
              -
                -
              
              
              -
                -
              
              
              -
                -
              
              $
              18,150
                -John
                  Blackmon, President of Staf*Tek Services, Inc.
              
              
              2006
                2007
              
              
              72,000
                72,000
              
              
              -
                -
              
              
              -
                -
              
              $
              18,150
                -
              (2)
              
              -
                -
              
              
              -
                -
              
              
              -
                -
              
              $
              90,150
                -




(1)
            Calculated
                pursuant to FAS 123R. Consists of options to purchase 100,000 shares
                of
                common stock at an exercise price of $1.05 per share, which was the
                fair
                market price as of the date of the grant, August 24, 2006. The options
                expire August 24, 2011.





(2)
            Calculated
                pursuant to FAS 123R. Consists of options to purchase 50,000 shares
                of
                common stock at an exercise price of $1.05 per share, which was the
                fair
                market price as of the date of the grant, August 24, 2006. The options
                expire August 24, 2011.





**Compensation
      Summary**





*Gerald
      McIlhargey* .
      Mr.
      McIlhargey was appointed President and Chief Executive Officer of our Company
      on
      May 17, 2006. Mr. McIlhargey has served as a Director of our Company since
      March
      of 2004. We do not have an employment agreement with Mr. McIlhargey and he
      is
      not receiving any compensation for serving as our Acting President. On August
      24, 2006, he received options to purchase 100,000 shares of our common stock
      for
      agreeing to serve as a director on our Board. The options have an exercise
      price
      of $1.05 per share and expire on August 24, 2011.





*Kenneth
      L. Johnson* .
      We do
      not have an employment agreement with Mr. Johnson and he is not receiving any
      compensation for serving as our Secretary and Treasurer. On August 24, 2006,
      he
      received options to purchase 50,000 shares of our common stock for agreeing
      to
      serve as a director on our Board. The options have an exercise price of $1.05
      per share and expire on August 24, 2011.


20


*John
      Blackmon* .
      Mr.
      Blackmon is the President of our wholly-owned subsidiary, Staf*Tek Services,
      Inc. We do not have an employment agreement with Mr. Blackmon. He receives
      an
      annual salary of $72,000 as compensation for serving as Staf*Tek Services,
      Inc.’s President. On August 24, 2006, he received options to purchase 50,000
      shares of our common stock for agreeing to serve as President of Staf*Tek
      Services, Inc. The options have an exercise price of $1.05 per share and expire
      on August 24, 2011.





**OUTSTANDING
      EQUITY AWARDS AT FISCAL-END**





The
      following table provides information concerning equity awards as of our 2007
      fiscal year end, December 31, 2007, held by each of our named executive
      officers.





OUTSTANDING
                EQUITY AWARDS AT FISCAL YEAR-ENDOption
                Awards
            
            Stock
                AwardsName
            
            Number
                of Securities Underlying Unexercised Options
              (#)
              Exercisable
            
            Number
                of Securities Underlying Unexercised Options
              (#)
              Unexercisable
            
            Equity
                Incentive
              Plan
              Awards:
              Number of
                Securities Underlying Unexer-cised Unearned Options
              (#)
            
            Option
                Exercise
              Price
                ($)
            
            Option
              Expira-
              tion
              Date
            
            Number
              of
                Shares
              or
                Units
              of
                Stock
              That
              Have
                Not
              Vested
              (#)
            
            Market
              Value
                of
              Shares
              of
                Units
              of
                Stock
              That
              Have
              Not
              Vested
              (#)
            
            Equity
                Incentive
              Plan
              Awards:
              Number of
                Unearned
              Shares,
              Units or
              Other
              RightsThat
              Have Not
                Vested
            
            Equity
              Incentive
              Plan
              Awards:
              Market
                or
              Payout
              Value of
              Unearned
              Shares,
              Units
                or
              Other
              Rights That
                Have Not Vested
              ($)(a)
            
            (b)
            
            (c)
            
            (d)
            
            (e)
            
            (f)
            
            (g)
            
            (h)
            
            (i)
            
            (j)Gerry
                McIlhargey
            
            
            100,000
            
            
            -
            
            
            -
            
            $
            1.05
            
            
            August 24, 2011
            
            
            -
            
            
            -
            
            
            -
            
            
            -Kenneth
                L. Johnson
            
            
            50,000
            
            
            -
            
            
            -
            
            $
            1.05
            
            
            August 24, 2011
            
            
            -
            
            
            -
            
            
            -
            
            
            -John
                Blackmon
            
            
            50,000
            
            
            -
            
            
            -
            
            $
            1.05
            
            
            August 24,
              2011
            
            
            -
            
            
            -
            
            
            -
            
            
            -








**Director
      Compensation**





The
      directors receive no annual compensation other than the options they received
      for serving on the board of directors of St. Joseph; however, they are
      reimbursed for out-of-pocket expenses incurred in connection with the Company's
      business.





On
      August
      24, 2006 each of the directors listed below received fully vested options to
      purchase up to 50,000 shares of our common stock for agreeing to serve as our
      directors. The options have an exercise price of $1.05 and expire on August
      24,
      2011. All of these options were still outstanding and unexercised as of December
      31, 2007.





As
      shown
      by the following table, none of our directors who are not executive officers
      received any compensation during our fiscal year ended December 31, 2007:


21





Name
            
            Fees
              earned
              or paid
              in cash
              ($)
            
            Stock
                Awards
              ($)
            
            Option
                Awards
              ($)
            
            Non-equity
                incentive plan compensation
              ($)
            
            Nonqualified
                deferred compensation earnings
              ($)
            
            All
                other compensation
              ($)
            
            Total
              ($)(a)
            
            (b)
            
            (c)
            
            (d)
            
            (e)
            
            (f)
            
            (g)
            
            (h)Bruce
                Schreiner
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Donal
                Ford
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Maureen
                O’Brien
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -




**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT**





The
      following table sets forth information as of December 31, 2007 based on
      information obtained from the persons named below, with respect to the
      beneficial ownership of the our common stock by (i) each person (including
      groups) known to us to be the beneficial owner of more than 5 percent of our
      common stock, and (ii) each Director and Officer, and (iii) all Directors and
      Officers of the Company, as a group. Except as otherwise indicated, all
      stockholders have sole voting and investment power with respect to the shares
      listed as beneficially owned by them, subject to the rights of spouses under
      applicable community property laws.





Name
                of
              Beneficial
                Owner(1)
            
            Number
                of
              Shares
                of
              Common
              Stock(2)
            
            Percent
              Outstanding
            
            Number
                of
              Shares
              of
                Series A
              Preferred
                Stock(2)
            
            Percent
              OutstandingGerald
                McIlhargey, President, Chief Executive Officer and
                Director
            
            
            389,923
            (3)
            
            5.27
            %
            
            0
            
            
            0
            %Kenneth
                L. Johnson, Secretary, Treasurer and Director
            
            
            150,000
            (4)
            
            2.06
            %
            
            0
            
            
            0
            %Bruce
                Schreiner, Director
            
            
            150,000
            (5)
            
            2.06
            %
            
            0
            
            
            0
            %Maureen
                O’Brien, Director
            
            
            75,000
            (4)
            
            1.01
            %
            
            0
            
            
            0
            %Donal
                Ford, Director
            
            
            75,000
            (4)
            
            1.01
            %
            
            0
            
            
            0
            %John
                Blackmon, President of Staf*Tek Services, Inc.
            
            
            79,954
            (4)
            
            1.08
            %
            
            0
            
            
            0
            %All
                Executive Officers and Directors as a Group
              (5
                individuals)
            
            
            1,019,877
            
            
            13.77
            %
            
            0
            
            
            0
            %Hong
                Kong Base, Ltd. (7)
            
            
            950,000
            
            
            12.83
            %
            
            0
            
            
            0Desert
                Projects, Inc. (8)
            
            
            716,667
            
            
            9.68
            %
            
            0
            
            
            0Phyllis
                L. Bell
            
            
            680,368
            (6)
            
            9.18
            %
            
            330,000
            
            
            85.45
            %


22


(1)
            The
                address for Messrs. McIlhargey, Johnson, Schreiner, Ford, and Ms.
                O’Brien
                is: c/o St. Joseph, Inc., 4870 S. Lewis, Suite 250, Tulsa, Oklahoma
                74105.
                The address for Ms. Bell is Route 1 Box 650, Haskell, Oklahoma 74436.
                Except as indicated by footnote, and subject to applicable community
                property laws, the persons named in the table have sole voting and
                investment power with respect to all shares of common stock shown
                as
                beneficially owned by them.





(2)
            Based
                upon 7,406,802 shares of common stock and 386,208 shares of Series
                A
                Preferred Stock issued and outstanding on December 31, 2007. The
                Company
                no longer has any shares of Series B Preferred Stock issued and
                outstanding. Percentages are rounded to the nearest one hundredth
                of a
                percent. As required by Item 403 of Regulation S-B, calculated on
                the
                basis of the amount of outstanding securities plus, for each person
                or
                group, any securities that person or group has the right to acquire
                within
                60 days pursuant to options, warrants, conversion privileges or other
                rights. The percentage of the person holding such option or warrant
                but
                are not deemed outstanding for computing the percentage of any other
                person.





(3)
            Includes
                fully vested options to purchase 100,000 shares of our common stock
                at an
                exercise price of $1.05 per share.





(4)
            Includes
                fully vested options to purchase 50,000 shares of our common stock
                at an
                exercise price of $1.05 per share.





(5)
            Includes
                fully vested options to purchase 50,000 share of our common stock
                at an
                exercise price of $1.05 per share and options to purchase 100,000
                shares
                of our common stock at an exercise price of $0.10 per
                share.





(6)
            Includes
                330,000 share of common stock that may be acquired through conversion
                of
                330,000 shares of Series A Preferred Stock, 60,000 shares held by
                a trust
                controlled by Ms. Bell and 20,368 held in CEDE &
                Co.





(7)
            Hong
                Kong Base Ltd is a corporation organized under the laws of Hong Kong
                and
                is beneficially owned by Yvonne Chun Siu
                Fun.





(8)
            Desert
                Projects, Inc. is a corporation organized under the laws of the State
                of
                Nevada and is beneficially owned by James Ralph
                Houston.




**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE**





**CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS**





Other
      than disclosed below, none of the directors or executive officers of the Company
      nor any person who beneficially owns, directly or indirectly, shares carrying
      more than 10% of the voting rights attached to all outstanding shares of the
      Company, nor any promoter of the Company, nor any relative or spouse of any
      of
      the foregoing persons has any material interest, direct or indirect, in any
      transaction since the beginning of the Company’s 2007 fiscal year or in any
      presently proposed transaction which, in either case, has or will exceed one
      percent of the Company’s total assets at year-end for the last three completed
      fiscal year. The Company has not entered into transactions with any member
      of
      the immediate families of the foregoing persons, nor is any such transaction
      proposed.





**Gerald
      McIlhargey**





On
      December 28, 2006, Gerald McIlhargey, President and a Director of our Company,
      loaned us $25,000 for working capital in exchange for a promissory note maturing
      on December 31, 2007. As detailed below, the outstanding balance was converted
      into shares of Company common stock on December 31, 2007.





On
      September 5, 2007, Gerald McIlhargey, President and a Director of our Company,
      loaned us $30,000 of which $2,423 was repaid. The note included $2,400 fixed
      interest. As detailed below, the outstanding balance was converted into shares
      of Company common stock on December 31, 2007.





On
      December 31, 2007, and pursuant to a letter agreement as of the same date,
      we
      effected the conversion of two promissory notes held by our President and one
      of
      our directors, Gerald McIlhargey, into shares of our common stock at conversion
      price of $0.30 per share. The two promissory notes were a note dated December
      28, 2006 for $25,000 in principal with accrued unpaid interest of $2,000, and
      a
      note dated September 5, 2007 for $27,576.94 in principal and $2,400 in interest.
      Mr. McIlhargey received an aggregate total of 189,923 shares of common stock
      in
      conversion of these notes.





23


**Desert
      Projects Inc. and James Ralph Houston**





On
      December 31, 2007 and pursuant to a letter agreement as of the same date, we
      effected the conversion of 120,000 shares of Series B Preferred Stock held
      by
      Desert Projects, Inc., valued at $200,000 and unpaid dividends of $15,000 into
      716,667 shares of our common stock at a conversion price of $0.30 per share.
      The
      valuation of the Series B Stock was determined pursuant to the rights and
      preferences of the stock stated in our Articles of Incorporation. Desert
      Projects, Inc. is a Nevada corporation beneficially owned by James Ralph
      Houston. Desert Projects, Inc. had originally purchased the shares of Series
      B
      Preferred Stock in May 2007.





**DIRECTOR
      INDEPENDENCE**





Although
      we are not “listed” by any exchange with established criteria for determining
      director independence, we use the criteria established by The NASDAQ Stock
      Market governing audit committee membership for making such determination for
      disclosure purposes. Based on its review of the applicable rules of The NASDAQ
      Stock Market governing audit committee membership, the Board believes that
      all
      Bruce Schreiner, Donal Ford, and Maureen O’Brien are "independent" within the
      meaning of such rules.





As
      Bruce
      Schreiner, Donal Ford, and Maureen O’Brien are the only directors on our audit
      and compensation committees, such committees have no directors who are not
      independent.





Because
      we do not have a nominating committee, our entire Board acts in such capacity,
      including our two directors who are not independent, Gerald McIlhargey and
      Kenneth L. Johnson.




**ITEM
      13. EXHIBITS**





EXHIBIT
                NO.
            
            DESCRIPTION
                OF DOCUMENT2.1
                (5)
            
            Agreement
                of Share Exchange and Purchase and Sale dated January 2, 2004 between
                St.
                Joseph, Inc. and Phyllis L. Bell, and Paul D. Aelmore and Staf-Tek
                Services, Inc.3.1
                (1)
            
            Articles
                of Incorporation of Pottery Connection, Inc.3.2
                (1)
            
            Articles
                of Amendment to Articles of Incorporation as filed with the Colorado
                Secretary of State on January 19, 2001.3.3
                (5)
            
            Articles
                of Amendment to Articles of Incorporation as filed with the Colorado
                Secretary of State on November 6, 20033.4
                (6)
            
            Articles
                of Amendment to Articles of Incorporation as filed with the Colorado
                Secretary of State on September 29, 20063.5
                (7)
            
            Articles
                of Amendment to the Articles of Incorporation filed with the Colorado
                Secretary of State on May 18, 20073.6
                (7)
            
            Articles
                of Amendment to the Articles of Incorporation filed with the Colorado
                Secretary of State on May 23, 20073.5
                (3)
            
            Bylaws
                of St. Joseph, Inc. (formerly known as Pottery Connection,
                Inc.)4.1
                (1)
            
            Specimen
                form of St. Joseph’s stock certificate for shares of its common
                stock.4.2
                (10)
            
            2006
                Stock Option Plan10.1
                (3)
            
            Exclusive
                Agreement between St. Joseph Energy, Inc. and David
                Johnson10.2
                (2)
            
            Form
                of User Agreement for St. Joseph,
                Inc.


24





10.3
                (9)
            
            Promissory
                Note dated June 16, 2005 for $96,000 issued by St. Joseph, Inc. to
                John H.
                Simmons.10.4
                (9)
            
            Promissory
                Note dated December 28, 2006 for $25,000 issued by Staf*Tek Services,
                Inc.
                to Gerry McIlhargey.10.5
                (8)
            
            Form
                of Letter Agreement for conversion of Series B Stock to common stock
                on
                December 31, 2007.10.6
                (8)
            
            Form
                of Letter Agreement for conversion of promissory notes to common
                stock on
                December 31, 2007.14.1
                (9)
            
            Code
                of Ethics.21.1
                (9)
            
            Subsidiaries
                of St. Joseph, Inc.31.1*
            
            Principal
                Executive Officer Certification under Section 302 of the Sarbanes-Oxley
                Act of 200231.2*
            
            Principal
                Financial Officer Certification under Section 302 of the Sarbanes-Oxley
                Act of 200232.1*
            
            Principal
                Executive Officer Certification under Section 906 of the Sarbanes-Oxley
                Act of 200232.2*
            
            Principal
                Financial Officer Certification under Section 906 of the Sarbanes-Oxley
                Act of 2002





*
      Filed
      herewith





(1)
            Filed
                on July 23, 2002 as an exhibit to St. Joseph’s registration statement on
                Form 10SB and incorporated herein by reference.





(2)
            Filed
                on April 15, 2003 as an exhibit to St. Joseph’s annual report on Form
                10-KSB for the fiscal year ended December 31, 2002 and incorporated
                herein
                by reference.





(3)
            Filed
                on June 3, 2003 as an exhibit to St. Joseph’s amendment to registration
                statement on Form 10SB12G/A and incorporated herein by reference.





(4)
            Filed
                on April 15, 2004 as an exhibit to St. Joseph’s annual report on Form
                10-KSB for the fiscal year ended December 31, 2003 and incorporated
                herein
                by reference.





(5)
            Filed
                on May 5, 2004 as an exhibit to St. Joseph’s report on Form 8-K dated
                April 30, 2004 and incorporated herein by reference.





(6)
            Filed
                on November 20, 2006 as an exhibit to St. Joseph’s quarterly report on
                Form 10-QSB for the quarterly period ended September 30, 2006 and
                incorporated herein by reference.





(7)
            Filed
                on May 23, 2007 as an exhibit to St. Joseph’s report on Form 8-K dated May
                18, 2007 and incorporated herein by reference.





(8)
            Filed
                on January 28, 2008 as an exhibit to St. Joseph’s report on Form 8-K dated
                December 31, 2007 and incorporated herein by reference.





(9)
            Filed
                on April 20, 2007 as an exhibit to St. Joseph’s amendment 1 to annual
                report on Form 10-KSB for the fiscal year ended December 31, 2006
                and
                incorporated herein by reference.





(10)
            Filed
                on August 3, 2006 as an exhibit to St. Joseph’s proxy statement on
                Schedule and incorporated herein by reference.


25


**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





We
      appointed the accounting firm of Cordovano and Honeck, LLP, located at 88
      Inverness Circle East, Building M-103, Englewood, Colorado 80112, to serve
      as
      our independent auditors for the fis cal
      years
      ended December 31, 2007 and 2006. During our fiscal years 2007 and 2006, accrued
      fees owed to Cordovano
      and Honeck, LLP are as
      follows:





**Audit
      Fees**





2007
            
            2006$22,420.00
            
            $
            15,285.00





Audit
      Fees and Audit Related Fees consist of fees billed for professional services
      rendered for auditing our Financial Statements, reviews of interim Financial
      Statements included in quarterly reports, services performed in connection
      with
      other filings with the Securities & Exchange Commission and related comfort
      letters and other services that are normally provided by our independent
      auditors in connection with statutory and regulatory filings or
      engagements.





**Tax
      Fees**





2007
            
            2006$0.00
            
            $
            0.00





Tax
      Fees
      consists of fees billed for professional services for tax compliance, tax advice
      and tax planning. These services include assistance regarding federal, state
      and
      local tax compliance and consultation in connection with various transactions
      and acquisitions.





**All
      Other Fees**


2007
            
            2006$0.00
            
            $
            0.00


26


SIGNATURES





Pursuant
      to the requirements of Section 13 of the Securities Exchange Act of 1934, the
      Company has caused this Report to be signed on its behalf by the undersigned,
      thereunto duly authorized.





Dated:
      March 28, 2008





St.
      Joseph, Inc.





By:
            /s/
                Gerry McIlhargeyGerry
              McIlhargey, President and Chief Executive
              Officer





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





Signature
                and Title
            
            Date/s/
                Gerry McIlhargey
            
            March
                28, 2008Gerry
                McIlhargey, President,Chief
                Executive Officer andDirector/s/
                Kenneth L. Johnson
            
            March
                28, 2008Kenneth
                L. Johnson,Secretary-Treasurer
                and Director/s/
                Bruce Schreiner
            
            March
                28, 2008Bruce
                Schreiner, Director/s/
                Donal Ford
            
            March
                28, 2008Donal
                Ford, Director/s/
                Maureen O’Brien
            
            March
                28, 2008Maureen
                O’Brien, Director




27







**ST.
      JOSEPH, INC.**


**Index
      to Consolidated Financial Statements**





PageReport
                of Independent Registered Public Accounting Firm
            2Consolidated
                Balance Sheet at December 31, 2007
            3Consolidated
                Statements of Operations for the years ended December 31, 2007 and
                2006
            4Consolidated
                    Statement of Changes in Stockholders' Deficit for the years ended
                    December
                    31, 2007 and 2006
            5Consolidated
                Statements of Cash Flows for the years ended December 31, 2007 and
                2006
            6Notes
                to Consolidated Financial Statements
            7




1





**Report
      of Independent Registered Public Accounting Firm**





To
      the
      Board of Directors and Shareholders:


St.
      Joseph, Inc.





We
      have
      audited the consolidated balance sheet of St. Joseph, Inc. as of December 31,
      2007, and the related consolidated statements of operations, changes in
      stockholders’ deficit, and cash flows for the years ended December 31, 2007 and
      2006. These consolidated financial statements are the responsibility of the
      Company’s management. Our responsibility is to express an opinion on these
      consolidated financial statements based on our audits.





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





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of St. Joseph, Inc. as of
      December 31, 2007, and the results of their operations and their cash flows
      for
      the years ended December 31, 2007 and 2006, in conformity with accounting
      principles generally accepted in the United States of America.





The
      accompanying consolidated financial statements have been prepared assuming
      the
      Company will continue as a going concern. As discussed in Note 1 to the
      consolidated financial statements, the Company has incurred recurring losses
      and
      has negative working capital and a net capital deficiency at December 31, 2007.
      These conditions raise substantial doubt about the Company’s ability to continue
      as a going concern. Further information and management’s plans in regard to this
      uncertainty are also described in Note 1. The consolidated financial statements
      do not include any adjustments that might result from the outcome of this
      uncertainty.





Cordovano
      and Honeck LLP


Englewood,
      Colorado


March
      24,
      2008





2
 
  **ST.
          JOSEPH, INC.**
 **CONSOLIDATED
          BALANCE SHEET**
 **DECEMBER
          31, 2007**
 **ASSETS**
 
 CURRENT
                    ASSETS:Cash
                
                $
                204,135Accounts
                        receivable, net of allowance for doubtful accounts of
                        $2,208
                
                
                246,075Total
                    current assets
                
                
                450,210Property
                    and equipment, net
                
                
                2,473Deposits
                
                
                1,230$
                453,913**LIABILITIES
                    AND STOCKHOLDERS' DEFICIT**CURRENT
                    LIABILITIES:Accounts
                    payable
                
                $
                272,637Accrued
                    liabilities
                
                
                11,456Accrued
                    preferred dividend
                
                
                39,104Due
                    to former officer
                
                
                25,000Notes
                    payable:Bank
                    (Note 4)
                
                
                195,000Former
                    Officer (Note 2)
                
                
                48,120Total
                    current liabilities
                
                
                591,317STOCKHOLDERS'
                    DEFICIT (Note 7):Preferred
                    stock, Series A, $.001 par value, $3.00 face value; 25,000,000
                    shares
                    authorized, 386,208 shares issued and outstanding
                
                
                386Common
                    stock, $.001 par value; 100,000,000 shares authorized, 7,406,802
                    issued
                    and outstanding
                
                
                7,407Additional
                    paid-in capital
                
                
                1,950,201Retained
                    deficit
                
                
                (2,095,398
                )Total
                    Stockholders' Deficit
                
                
                (137,404
                )$
                453,913
  The
          accompaning notes are an integral part of the financial ststements.
  3
 
 **ST.
          JOSEPH, INC.**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
  **Year
                      Ended****December
                      31,****2007**
                  
                  **2006****REVENUES:**Contract
                  
                  $
                  2,485,279
                  
                  $
                  2,597,324**COST
                      OF REVENUES**
                  
                  
                  1,994,271
                  
                  
                  2,143,175**Gross
                      Margin**
                  
                  
                  491,008
                  
                  
                  454,149**COSTS
                      AND EXPENSES:**General
                      and Administrative Expenses
                  
                  
                  494,459
                  
                  
                  762,575Goodwill
                      Impairment
                  
                  
                  258,525
                  
                  
                  -Depreciation
                      and Amortization
                  
                  
                  3,100
                  
                  
                  19,034**Total
                      Costs and Expenses**
                  
                  
                  756,084
                  
                  
                  781,609**Operating
                      Loss**
                  
                  
                  (265,076
                  )
                  
                  (327,460
                  )**OTHER
                      INCOME AND (EXPENSE):**Interest
                      Income
                  
                  
                  1
                  
                  
                  63Loss
                      on sale of securities
                  
                  
                  -
                  
                  
                  (7,707
                  )Other
                      Income (expense)
                  
                  
                  (41,608
                  )
                  
                  -Interest
                      Expense
                  
                  
                  (28,880
                  )
                  
                  (29,663
                  )**Net
                      Other Expense**
                  
                  
                  (70,487
                  )
                  
                  (37,307
                  )**Loss
                      before income taxes**
                  
                  
                  (335,563
                  )
                  
                  (364,767
                  )Income
                      tax provision
                  
                  
                  -
                  
                  
                  -**Net
                      Loss**
                  
                  
                  (335,563
                  )
                  
                  (364,767
                  )Preferred
                      stock dividend requirements
                  
                  
                  (110,530
                  )
                  
                  (82,708
                  )**Loss
                      applicable to common stock**
                  
                  $
                  (446,093
                  )
                  $
                  (447,475
                  )**Basic
                      and diluted loss per common share**
                  
                  $
                  (0.07
                  )
                  $
                  (0.07
                  )**Weighted
                      average common shares outstanding**
                  
                  
                  6,098,253
                  
                  
                  6,104,013
 
 The
          accompaning notes are an integral part of the financial statements.
  4
 
 **ST.
          JOSEPH, INC.**
 **CONSOLIDATED
          STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT**
  **Additional**
                  
                  
                  
                  **Other****Preferred Stock-Series A**
                  
                  **Preferred Stock-Series B**
                  
                  **Common Stock**
                  
                  **Paid-in**
                  
                  **Retained**
                  
                  **Comprehensive****Shares**
                  
                  **Par value**
                  
                  **Shares**
                  
                  **Par value**
                  
                  **Shares**
                  
                  **Par value**
                  
                  **Capital**
                  
                  **Deficit**
                  
                  **Income (Loss)**
                  
                  **Total****Balance
                      December 31, 2005**
                  
                  
                  386,208
                  
                  $
                  386
                  
                  
                  
                  
                  $
                  
                  
                  
                  5,830,712
                  
                  $
                  5,831
                  
                  $
                  1,278,003
                  
                  $
                  (1,201,830
                  )
                  $
                  (1,601
                  )
                  $
                  80,789Sale
                      of common stock at $2.per share (Note 7)
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  28,500
                  
                  
                  28
                  
                  
                  56,972
                  
                  
                  
                  
                  
                  
                  
                  
                  57,000Granted
                      common stock options (Note 7)
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  148,830
                  
                  
                  
                  
                  
                  
                  
                  
                  148,830Exercised
                      stock options (Note 7)
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  440,000
                  
                  
                  440
                  
                  
                  43,560
                  
                  
                  
                  
                  
                  
                  
                  
                  44,000Sale
                      of preferred stock - series B (Note 7)
                  
                  
                  -
                  
                  
                  -
                  
                  
                  50,000
                  
                  
                  50
                  
                  
                  -
                  
                  
                  -
                  
                  
                  59,950
                  
                  
                  
                  
                  
                  
                  
                  
                  60,000Cancellation
                      of common stock (Note 7)
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (250,000
                  )
                  
                  (250
                  )
                  
                  (24,750
                  )
                  
                  
                  
                  
                  
                  
                  
                  (25,000
                  )Preferred
                      stock dividends (Note 7)
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  
                  
                  
                  (82,708
                  )
                  
                  
                  
                  
                  (82,708
                  )Comprehensive
                      income (loss):Unrealized
                      investment gains
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  
                  1,601
                  
                  
                  1,601Net
                      loss
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  
                  
                  
                  (364,767
                  )
                  
                  
                  
                  
                  (364,767
                  )**Balance
                      December 31, 2006**
                  
                  
                  386,208
                  
                  
                  386
                  
                  
                  50,000
                  
                  
                  50
                  
                  
                  6,049,212
                  
                  
                  6,049
                  
                  
                  1,562,565
                  
                  
                  (1,649,305
                  )
                  
                  -
                  
                  
                  (80,255
                  )Sale
                      of preferred stock, including BeneficialConversion
                      Feature totaling $41,667 (Note 4)
                  
                  
                  -
                  
                  
                  -
                  
                  
                  166,667
                  
                  
                  167
                  
                  
                  -
                  
                  
                  -
                  
                  
                  241,500
                  
                  
                  -
                  
                  
                  
                  
                  
                  241,667Preferred
                      stock dividends (Note 4)
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (110,530
                  )
                  
                  
                  
                  
                  (110,530
                  )Sale
                      of common stock @ $0.30 per share
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  214,000
                  
                  
                  214
                  
                  
                  63,986
                  
                  
                  -
                  
                  
                  
                  
                  
                  64,200Conversion
                      of series B preferred stock to common stock at $0.30 per share
                      (Note
                      7)
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (216,667
                  )
                  
                  (217
                  )
                  
                  931,667
                  
                  
                  932
                  
                  
                  18,785
                  
                  
                  -
                  
                  
                  
                  
                  
                  19,500Conversion
                      of notes payble to common stock (Note 2)
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  189,923
                  
                  
                  190
                  
                  
                  54,787
                  
                  
                  -
                  
                  
                  
                  
                  
                  54,977Conversion
                      of notes payble to common stock (Note 2)
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  22,000
                  
                  
                  22
                  
                  
                  8,578
                  
                  
                  -
                  
                  
                  
                  
                  
                  8,600Net
                      loss for the year ended December 31, 2007
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (335,563
                  )
                  
                  
                  
                  
                  (335,563
                  )**Balance
                      December 31, 2007**
                  
                  
                  386,208
                  
                  $
                  386
                  
                  
                  -
                  
                  $
                  -
                  
                  
                  7,406,802
                  
                  $
                  7,407
                  
                  $
                  1,950,201
                  
                  $
                  (2,095,398
                  )
                  $
                  -
                  
                  $
                  (137,404
                  )
 
 The
          accompaning notes are an integral part of the financial statements.
  5
  **ST.
            JOSEPH, INC.**
 **CONSOLIDATED
            STATEMENTS OF CASH FLOW**
  **Year
                    ended****December
                    31,****2007**
                
                **2006****OPERATING
                    ACTIVITIES**Net
                    loss
                
                $
                (335,563
                )
                $
                (364,767
                )Adjustments
                    to reconcile net loss to net cash (used
                    in) operating activities:Depreciation
                    and amortization
                
                
                3,100
                
                
                19,034Stock
                    issued for interest expense
                
                
                5,000
                
                
                -Stock
                    Option compensation
                
                
                -
                
                
                148,830Gain
                    on sale of marketable securities
                
                
                -
                
                
                7,707Goodwill
                    impairment
                
                
                258,525
                
                
                -Changes
                    in operating assets and liabilities:(Increase)
                    decrease in accounts receivable
                
                
                (19,453
                )
                
                78,565Increase
                    in allowance for doubtful accounts
                
                
                2,208
                
                
                -Increase
                    (decrease) in accounts payable
                
                
                (2,501
                )
                
                39,998Decrease
                    in accrued liabilities
                
                
                35,645
                
                
                (2,268
                )**Net
                    cash used in operating activities**
                
                
                (53,039
                )
                
                (72,901
                )**INVESTING
                    ACTIVITIES**Sales
                    of marketable securities
                
                
                -
                
                
                11,092Equipment
                    acquisitions
                
                
                (2,473
                )
                
                -**Net
                    cash provided by (used in) investing activities**
                
                
                (2,473
                )
                
                11,092**FINANCING
                    ACTIVITIES**Payments
                    on line of credit
                
                
                (5,000
                )
                
                -Proceeds
                    from notes payable to related parties
                
                
                36,000
                
                
                -Payments
                    on notes payable to related parties
                
                
                (4,527
                )
                
                (57,714
                )Payments
                    on preferred stock dividends
                
                
                (90,926
                )
                
                (82,708
                )Proceeds
                    from exercised stock options
                
                
                -
                
                
                44,000Proceeds
                    from sale of common stock
                
                
                64,200
                
                
                57,000Proceeds
                    from sale of preferred stock
                
                
                241,667
                
                
                60,000**Net
                    cash provided by financing activities**
                
                
                241,414
                
                
                20,578Changes
                    on other comprehensive income
                
                
                -
                
                
                1,601**INCREASE
                    (DECREASE) IN CASH**
                
                
                185,902
                
                
                (39,630
                )**CASH
                    AT BEGINNING OF PERIOD**
                
                
                18,233
                
                
                57,863**CASH
                    AT END OF PERIOD**
                
                $
                204,135
                
                $
                18,233**SUPPLEMENTAL
                    INFORMATION:**Cash
                    paid during the period for:Interest
                
                $
                28,880
                
                $
                29,663Income
                    taxes
                
                $
                -
                
                $
                -
 
 The
          accompaning notes are an integral part of the financial
          statements.
  6




**ST.
      JOSEPH, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      1 –********SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





Organization
      and Basis of Presentation





St.
      Joseph, Inc. (the "Company") was incorporated in Colorado on March 19, 1999
      as
      Pottery Connection, Inc. On March 19, 2001, the Company changed its name to
      St.
      Joseph Energy, Inc. and on November 6, 2003, the Company changed its name to
      St.
      Joseph, Inc.





The
      Company, through its wholly-owned subsidiary, specializes in the recruitment
      and
      placement of professional data processing and technical personnel for clients
      on
      both a permanent and contract basis.





Principles
      of Consolidation





The
      consolidated financial statements for the years ended December 31, 2007 and
      2006
      included in this report include the activities of St. Joseph, Inc. and its
      wholly-owned subsidiary, Staf*Tek. All significant intercompany balances and
      transactions have been eliminated in consolidation.





Going
      Concern





The
      accompanying financial statements have been prepared on a going concern basis,
      which contemplates the realization of assets and satisfaction of liabilities
      in
      the normal course of business. As shown in the accompanying financial
      statements, the Company has incurred recurring losses and has negative working
      capital and a net capital deficiency at December 31, 2007. These factors, among
      others, may indicate that the Company will be unable to continue as a going
      concern.





The
      financial statements do not include any adjustments relating to the
      recoverability of assets and classification of liabilities that might be
      necessary should the Company be unable to continue as a going concern. The
      Company's continuation as a going concern is dependent upon its ability to
      generate sufficient cash flow to meet its obligations on a timely basis and
      ultimately to attain profitability. The Company plans to generate the necessary
      cash flows with increased sales revenue and a reduction of general and
      administrative expenses over the next 12 months. However, should the Company's
      operations not provide sufficient cash flow; the Company has plans to raise
      additional working capital through debt and/or equity financings. Insiders
      have
      loaned working capital to the Company on an as-needed basis over the past two
      years; however, there are no formal committed financing arrangements to provide
      the Company with working capital. There is no assurance the Company will be
      successful in producing increased sales revenues, attaining profitability,
      or
      obtaining additional funding through debt and equity financings.





Cash
      Equivalents and Fair Value of Financial Instruments





For
      the
      purposes of the statements of cash flows, the Company considers all highly
      liquid debt instruments purchased with an original maturity of three months
      or
      less to be cash equivalents. The Company had no cash equivalents at December
      31,
      2007.





The
      carrying amounts of cash, receivables and current liabilities approximate fair
      value due to the short-term maturity of the instruments.


7


**ST.
      JOSEPH, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





Accounts
      Receivable





Accounts
      receivable consists of amounts due from customers related to the Company's
      employee placement services. The Company considers accounts more than 30 days
      old to be past due. The Company uses the allowance method for recognizing bad
      debts. When an account is deemed uncollectible, it is written off against the
      allowance. The Company generally does not require collateral for its accounts
      receivable.





Property,
      Equipment and Depreciation





Property
      and equipment are stated at cost. Property and equipment are depreciated using
      the straight-line method over the estimated useful lives of the assets as
      follows:





Furniture
                and fixtures
            
            
            7
                yearsOffice
                equipment
            
            
            5
                yearsComputer
                equipment
            
            
            3
                years




Upon
      retirement or disposition of an asset, the cost and accumulated depreciation
      are
      removed from the accounts and any resulting gain or loss is reflected in
      operations. Repairs and maintenance are charged to expense as incurred and
      expenditures for additions and improvements are capitalized.





Goodwill
      and Impairment





The
      Company tested its goodwill for impairment using the two-step process prescribed
      in SFAS No. 142. The first step is a screen for potential impairment, while
      the
      second step measures the amount of the impairment, if any. The Company performed
      the impairment test as of December 31, 2007 and determined that there was
      potential impairment of the goodwill. The Company performed the second step
      as
      of and determined that the goodwill balance of $258,525 was impaired.
      Accordingly, the Company wrote-off its goodwill totaling $258,525 in the
      accompanying consolidated financial statements for the year ended December
      31,
      2007. Following the impairment charge, there is no goodwill balance remaining
      at
      December 31, 2007.





Impairment
      and Disposal of Long-lived Assets





The
      Company evaluates the carrying value of its long-lived assets under the
      provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of
      Long-Lived Assets". Statement No. 144 requires impairment losses to be recorded
      on long-lived assets used in operations when indicators of impairment are
      present and the undiscounted future cash flows estimated to be generated by
      those assets are less than the assets' carrying amount. If such assets are
      impaired, the impairment to be recognized is measured by the amount by which
      the
      carrying amount of the assets exceeds the fair value of the assets. Assets
      to be
      disposed of are reported at the lower of the carrying value or fair value,
      less
      costs to sell. Other
      than the goodwill impairment discussed above, no SFAS No. 144 impairments have
      been recognized for the years ended December 31, 2007 and 2006.





Revenue
      Recognition





Staffing
      service revenues are recognized when the services are rendered by the Company's
      contract employees and collection is probable. Permanent placement revenues
      are
      recognized when employment candidates accept offers of permanent
      employment.





Direct
      Costs of Services





Direct
      costs of staffing services consist of payroll, payroll taxes, contract labor,
      and insurance costs for the Company's contract employees. There are no direct
      costs associated with permanent placement staffing services.





8


**ST.
      JOSEPH, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





Advertising
      Costs





The
      Company expenses all advertising as incurred. The Company incurred advertising
      costs totaling $5,295 and $3,413 for the years ended December 31, 2007 and
      2006,
      respectively.





Loss
      Per Common Share





The
      Company reports earnings (loss) per share using a dual presentation of basic
      and
      diluted earnings per share. Basic loss per share excludes the impact of common
      stock equivalents. Diluted loss per share utilizes the average market price
      per
      share when applying the treasury stock method in determining common stock
      equivalents. Preferred stock and common stock options outstanding at December
      31, 2007 were not included in the diluted loss per share as all 386,208
      preferred shares and all 760,000 options were anti-dilutive. Therefore, basic
      and diluted losses per share at December 31, 2007 were equal.





Income
      Taxes





Income
      taxes are provided for the tax effects of transactions reported in the
      consolidated financial statements and consist of taxes currently due plus
      deferred taxes related primarily to differences between the recorded book basis
      and the tax basis of assets and liabilities for financial and income tax
      reporting. The deferred tax assets and liabilities represent the deductible
      when
      the assets and liabilities are recovered or settled. Deferred taxes are also
      recognized for operating losses that are available to offset future taxable
      income and tax credits that are available to offset future federal income
      taxes.





Stock-Based
      Compensation:




On
      January 1, 2006, the Company adopted SFAS 123R, *Share-Based
      Payment* (“SFAS
      123(R)”), which requires the measurement and recognition of compensation expense
      for all share-based awards made to employees and directors, including employee
      stock options and shares issued through its employee stock purchase plan, based
      on estimated fair values. The Company adopted SFAS 123(R) using the modified
      prospective transition method, which requires the application of the accounting
      standard as of the beginning in 2006. The Company’s financial statements as of
      and for the year ended December 31, 2007 reflect the impact of SFAS
      123(R).




Stock
      compensation expense recognized during the period is based on the value of
      share-based awards that are expected to vest during the period. Stock
      compensation expense in 2007 includes compensation expense for the share-based
      awards granted subsequent to January 1, 2006 based on the grant date fair
      value estimated in accordance with the provisions of SFAS 123(R). 2007 stock
      compensation also includes expense for the share-based awards granted prior
      to
      January 1, 2006, but vested subsequent to January 1, 2006, based on the
      grant date fair value estimated in accordance with the provisions of SFAS
      123(R). Stock compensation expense recognized in the statement of operations
      is
      based on awards that are expected to vest.




The
      Company estimates the fair value of its share-based awards utilizing the
      Black-Scholes option-pricing model.





Use
      of
      Estimates





The
      preparation of the consolidated financial statements in conformity with
      generally accepted accounting principles requires management to make estimates
      and assumptions that affect certain reported amounts of assets and liabilities;
      disclosure of contingent assets and liabilities at the date of the consolidated
      financial statements; and the reported amounts of revenues and expenses during
      the reporting period. Accordingly, actual results could differ from those
      estimates.





9




**ST.
      JOSEPH, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





Recent
      Accounting Pronouncements





In
      July
      2006, the Financial Accounting Standards Board issued Interpretation No. 48
      (“FIN 48”), Accounting for Uncertainty in Income Taxes, which clarifies the
      accounting for uncertainty in income taxes recognized in an enterprise’s
      financial statements in accordance with FASB Statement No. 109, Accounting
      for Income Taxes. FIN 48 provides guidance on the financial statement
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return. FIN 48 also provides guidance on derecognition, classification,
      interest and penalties, accounting in interim periods, disclosures, and
      transition. SFAS 156 is effective for fiscal years beginning after
      December 15, 2006. The adoption of FIN 48 did not impact the Company’s
      financial position or results of operation.





In
      September 2006, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 157 (“SFAS 157”), Fair Value
      Measurements. SFAS 157 clarifies the principle that fair value should be based
      on the assumptions market participants would use when pricing an asset or
      liability and establishes a fair value hierarchy that prioritizes the
      information used to develop those assumptions. Under the standard, fair value
      measurements would be separately disclosed by level within the fair value
      hierarchy. SFAS 157 is effective for financial statements issued for fiscal
      years beginning after November 15, 2007 and interim periods within those
      fiscal years, with early adoption permitted. The adoption of SFAS 157 did not
      materially impact its financial position or results of operations.





In
      February 2007, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 159 (“SFAS 159”), The Fair Value Option
      for Financial Assets and Financial Liabilities - Including an amendment of
      FASB
      Statement No. 115. This Statement permits entities to choose to measure many
      financial instruments and certain other items at fair value. The objective
      is to
      improve financial reporting by providing entities with the opportunity to
      mitigate volatility in reported earnings caused by measuring related assets
      and
      liabilities differently without having to apply complex hedge accounting
      provisions. This Statement is expected to expand the use of fair value
      measurement, which is consistent with the Board’s long-term measurement
      objectives for accounting for financial instruments. SFAS 157 is effective
      for
      financial statements issued for fiscal years beginning after November 15,
      2007. The Company has not determined the affect of adopting this
      standard.





**NOTE
      2 – RELATED PARTY TRANSACTIONS**





On
      September 5, 2007, an officer loaned the Company $30,000 for working capital
      in
      exchange for a promissory note, of which $2,423 was repaid. The note matured
      on
      December 31, 2007. The note included $2,400 fixed interest payment at maturity.
      The note was converted to 99,923 shares of common stock at a price of $0.30
      per
      share on December 31, 2007, which was the fair value of the stock on the date
      of
      the transaction.





On
      December 5, 2006, an officer loaned the Company $25,000 for working capital
      in
      exchange for a promissory note. The note matured on June 30, 2007 and included
      a
      $2,000 fixed interest payment at maturity. The note was converted to 90,000
      shares of common stock at a price of $0.30 per share on December 31,
      2007.





On
      November 1, 2006, a shareholder advanced the Company $2,000 for working capital
      in exchange for a promissory note. The note was repaid during the first quarter
      of 2007.





On
      March
      18, 2007, a shareholder loaned the Company $6,000 for working capital in
      exchange for a promissory note. The note matured on June 30, 2007 and included
      a
      $600 fixed interest payment at maturity. The note was converted to 22,000 shares
      of common stock at a price of $0.30 per share on December 31, 2007, which was
      the fair value of the stock on the date of the transaction.





On
      January 5, 2006, a shareholder advanced the Company $40,000 for working capital.
      The Company repaid the advance on January 31, 2006.




10




**ST.
      JOSEPH, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





On
      June
      16, 2005, we issued John Simmons, our President at the time, a promissory note
      in the amount of $96,000. This note replaced and superseded a promissory note
      that we issued to Mr. Simmons in December of 2003. The note carries a ten
      percent interest rate, payable quarterly and matured on June 16, 2006. Mr.
      Simmons resigned as our President, Chief Executive Officer on May 17, 2006
      and
      as our Director on May 30, 2006. During the year ended December 31, 2007, we
      did
      not repay any balance under the note. As of December 31, 2007, we owed $48,120
      in principal and $2,406 in accrued interest on the note. The note obligation
      is
      included in the accompanying consolidated balance sheet as Note payable, former
      officer. Under the terms of the note, we are currently in default of the note.
      Mr. Simmons has instituted legal proceedings to collect this note and if he
      prevails, we will have to pay Mr. Simmons his court costs, including reasonable
      attorneys’ fees. However, we believe that the amount owed to Mr. Simmons on the
      note is fully or partially offset by sums owed to us in connection with expense
      reimbursements that were paid to Mr. Simmons while he was the President of
      our
      Company and to which we believe he may not have the rights. We currently have
      a
      lawsuit against Mr. Simmons in the U.S. District Court, Northern District of
      Texas, Dallas Division, to recover damages against Mr. Simmons of not less
      than
      $75,000, plus attorneys’ fees, costs of litigation, interest and tremble
      damages.





Cancellation
      of Stock Options





Between
      October 28, 2003 and March 23, 2004, the Board of Directors approved the grant
      of stock options to seven individuals who were then directors of the Company
      (each, an “Optionee”) in consideration for services provided to the Company as
      directors. Each option was exercisable immediately at the exercise price of
      $0.10 per share and expires on the tenth day after an Optionee’s removal from
      the Board of Directors for reasons other than for a voluntary resignation.
      The
      Board of Directors approved the issuance of an aggregate of 2,600,000 options
      to
      the Company’s then directors, with each director receiving 100,000 options, with
      the sole exception of John Simmons, our former President and director, who
      received 2,000,000 options, or 2,000% more the other directors.




As
      disclosed on Form 8-K filed by the Company on August 30, 2006, at the annual
      meeting of the Board of Directors on August 24, 2006, the Company’s directors
      reviewed the above options previously granted by the Board of Directors between
      October 28, 2003 and March 23, 2004. After careful and exhaustive deliberation,
      the directors concluded that the options granted to Mr. Simmons as consideration
      for providing the same directorial services as the other Optionees was not
      fair
      and reasonable to the shareholders. Specifically, the Board of Directors
      concluded that the amount of options granted to Mr. Simmons was unduly
      excessive, unreasonable, and unfair to the shareholders. Therefore, the Board
      of
      Directors resolved to void 1,900,000 of the options previously granted to Mr.
      Simmons.





**NOTE
      3 – PROPERTY AND EQUIPMENT**





Property
      and equipment consisted of the following at December 31, 2007:





Furniture
                and fixtures
            
            $
            35,447Office
                equipment
            
            
            88,295Computer
                equipment
            
            
            37,629Leasehold
                improvements
            
            
            19,585Total
                property and equipment
            
            
            180,956Less
                accumulated depreciation
            
            
            (178,483
            )Property
                and equipment, net
            
            $
            2,473





Depreciation
      expense totaled $3,100 and $19,034, respectively, for the years ended December
      31, 2007 and 2006.





**NOTE
      4 – LINE OF CREDIT**




The
      Company has a $200,000 line of credit of which $195,000 was unpaid and
      outstanding at December 31, 2007. The interest rate on the credit line 9.75
      percent at December 31, 2007. Interest payments are due monthly. The note
      matures April 06, 2008.




11




**ST.
      JOSEPH, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      5 – CONCENTRATION OF CREDIT RISK**





The
      Company conducts a significant portion of its operations with one customer.
      During the year ended December 31, 2007, approximately 79 percent of the
      Company's service revenues were conducted with this one customer. During the
      year ended December 31, 2006, approximately 81 percent of the Company's service
      revenues were conducted with one customer.





**NOTE
      6 – INCOME TAXES**





A
      reconciliation of U.S. statutory federal income tax rate to the effective rate
      is as follows:





Years
                EndedDecember
                31,2007
            
            2006U.S.
                Federal statutory rate
            
            
            34.00
            %
            
            33.93
            %State
                income tax, net of federal benefit
            
            
            4.00
            %
            
            3.96
            %Permanent
                book-to-tax differences
            
            
            -0.03
            %
            
            -1.41
            %Timing
                Differences
            
            
            -0.03
            %Net
                operating loss for which no tax benefit is currently
                available
            
            
            -37.94
            %
            
            -36.21
            %0.00
            %
            
            0.00
            %





At
      December 31, 2007, the Company's current tax benefit consisted of a net tax
      asset of $232,334, due to operating loss carryforwards of approximately $929,336
      which was fully allowed for, in the valuation allowance of $232,334. The
      valuation allowance results in deferred tax expense, which offsets the net
      deferred tax asset for which there is no assurance of recovery. The changes
      in
      the valuation allowance for the years ended December 31, 2007 and 2006 were
      $19,229 and $53,100, respectively. Net operating loss carry forwards will expire
      through 2026.





The
      valuation allowance will be evaluated at the end of each year, considering
      positive and negative evidence about whether the asset will be realized. At
      that
      time, the allowance will either be increased or reduced; reduction could result
      in the complete elimination of the allowance if positive evidence indicates
      that
      the value of the deferred tax asset is no longer impaired and the allowance
      is
      no longer required.





Should
      the Company undergo an ownership change, as defined in Section 382 of the
      Internal Revenue Code, the Company's tax net operating loss carry forwards
      generated prior to the ownership change will be subject to an annual limitation,
      which could reduce or defer the utilization of those losses.





**NOTE
      7 – SHAREHOLDERS' EQUITY**




Preferred
      Stock





During
      the year ended December 31, 2007, the Company did not issue any Series A
      Convertible Preferred Stock. The Board of Directors is authorized to issue
      shares of Series A Convertible Preferred Stock and to fix the number of shares
      in such series as well as the designation, relative rights, powers, preferences,
      restrictions, and limitations of all such series. In December 2003, the Company
      issued 386,208 shares of Series A Convertible Preferred Stock that remain
      outstanding at December 31, 2007. Series A Convertible Preferred Stock is
      convertible to one share of common stock and has a yield of 6.75% dividend
      per
      annum, which is paid quarterly on a calendar basis for a period of 5 years.
      The
      Company paid $39,104 in Series A Convertible Preferred Stock dividends and
      accrued $39,104 during the year ended December 31, 2007.




12




**ST.
      JOSEPH, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





During
      the two year period ended December 31, 2007, the Company sold an aggregate
      amount of 216,667 of Series B Convertible Preferred Stock. Each share of Series
      B Convertible Preferred Stock is convertible to one share of common stock and
      has a yield of 15% dividend per annum, which is paid monthly on a calendar
      basis
      for a period of 18 months. The Series B Convertible Preferred Stock was sold
      at
      $1.20 per share. On the transaction date, the fair value of the common stock
      was
      $1.45 per share, resulting in a beneficial conversion feature. The intrinsic
      value of the imbedded beneficial conversion feature related to the option for
      conversion into the Company’s common stock totaled $41,667. Because the Series B
      Convertible Preferred Stock could not be converted for a period of six months,
      the beneficial conversion charge was capitalized as prepaid compensation expense
      and amortized to stock-based compensation expense over the six month period.
      The
      Company paid $32,323 in preferred stock dividends and accrued $19,500 during
      the
      year ended December 31, 2007. All 216,667 shares of the Series B Convertible
      Preferred Stock and accrued dividends of $19,500 were converted on December
      31,
      2007, into 931,667 shares of common stock at the conversion price of $0.30
      per
      share, which was fair value of the common stock on the transaction
      date.





Common
      Stock





During
      the year ended December 31, 2007, the Company sold 214,000 shares of its common
      stock at $0.30 per share pursuant to the exemptions afforded by Section 4(2)
      of
      the Securities Act of 1933, as amended. The Company received gross proceeds
      of
      $64,200 from such sales.





During
      the year ended December 31, 2006, the Company sold 28,500 shares of its common
      stock at $2.00 per share pursuant to the exemptions afforded by Section 4(2)
      of
      the Securities Act of 1933, as amended. The Company received gross proceeds
      of
      $57,000 from such sales.





Equity
      Awards Granted to Employees





On
      August
      24, 2006, the Company granted options to ten employees and directors to purchase
      410,000 shares of the Company’s common stock at an exercise price of $1.05 per
      share. The options vested on the date of grant. The quoted market price of
      the
      Company’s common stock was $1.05 per share on the grant date. The weighted
      average exercise price and weighted average fair value of these options on
      the
      date of grant were $1.05 per share and $.363 per share, respectively. Stock
      option compensation totaling $148,830 was been recognized during the year ended
      December 31, 2006 in the accompanying consolidated financial statements related
      to these options.





The
      fair
      value for the options granted during the year ended December 31, 2006 was
      estimated at the date of grant using the Black-Scholes option-pricing model
      with
      the following assumptions:





Risk-free
                interest rate
            
            
            4.78
            %Dividend
                yield
            
            
            0.00
            %Volatility
                factor
            
            
            29.02
            %Weighted
                average expected life
            
            
            5
                years




13




The
      following schedule summarizes the changes in the Company’s equity awards for the
      years ended December 31, 2007 and 2006:





Weighted
            
            WeightedAwards
            
            
            
            Average
            
            AverageOutstanding
            
            Exercise
            
            Exercise
            
            Remaining
            
            Aggregateand
            
            Price
            
            Price
            
            Contractual
            
            IntrinsicExercisable
            
            Per Share
            
            Per Share
            
            Life
            
            ValueOutstanding
                at January 1, 2006
            
            
            890,000
            
            $
            0.10
            
            $
            0.10Granted
            
            
            410,000
            
            $
            1.05
            
            $
            0.10Exercised
            
            
            540,000
            
            $
            0.10
            
            $
            0.10Cancelled/Expired
            
            
            -
            
            $
            0.10
            
            $
            0.10Outstanding
                at December 31, 2006
            
            
            760,000
            
            $
            0.61
            
            $
            0.10Granted
            
            
            -
            
            $
            -
            
            $
            -Exercised
            
            
            -
            
            $
            -
            
            $
            -Cancelled/Expired
            
            
            -
            
            $
            -
            
            $
            -Outstanding
                at December 31, 2007
            
            
            760,000
            
            $
            0.10
                - $1.05
            
            $
            0.61
            
            
            2.1
                years
            
            $
            -





All
      equity awards were fully vested as of December 31, 2007. Aggregate Intrinsic
      Value is calculated by determining the amount by which the market price of
      the
      stock exceeds the exercise price of the options on December 31, 2007, and then
      multiplying that amount by the number of options.  The exercise price
      exceeds the market value of the stock on December 31, 2007, therefore the
      Aggregate Intrinsic Value is zero.





Upon
      the
      exercise of stock options, the Company issues new shares that are authorized
      and
      not issued or outstanding. The Company does not plan to repurchase shares to
      meet stock option requirements.





The
      Black-Scholes options valuation model was developed for use in estimating the
      fair value of traded options, which have no vesting restrictions and are fully
      transferable. In addition, option valuation models require the input of highly
      subjective assumptions including the expected stock price volatility. Because
      the Company's stock options have characteristics significantly different from
      those of traded options, and because changes in the subjective input assumptions
      can materially affect the fair value estimate, in management's opinion, the
      existing models do not necessarily provide a reliable single measure of the
      fair
      value of its stock options.





In
      connection with the cancellation of the options previously granted to Mr.
      Simmons, the Board of Directors cancelled 250,000 shares of common stock that
      were previously issued to Mr. Simmons pursuant to the exercise of these now
      cancelled options. As of December 31, 2006, the Company had not refunded the
      $25,000 received from Mr. Simmons to exercise the stock options. The $25,000
      liability is included in the accompanying consolidated financial statements
      as
      Due to former officer.





The
      Board
      of Directors concluded that the grant of 100,000 options to each Optionee was
      fair and reasonable, and accordingly ratified the issuance of 100,000 options
      to
      each Optionee, including Mr. Simmons. To the extent that the issuance of the
      1,900,000 options which have been voided by resolution of the Board of Directors
      is deemed fair, the Company may have a contingent liability for cancelling
      Mr.
      Simmons’ 1,900,000 options.




14


**ST.
      JOSEPH, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      8 – LEGAL PROCEEDINGS**





As
      previously disclosed in a current report on Form 8-K, filed with the SEC on
      June
      20, 2007, on June 8, 2007, we filed a complaint against our former President,
      CEO and Director John H. Simmons in the United States District Court for the
      District of Colorado, Civil Action No. 07-CV-01208. We are seeking damages
      against Mr. Simmons of not less than $75,000, attorneys’ fees, costs of
      litigation, interest and tremble damages. The complaint alleged, among other
      things, that Mr. Simmons breached his fiduciary duties by diverting Company
      funds for personal and recreational use and acquiring shares of our common
      stock
      without adequate consideration. On August 27, 2007, this suit was dismissed
      due
      to jurisdictional reasons and the parties agreed to move the case to
      Texas.





On
      October 11, 2007, we refiled this lawsuit United States District Court, Northern
      District of Texas, Dallas Division, Civil Action No. 307CV1718-R for the same
      causes of action and asking for the same relief. Although we believe that our
      claims against Mr. Simmons are meritorious, there can be no assurance that
      we
      will prevail in this litigation. At this time, we cannot estimate any possible
      loss from this litigation in the event that we do not prevail.





As
      previous disclosed in a quarterly report on Form 10-QSB, filed with the SEC
      on
      November 20, 2006, on July 28, 2006, Zachary Karo, a former employee, filed
      a
      lawsuit against the Company and its subsidiary Staf*Tek Services, Inc. in the
      district court in Tulsa County, Oklahoma, Case No. CJ 2006 04713, in connection
      with stock options allegedly granted to Mr. Karo. Mr. Karo alleges that he
      was
      granted an option to purchase up to 25,000 shares of the Company’s common stock
      at $0.10 per share but that management refused to issue Mr. Karo such shares
      upon his exercise of the alleged option. A motion was made to and granted with
      prejudice to dismiss the case, Mr. Karo refilled to vacate the dismissal, and
      a
      hearing is set for April 1, 2008 to rule on the motion for dismissal. Mr. Karo
      is seeking damages, actual and exemplary, against the Company in an amount
      in
      excess of $10,000. Management denies that Mr. Karo was owed such stock options.
      The Company has engaged local counsel and intends to vigorously defend this
      action on the basis brought by the plaintiffs. The costs of defending against
      the complaint could be substantial; however management is unable to estimate
      an
      amount at this time.





On
      July
      11, 2007, Vial, Hamilton, Koch & Knox, LLP brought a lawsuit against the
      Company in the state court in Dallas County, Texas under the case number
      CC-07-10120-C, to recover fees for legal services, interest and costs of
      litigation. The invoice we received from Vial, Hamilton, Koch & Knox, LLP
      dated July 27, 2007 states that the amount we owed was $9,618. The Company
      has
      not engaged legal counsel in connection with this lawsuit and has made no
      determination as to the merits of, or possible defenses to, the claim, and
      is
      unable to predict a meaningful estimate of the costs of defending against the
      claim at this time.




15