SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K

(Mark One)

| | x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 :
| | - | --------------------------------------------------------------------------------------



For the fiscal year
ended December 31, 2012



| |  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------



For the transition
period from           to



Commission file number 0-54427



FIRST RATE STAFFING CORPORATION

(Exact name of registrant as specified in
its charter)



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



2775 West Thomas Road

Suite 107

Phoenix, Arizona 85018

(Address of principal executive offices)
(zip code)



Registrant's telephone number, including
area code: 602-442-5277



Securities registered pursuant to Section
12(b) of the Act: None



Securities registered pursuant to Section
12(g) of the Exchange Act:



Common Stock, $.0001 par value per share

(Title of class)



Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act

 ̈
Yes x No



Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

 ̈
Yes x No



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

x
Yes  ̈ No



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

x
Yes  ̈ No



Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not
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-K or any amendment to this Form 10-K.

x
Yes  ̈ No



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



|Large Accelerated filer   ̈                  |  | Accelerated filer         |  ̈
|------------------------------------------- |  | ------------------------- | -
|Non-accelerated filer      ̈                 |  | Smaller reporting company | x
|(do not check if smaller reporting company) |  |                           |  



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

 ̈
Yes x No



State the aggregate market value of the
voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last
sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed
second fiscal quarter.

| |  | $ 0
| |  | ---



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



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



Documents incorporated by reference:



On November 13, 2012,
the Registrant filed, pursuant to the Securities Act of 1933, a registration statement on Form S-1 and an amendment to such registration
statement in February 2013 for the sale of up to 1,600,000 shares of its common stock by the holders thereof and simultaneously
filed, pursuant to the Securities Exchange Act of 1934, a Report on Form 8-K and amendments to such report in February, 2013. Information
contained in those filings may contain additional information and is incorporated by reference herein.



PART I



ITEM 1. BUSINESS



First Rate Staffing
Corporation, a Delaware corporation (the “Company”), provides recruiting and staffing services for temporary positions
in light industrial, distribution center, assembly, and clerical businesses.











The Company was incorporated
in the State of Delaware in April 2011as Moosewood Acquisition Corporation, a development stage company. In May 2012, the Company
effected a change of control by issuing shares of common stock to new shareholders, redeeming shares of existing shareholders,
electing new officers and directors and accepting the resignations of its then existing officers and directors. In connection with
the change of control, the Company changed its name from Moosewood Acquisition Corporation to First Rate Staffing Corporation.



On November 9, 2012,
the Company entered into merger agreements with each of First Rate Staffing, LLC, a California limited liability company (“First
Rate California”), and First Rate Staffing, Inc., a Nevada corporation (“First Rate Nevada”), in separate mergers
(collectively, and together, the “Mergers”) that were concurrently completed on November 13, 2012. Prior to the Mergers,
First Rate California and First Rate Nevada were under common control of the same group of shareholders.



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



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



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



Prior to the mergers,
the Company had no ongoing business or operations and was established for the purpose of completing a business combination with
a target company, such as First Rate California and First Rate Nevada. The Company, as the surviving entity from the Mergers, has
taken over the respective operations and business plans of each of both First Rate California and First Rate Nevada.



Services



The Company provides
recruiting and staffing services for temporary positions in light industrial, distribution center, assembly, and clerical businesses.
The Company’s client customization model allows it to integrate its services to its client-specific needs and thereby providing
clients with the highest level of customer service. The Company strives to devote adequate time and attention to understand both
the needs of its clients and the capabilities of its employees so that the Company can identify the best suitable matches between
client needs and employee abilities. The Company is dedicated to achieving a high level of service for all of its clients and considers
itself to be a loyal partner to meeting client demands. In this regard, the Company seeks to position itself not only as a pool
of employee for its clients, but also as a dedicated business partner that understands its clients’ businesses and needs.



Services provided to
clients by the Company include recruiting, payroll, all state and federal taxes, worker’s compensation coverage, and screening
and managing of clients’ contingent work force. The Company provides comprehensive screening and electronic verification
(for federal employment eligibility requirements) for all employees. The Company also conducts reference checks of employees to
ensure that the employers receive accurate and useful descriptions of employees’ backgrounds and experiences. The Company
also operates a risk management department that helps client mitigate losses by implementing sound and effective risk management
procedures at client sites. Clients receive these risk management services at no cost, helping them to reduce their own business
risks and expenses.











The Company offers
recruiting, human resources, workers’ compensation services, and risk management at no additional charge as part of the overall
mark-up inclusive with the standard mark-up rate for temporary placement of employees. For example, a client may have a need for
a certain number of temporary employees that fulfill a specific function. The Company recruits, screens, tests, and verifies employment
eligibility for these individuals based on the requirements of the client. The Company also ensures that the employees are certified/licensed
based on the equipment and facility that they will be operating within. The Company considers safety to be a very important priority
since accidents directly impact workers’ compensation cost. Generally, workers’ compensation costs usually run from
6-10% of total costs. Risk management services, such as safety audits, certifications, and safety training, are typically provided
at no additional charge (i.e. inclusive in the mark-up rate) to clients.



The Business: Staffing



The industry is divided
into three major segments: temporary help services (about 50 percent of industry revenue), professional employer organizations
(about 40 percent), and placement agencies (about 10 percent).



Temporary help services
provide workers for customers for limited periods, often to substitute for absent permanent workers or to help during periods of
peak demand. These workers, who are employees of the temporary help agency, will generally fill clerical, technical, or industrial
positions.



Professional employer
organizations (PEOs), sometimes known as employee leasing agencies, contract to provide workers to customers for specific functions,
often related to human resource management. In many cases, customers’ employees are hired by a PEO and then leased back to
the customer.



Placement agencies,
sometimes referred to as executive recruiters or headhunters, find workers to fill permanent positions at customer companies. These
agencies may specialize in placing senior managers, midlevel managers, technical workers, or clerical and other support workers.



The Company considers
itself to be a temporary staffing company within the broader staffing industry. However, the Company does conduct permanent placements
at the request of existing clients.



Staffing companies
identify potential employees through advertising and referrals, and the companies interview, test, and counsel workers before sending
them to the customer for approval. Pre-employment screening can include skills assessment, drug tests, and criminal background
checks. Most staffing agencies provide some sort of training, often involving data entry and basic computer skills. The personnel
staffing industry has been radically changed by the Internet. Many employers list available positions with one or several Internet
personnel sites like monster.com or jobs.com, and on their own site. Personnel agencies operate their own sites and often still
work as intermediaries by helping employers accurately describe job openings and screening candidates who submit applications.



Job growth drives demand
for the personnel staffing industry. The profitability of individual companies depends on good marketing and availability of qualified
employees. Large companies enjoy economies of scale in marketing and back-office operations. Small companies can compete successfully
by specializing in an industry or a job function. The industry is labor-intensive: average annual revenue per worker is about $80,000.



To a great extent,
clients follow the seasonal retail cycles but precede them by two t three months and two distinct “peak” seasons: (i)
between August and October preceding Halloween, Thanksgiving, and Christmas and (ii) between April and May preceding the summer
season.



Major end-use customers
include businesses from a wide range of industries. Nine out of ten large US businesses have used a staffing agency, according
to the American Staffing Association. Wholesale, retail, and service industries are most likely to use temporary help services.
Marketing involves direct sales presentations, referrals from existing clients, and advertising. Agencies compete both for customers
and workers. Depending on market supply and demand at any given time, agencies may allocate more resources either to finding potential
employers or potential workers. Permanent placement agencies work either on a retainer or a contingency basis, often 30 percent
of annual salary. Clients may retain an agency for a specific job search or on contract for a specific period. Temporary help services
charge customers a fixed price per hour or a standard markup on prevailing hourly rates. When a temporary employee is hired for
a regular position within a company, the customer pays











Staffing companies
are regulated by the United States Department of Labor (DOL) and the Equal Employment Opportunity Commission (EEOC), and often
by state authorities. These agencies regulate the relationship between the agency and the temporary employees, or employee candidates.
Many federal anti-discrimination rules regulate the type of information that employment firms can request from candidates or provide
to customers about candidates. PEOs are often considered co-employers along with the client, but the PEO is responsible for employee
wages, taxes, and benefits. State regulation aims to ensure that PEOs provide the benefits they promise to workers.



Demand for personnel
staffing services is strongest in areas with strong employment growth, and geographic location can determine an agency's success
in attracting employees and employers. Customers generally prefer a staffing service that can provide workers for all of their
office locations. Temporary employee candidates are often unwilling to relocate for a position.



The revenue of personnel
agencies depends on the number of jobs they fill, which in turn depends on economic growth. During economic slowdowns, many client
companies stop hiring altogether. In years of good economic growth, the number of jobs in the US economy grows approximately %
to 2% annually. Internet employment sites expand a company's ability to find workers without the help of traditional agencies.
Personnel agencies often work as intermediaries, helping employers accurately describe job openings and screen candidates. Increasing
use of sophisticated, automated job description and candidate screening tools could make many traditional functions of personnel
agencies obsolete. Free social networking sites such as LinkedIn and Facebook are also becoming a common way for recruiters and
employees to connect without the assistance of a staffing agency.



To avoid large placement
agency fees, big companies may use in-house personnel staff, current employee referrals, or human resources consulting companies
to find and hire new personnel. Because placement agencies typically charge a fee based on a percentage of the first year's salary
of a new worker, companies with many jobs to fill have a large financial incentive to avoid agencies.



However, temporary
workers are becoming such a large factor at some companies that personnel agency staff sometimes work at the customer's site to
recruit, train, and manage. Onsite training is designed to serve only that customer. Agencies try to match the best qualified employees
for the customer's needs, but often provide additional training specific to that company, such as instruction in the use of proprietary
software.



Most personnel agencies
are small and may depend heavily on a few big customers for a large portion of revenue. Large customers may lead to increased revenues,
but also expose agencies to higher risks. When major accounts experience financial hardships, and have less need for temporary
employment services, agencies stand to lose large portions of revenue.



Startup costs for a
personnel agency are very low. Individual offices can be highly profitable, but consolidation is driven mainly by the opportunity
for large agencies to develop national relationships with big customers. Some agencies expand by starting new offices in promising
markets, but most prefer to buy existing independent offices with proven staff and an existing customer roster.



The Market



The output of US employment
services is forecast to grow at an annual compounded rate of 4 percent between 2011 and 2016, based on industry data published
in October 2011.











The global staffing
services industry generates about $280 billion in annual revenue, according to the International Confederation of Private Employment
Agencies. As the global economy recovers and employment improves, revenue could exceed $320 billion by 2015, according to Global
Industry Analysts. Major staffing services providers include Adecco (headquartered in Switzerland), Randstad (the Netherlands),
and Manpower (US). Overall, Europe is the largest regional staffing services market, representing about 40 percent of annual revenue.
The US and Japan each account for about 20 percent of global revenue. The UK accounts for about 15 percent. There are about 70,000
private employment services agencies in the world, with the top 10 companies accounting for about a third of industry sales, according
to the International Confederation of Private Employment Agencies. The industry is growing fastest among nations in the Asia-Pacific
region.



The US personnel staffing
agencies industry includes about 32,000 companies with combined annual revenue of about $215 billion. Major companies include ADP
TotalSource, Insperity (formerly Administaff), Kelly Services, Manpower, and the US operations of Adecco. The industry is fragmented:
the 50 largest companies generate about 40 percent of industry revenue. The global staffing services industry generates about $280
billion in annual revenue, according to the International Confederation of Private Employment Agencies. Major staffing services
providers based outside the US are Adecco (Switzerland) and Randstad (the Netherlands). Large staffing services markets include
the EU, the US, Japan, and the UK. US corporate profits, an indicator of corporate demand for staffing services, rose 7.9 percent
in the third quarter of 2011 compared to the same period in 2010. US personal income, a measure of overall employment trends, rose
3.9 percent in October 2011 compared to the same month in 2010. Total US revenue for employment services rose 6.5 percent in the
third quarter of 2011 compared to the same period in 2010.



The Company’s Presence in the
Market



Currently, the Company
operates in California (the greater Los Angeles area) and Arizona (the greater Phoenix area). The presence in these two regions
is due partly from the previous experience of the Company and its officers in these marketplaces, but also because of the heavy
focus these two metropolitan areas have on the Company’s particular specialty niche in staffing; light industrial.



In the past 18 months,
the Company has seen the market trending upward with respect to its current client base, as evidenced in clients’ billing
amounts increasing, and their overall need for labor assistance increasing. According to the American Staffing Association, a leader
in industry analysis, temporary labor saw a year-over-year third quarter increase of 4.3% and a total year over year increase of
5.9%.



Los Angeles mirrors
the Phoenix market as the Company sees a majority of its business in the form of unloading and re-packaging of bulk quantity goods
that arrive through the Port of Long Beach. These goods vary from food products to retail items. Many have seasonal increases but
the Company has a mainstay of labor that is employed throughout the year. Several clients operate in both Los Angeles and Phoenix
and the Company provides its services in both locations to these clients. The Company does not currently operate in Nevada.



Customers



The Company has a diverse
array of customers across sectors. Key customers include the following (each of which comprises at least 5% or more of the Company’s
sales): Essentials Packaging; States Logistics; Direct Chassis; Essentials, Inc.; Phillips Industries; and Premier Packaging. The
Company also has many other customers, and plans to continue to grow its customer base.



Marketing and Sales



The Company has conducted
limited advertising and marketing to date to reach new clients. To date, advertising and marketing has been centered on reaching
potential employees. In all locations, the Company has used multiple resources to drive in potential new temporary employees. These
tactics range from advertisements in newspapers, job boards, unemployment assist centers, as well as online advertisements. The
Company also utilizes CareerBuilder to recruit for professional placements.











Registration Statement



The Company has filed
a registration statement with the Securities and Exchange Commission on Form S-1 pursuant to the Securities Act of 1933 for the
offer and sale of 1,600,000 shares of its common stock offered by the holders of such stock (“selling shareholders”).
It is anticipated that the selling shareholders will offer their shares at a price of $2.00 per share. Although the registration
statement has been filed, it not yet effective and no sales can be made thereof until the time it has become effective. Although
the Company anticipates that the registration statement will be effective in the near future, there is no assurance that that is
the case.



The Company and the
selling shareholders are seeking an underwriter, broker-dealer or selling agent to sell the shares. Neither the Company nor the
selling shareholders have entered into any arrangements with any underwriter, broker-dealer or selling agent as of the date of
this Report.



The Company will not
receive any portion or percentage of any of the proceeds from the sale of the shares by the selling shareholders' Shares.



Employees



The Company presently
has approximately 225 employees, consisting or approximately 175 employees in California and 50 employees in Nevada.



Most employees receive
health benefits. The Company may offer additional fringe and welfare benefits in the future as the Company’s profits grow
and/or the Company secures additional outside financing.



Subsidiaries



The Company has no
subsidiaries.



ITEM 2. PROPERTIES



The Company currently
has two physical locations: Santa Fe Springs, California and Phoenix, Arizona.



The Santa Fe Springs
location consists of 1,000 square feet and is a monthly lease that is located in an office park on a major thoroughfare for southern
Los Angeles County, California. The monthly lease cost is $1,015, and annually the Company expends $12,700 for such lease. This
location is almost filled at capacity and offers limited street visibility.



The Phoenix location
consists of 1,600 square feet and is a yearly lease and is located at an intersection of a major thoroughfare for Phoenix, Arizona.
The Phoenix location offers street visibility and room for growth. The monthly lease cost is $1,757, and annually the Company expends
$20,750 for such lease.



The Company also anticipates
opening an official corporate location in Irvine, California in the near future.



ITEM 3. LEGAL PROCEEDINGS



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



ITEM 4. MINE SAFETY DISCLOSURES



Not applicable.











PART II



ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES



There is no public
market for the Company’s common stock. The Company has filed with the Securities and Exchange Commission a registration statement
on Form S-1 pursuant to the Securities Act of 1933 for the offer and sale of up to1,600,000 shares of its common stock owned by
current shareholders. The registration statement is not yet effective and the Company cannot predict when, if at all, such registration
statement will become effective.



The Company is authorized
to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock. As of December 31, 2012, 7,000,000 shares
of common stock and no preferred stock were issued and outstanding.



On April 20, 2011,
the Company issued, pursuant to Section 4(2) of the Securities Act of 1933, 10,000,000 shares of common stock to Tiber Creek Corporation
for $1,000 of which 9,750,000 were redeemed in May 2012, for the redemption price of $975.



On April 20, 2011,
the Company issued, pursuant to Section 4(2) of the Securities Act of 1933, 10,000,000 shares of common stock to MB Americus, LLC
for $1,000 of which 9,750,000 were redeemed in May 2012, for the redemption price of $975.



On
May 23, 2012, the Company issued, pursuant to Section 4(2) of the Securities Act of 1933,1,000,000 shares of common stock to Cliff Blake pursuant to a change of control in the Company for $100.



From July 1, 2012 through
October 31, 2012, the Company issued, pursuant to Section 4(2) of the Securities Act of 1933, 500,000 shares of common stock to
multiple shareholders pursuant to executed subscription agreements. The aggregate consideration paid for these shares was $50.



On November 13, 2012,
the Company issued, pursuant to Section 4(2) of the Securities Act of 1933, 1,000,000 shares of common stock each to Devon Galpin,
Julie Galpin, Joy Mautz and Michael Mautz, four management personnel, in connection with the mergers.



On November 13, 2012,
the Company issued, pursuant to Section 4(2) of the Securities Act of 1933, 1,000,000 shares of common stock to Terry Blake, the
wife of Cliff Blake, the chief financial officer and sole director of the Company.



ITEM 6. SELECTED FINANCIAL DATA



There is no selected
financial data required to be filed for a smaller reporting company.



ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The Company was incorporated
in the State of Delaware in April 2011. Each of First Rate Staffing, LLC, a California limited liability company (“First
Rate California”), and First Rate Staffing, Inc., a Nevada corporation (“First Rate Nevada”), merged into the
Company in separate mergers (collectively, and together, the “Mergers”) that were concurrently completed in November
2012. References to the financial condition and performance of the Company below in this section “Management’s Discussions
and Analysis of Financial Condition and Results of Operation” are to First State California and First State Nevada, respectively.



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











Revenues and Losses



The Company has posted
revenues from operations based on its billings to, and services for, customers. Based solely on a combination of First Rate California
and First Rate Nevada, the Company posted revenues of approximately $2.5 million during the partial-year 2010, approximately $6.1
million for the full-year 2011and approximately $6.9 million for the full-year 2012.



The Company has a mixed
record of net losses and profits. Based solely on a combination of First Rate California and First Rate Nevada, the Company posted
net losses of $575 during the partial-year 2010, net profits of $21,315 in the full-year 2011 and net losses of $120,195 for the
full-year 2012.



Promissory Notes



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



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



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



Factoring Facilities



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



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



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











Capital Resources



As of December 31,
2012 , First Rate California had cash available of $35,978 and First Rate Nevada had cash available of $149,609.



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



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



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



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



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











Liquidity



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



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



Pricing



Pricing for services
is dependent on several variables ranging from credit, risk exposure, payment terms, payment methods, volume, and potential for
growth. Applicable pricing is specified in customer services agreements. The Company typically charges client by marking up the
pay of employees or through other bill rates (i.e. the Company charges the client an hourly rate that is a premium (mark-up) to
the hourly wage that the Company pays to the employee).



The mark-up charged
by the Company on temporary staff varies for a number of reasons. For example, in some arrangements, the mark-up rate charged to
a client includes compensation, all taxes, unemployment charges, workers’ compensation costs and a profit for the Company.
Notably, unemployment withholding and other charges vary by state and these differences impact this mark-up. In addition, workers’
compensation cost codes are assigned to the employee based on the job description, which is a significant variable in costs (for
example, a clerical worker may have a rate of $00.80- $1.50 per hundred dollars of payroll while a fork lift driver may cost $5.00-$7.00
per hundred dollars of payroll). The Company might charge a higher mark-up to compensate for situations with higher workers’
compensation costs (e.g. a fork-lift operator).



Pricing and the rate
of mark-up is also impacted by the relationship of the Company with the applicable customer. Clients that provide a large volume
of business (typically over 75 employees) would generally receive discounted rates. On the other hand, clients at which employees
have consistently incurred injuries or clients which have a history of injuries in their business will generally be charged an
additional mark-up rate to counteract this expected cost and potential liability.



The Company also offers
clients discounts for referrals of new employees to the Company.



Alternative Financial Planning



The Company has no
alternative financial plans at the moment. If the Company is not able to successfully raise monies as needed through a private
placement or other securities offering (including, but not limited to, a primary public offering of securities), the Company’s
ability to expand its business plan or strategy over the next two years will be jeopardized.











Critical Accounting Policies



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



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



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



Equipment Financing



The Company has no
existing equipment financing arrangements.



Discussion of Year ended December 31,
2012 compared to Year ended December 31, 2011



The Company generated
revenues during the year ended December 31, 2012 of $6,937,349, as compared to revenues during the year ended December 31, 2011
of $6,099,042. Revenues increased on a year-over-year basis by approximately 14% due to the addition of new clients, consisting
primarily of eight new customers.



During the year ended
December 31, 2012, the Company posted an operating loss of $109,662 and net loss of $120,195, as compared to an operating profit
of $95,556 and net profit of $21,315 for the year ended December 31, 2011. A major contributor to the year-over-year decrease in
profitability was the professional fees and costs of preparing for the Company’s status as a public company and conducting
this offering. The Company incurred significant accounting, legal and other fees. Professional fees during the year ended December
31, 2012 were $36,120 as compared to professional fees of only $550 in the year ended December 31, 2011, an increase largely driven
by the fees required to prepare for conducting a public offering of securities. In addition, the Company experienced increased
workers’ compensation costs, due to the increase in revenues as well as rate increases that occurred during 2012. Also, employee
salaries and payroll costs necessarily rise as revenues rise, as was the case in 2012 compared to the prior year. The increase
in workers’ compensation costs is based on the payroll of the Company; hence the costs rise as the payroll of the Company
rises. Operating fees from insurance increased 22% from $278,495 in the year ended December 31, 2011 to $338,604 in the year ended
December 31, 2012. The increase in these costs was primarily attributable to an increase in workers’ compensation premiums
by $60,108 on a year-over-year basis. The increase in workers’ compensation costs is based on the payroll of the company;
hence the costs rise as the payroll of the company revenues rises.











For the year ended
December 31, 2012, the Company used cash of $53,970 in its operations. During such period, the Company also obtained cash from
financing activities totaling $231,493. During the year ended December 31 2011, the Company used cash of $6,861 from operations
and generated cash of $6,123 in financing activities.



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



The Company generated
revenues during the year ended December 31, 2011 of $6,099,042, as compared to revenues of $2,495,135 for the year ended December
31, 2010, an increase of approximately 144% on a year-over-year basis.



During the year ended
December 31, 2011, the Company posted operating income of $95,556 and net income of 21,315, as compared to operating income of
$31,132 and net loss of $575 for the year ending December 31, 2010. Operating fees from insurance increased 139% from $116,286
in the year ended December 31, 2010 to $278,495 in the year ended December 31, 2011. The increase in these costs was primarily
attributable to an increase in workers’ compensation premiums by $161,458 on a year-over-year basis. The increase in workers’
compensation costs is based on the payroll of the Company; hence, the costs rise as the payroll of the Company rises.



During the year ended
December 31, 2011, the Company used cash of $6,861 in its operations. During such period, the Company also obtained cash from financing
activities totaling $6,123.



The Company incurred
capital expenditures of $3,848 during the year ended December 31, 2012, but did not incur any capital expenditures during the year
ended December 31, 2011.



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA



The consolidated financial
statements for First Rate Staffing Corporation for the years ended December 31, 2012 and December 31, 2011 are included herewith.



| | ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                                                                                             DISCLOSURE
| | ------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Not applicable.



ITEM 9A. CONTROLS AND PROCEDURES



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











Management's Report of Internal Control
over Financial Reporting



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

been detected.



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



Changes in Internal Control Over Financial
Reporting



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



PART III



ITEM 10. DIRECTORS, EXECUTIVE OFFICERS,
AND CORPORATE GOVERNANCE



The Directors and Officers
of the Company are as follows:



|              |  |     |  |                                       |  | Year     
|------------- |  | --- |  | ------------------------------------- |  | ---------
|Name          |  | Age |  | Position                              |  | Commenced
|              |  |     |  |                                       |  |          
|Cliff Blake   |  | 58  |  | Chief Executive Officer and Director  |  | 2012     
|Devon Galpin  |  | 34  |  | President and Chief Operating Officer |  | 2010     
|Michael Mautz |  | 46  |  | Vice President of Risk Management     |  | 2010     
|Joy Mautz     |  | 37  |  | Vice President of Finance             |  | 2010     
|Julie Galpin  |  | 35  |  | Secretary                             |  | 2010     



Cliff Blake



Cliff Blake serves
as Chief Executive Officer and Treasurer of the Company and its sole director. Mr. Blake has over 22 years of experience in business
and management, including in starting, building and operating numerous businesses, including over 12 years in owning and operating
staffing businesses. Mr. Blake founded and built his own staffing company in 1999. Through the direction of Mr. Blake, the company
started with an idea and was built in to a successful company employing over 50 internal employees and thousands of more temporary
employees. The company was a major competitor in several states across the United States with ending annual revenues of over $104
million in 2009. The company was sold in 2009. From 2009 to 2010, Mr. Blake was employed by Lumea Staffing, Inc. Mr. Blake received
a Bachelor of Science degree from Louisiana Tech University in 1974 and a Master of Business Administration degree in Finance from
Florida State University in 1975.



Devon Galpin



Devon Galpin serves
as President and Chief Operating Officer. Mr. Galpin joined the Company in 2010. Mr. Galpin served in the staffing industry since
2004 holding positions at Excel Staffing Sevices, Inc. and Lumea Staffing, Inc. in sales, account management and operations. At
the time he left his employer in 2010, Mr. Galpin oversaw the operations and management of $30 million is staffing business encompassing
California and Arizona. Mr. Galpin worked hand in hand with all senior members of his company to procure business and develop better
operations for current and future clients. Mr. Galpin was also in charge of overseeing all payroll matters, delegating and hiring/terminating
positions, evaluating profitability of clients, and accounts renewals. Mr. Galpin received a Bachelor of Arts degree in Political
Science from Chapman College.











Michael Mautz



Michael Mautz serves
as Vice President of Risk Management. Mr. Mautz supervises risk management activities including the worker’s compensation
program. Mr. Mautz is an OSHA-certified risk manager. Mr. Mautz has been involved in the staffing industry for 12 years with his
primary focus on risk management and loss prevention. His previous tenure with a rapidly growing staffing company, Excel Staffing
Services Inc. and Lumea Staffing Inc., allowed him to gain critical knowledge on how to grow a business in a safe and productive
manner. Because of the steady growth of the company, the risk management department had to be very aggressive and effectively design
programs that protected the employees, thereby creating a more profitable business environment for the company. Mr. Mautz joined
the Company in 2010.



Joy Mautz



Joy Mautz serves as
Vice President of Finance. Ms. Mautz heads all accounting functions, including cash flow management, state and federal tax compliance,
financial modeling, forecasting and Sarbanes-Oxley compliance. Ms. Mautz has served in the staffing industry since 2005 holding
positions as controller and assistant controller of private and public companies, including Excel Staffing Services Inc. and Lumea
Staffing Inc. prior to joining the Company in 2010. Ms. Mautz was employed by Lumea Staffing, Inc. from 2009 to 2012. As Assistant
Controller and Controller, she worked with the daily cash management and treasury management for a multitude of business accounts.
She worked directly with all banking relationship managers and directly with funding companies preparing daily funding requests
and other daily and quarterly reports. Ms. Mautz assisted outside auditors with audit processes for private and public companies.
She performed cash flow analysis, monthly financial statements and other miscellaneous management ad hoc reports. She analyzed
business performance to maximize operations and prepared budgets, payroll, and cash flow reports. Also, Ms. Mautz performed monthly
reconciliations for all bank accounts for management and for auditing purposes, and she researched and resolved any out of balances.
Ms Mautz managed accounts receivables and made collection calls when needed. She also assisted with accounts payable and provided
solutions to any deficiencies. Ms. Mautz received a Bachelor of Arts degree from the California State University at Fullerton in
2004.



Julie Galpin



Julie Galpin serves
as Secretary. She also performs accounting and finance duties. For the past several years, Ms. Galpin has worked in similar accounting
roles and capacities, including at Excel Staffing Services Inc. and Lumea Staffing Inc. where she worked prior to joining the Company
in 2010. Ms. Galpin has served in the staffing industry since 2005, holding the position of accounting manager. Her skills are
in accounts receivables, reconciliations, and banking relationships. Ms. Galpin received a Bachelor of Arts degree in Psychology
from the University of California, Irvine in 2005.



Director Independence



Pursuant to Rule 4200
of The NASDAQ Stock Market one of the definitions of an independent director is a person other than an executive officer or employee
of a company. The Company's board of directors has reviewed the materiality of any relationship that each of the directors has
with the Company, either directly or indirectly. Based on this review, the board has determined that there are no independent directors.



Corporate Governance



The Company does not
have a nominating nor audit committee of the board of directors. The board of directors consists of one director. At such time
that the Company has a larger , board of directors and commences activities, the Company will propose creating committees of its
board of directors, including both a nominating and an audit committee.











Conflicts of Interest



There are no binding
guidelines or procedures for resolving potential conflicts of interest. Failure by management to resolve conflicts of interest
in favor of the Company could result in liability of management to the Company. However, any attempt by shareholders to enforce
a liability of management to the Company would most likely be prohibitively expensive and time consuming.



Code of Ethics



The Company has not
at this time adopted a Code of Ethics pursuant to rules described in Regulation S-K. The Company intends to adopt a Code of Ethics
to provide a manner of conduct.



ITEM 11. EXECUTIVE COMPENSATION



Remuneration of
Officers: Summary Compensation Table



|                      |  |      |      |  |        |   |        |          |  |   | Aggregate    |  |  |       |  |  |         |  |  | All       |  |  |          |  |  | Annual  | 
|--------------------- |  | ---- | ---- |  | ------ | - | ------ | -------- |  | - | ------------ |  |  | ----- |  |  | ------- |  |  | --------- |  |  | -------- |  |  | ------- | 
|                      |  |      |      |  | Annual |   |        | Annual   |  |   | Accrued      |  |  |       |  |  | Stock   |  |  | Comp-     |  |  | Other    |  |  | Compen- | 
|                      |  |      |      |  | Earned |   |        | Payments |  |   | Salary Since |  |  |       |  |  | and     |  |  | -ensation |  |  | Comp     |  |  | sation  | 
|Name/Position         |  | Year |      |  | Salary |   |        | Made     |  |   | Inception    |  |  | Bonus |  |  | Options |  |  | Plans     |  |  | ensation |  |  | Total   | 
|                      |  |      |      |  |        |   |        |          |  |   |              |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|Cliff Blake           |  |      | 2012 |  |        |   |        |          |  |   |              |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|CEO and Director      |  |      |      |  |        |   |        |          |  |   |              |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|                      |  |      |      |  |        |   |        |          |  |   |              |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|Devon Galpin          |  |      | 2012 |  |        | $ | 41,100 |          |  | $ | 41,100       |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|President and COO     |  |      |      |  |        |   |        |          |  |   |              |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|                      |  |      |      |  |        |   |        |          |  |   |              |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|Michael Mautz         |  |      | 2012 |  |        | $ | 41,100 |          |  | $ | 41,100       |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|Vice President        |  |      |      |  |        |   |        |          |  |   |              |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|                      |  |      |      |  |        |   |        |          |  |   |              |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|Joy Mautz             |  |      | 2012 |  |        | $ | 41,650 |          |  | $ | 41,650       |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|Vice President        |  |      |      |  |        |   |        |          |  |   |              |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|                      |  |      |      |  |        |   |        |          |  |   |              |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|Julie Galpin          |  |      | 2012 |  |        | $ | 41,650 |          |  | $ | 41,650       |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 
|Secretary, First Rate |  |      |      |  |        |   |        |          |  |   |              |  |  |       |  |  |         |  |  |           |  |  |          |  |  |         | 



The compensation shown
above is presented for the calendar/fiscal year 2012as of June 2012, and represents salaries and compensation payable to the officers
noted above in connection with their services to First Rate California and First Rate Nevada prior to the merger. The officers
noted above also received profits participation and earnings from their ownership interest in the equity of each of First Rate
California and First Rate Nevada; as such profits participation and earnings represent returns to these officers by virtue of their
equity ownership of these businesses, any such profits participation are not reflected in the table above.



As of December 31,
2012, there was no accrued compensation that was due to the Company’s employees or officers. Upon successful completion by
the Company of a primary public offering in the future (or the completion of other financing or funding), however, the Company
may compensate officers and employees as is discussed below in “Anticipated Officer and Director Remuneration.”











Each of the officers
has received certain shares of common stock in the Company in connection with the change of control of the Company and/or the mergers.
Accordingly, the Company has not recorded any compensation expense in respect to any shares issued to the officers as such shares
do not represent compensation that was paid to any officer.



There are no current
plans to pay or distribute any cash or non-cash bonus compensation to officers of the Company, until such time as the Company is
profitable, experiences positive cash flow or obtains additional financing. However, the Board of Directors may allocate salaries
and benefits to the officers in its sole discretion. No officer is subject to a compensation plan or arrangement that results from
his or her resignation, retirement, or any other termination of employment with the Company or from a change in control of the
company or a change in his or her responsibilities following a change in control. The members of the Board of Directors may receive,
if the Board so decides, a fixed fee and reimbursement of expenses, for attendance at each regular or special meeting of the Board,
although no such program has been adopted to date. The Company currently has no retirement, pension, or profit-sharing plan covering
its officers and directors; however, the Company plans to implement certain such benefits after sufficient funds are realized or
raised by the Company (see “Anticipated Officer and Director Remuneration” below.)



Employment Agreements



The Company enters
into and maintains customary employment agreements with each of its officers and employees.



Anticipated Officer and Director Remuneration



The Company pays reduced
levels of compensation to its officers and director at present. The Company intends to pay regular, competitive annual salaries
to all its officers and will pay an annual stipend to its directors when, and if, it completes a primary public offering for the
sale of securities and/or the Company reaches greater profitability, experiences larger and more sustained positive cash flow and/or
obtains additional funding. At such time, the Company anticipates offering additional cash and non-cash compensation to officers
and directors. In addition, although not presently offered, the Company anticipates that its officers and directors will be provided
with additional fringe benefits and perquisites at subsidizes rates, or at the sole expense of the Company, as may be determined
on a case-by-case basis by the Company in its sole discretion. In addition, the Company may plan to offer 401(k) matching funds
as a retirement benefit at a later time.



ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.



The following table
sets forth information regarding the beneficial ownership of the Company’s common stock by each of its executive officers
and directors, individually and as a group and by each person who beneficially owns in excess of five percent of the common stock
after giving effect to any exercise of warrants or options held by that person.











|                                      |  | Number of Shares of |           |     | Percent of | 
|------------------------------------- |  | ------------------- | --------- | --- | ---------- | 
|Name/Position                         |  | Common Stock        |           |     | Class (1)  | 
|                                      |  |                     |           |     |            | 
|Cliff Blake (2)                       |  |                     | 1,000,000 |     |            | 
|Chief Executive Officer               |  |                     |           |     |            | 
|Director                              |  |                     |           |     |            | 
|                                      |  |                     |           |     |            | 
|Devon Galpin (3)                      |  |                     | 1,000,000 |     |            | 
|President and COO                     |  |                     |           |     |            | 
|                                      |  |                     |           |     |            | 
|Michael Mautz (4)                     |  |                     | 1,000,000 |     |            | 
|Vice President                        |  |                     |           |     |            | 
|                                      |  |                     |           |     |            | 
|Joy Mautz (4)                         |  |                     | 1,000,000 |     |            | 
|Vice President                        |  |                     |           |     |            | 
|                                      |  |                     |           |     |            | 
|Julie Galpin (3)                      |  |                     | 1,000,000 |     |            | 
|Secretary                             |  |                     |           |     |            | 
|                                      |  |                     |           |     |            | 
|Terry Blake (2)                       |  |                     | 1,000,000 |     |            | 
|33 Tall Oak                           |  |                     |           |     |            | 
|Irvine, California 92603              |  |                     |           |     |            | 
|                                      |  |                     |           |     |            | 
|Total owned by officers and directors |  |                     |           |     |            | 
|(5 persons)                           |  |                     | 6,000,000 | (2) |            | 








(1) Based upon 7,000,000 shares outstanding.

(2) Terry Blake is the spouse of Cliff
Blake, the chief executive officer and sole director of the Company and thus the shares owned by Ms. Blake may be deemed to be
beneficially owned by Mr. Blake in which case Mr. Blake would own 2,000,000 shares or 28%.

(3) Julie Galpin is the spouse of Devon
Galpin, president and COO of the Company and thus the shares owned by Ms. Galpin may be deemed to be beneficially owned by Mr.
Galpin in which case Mr. Galpin would own 2,000,000 shares or 28%.

(4) Joy Mautz is the spouse of Michael
Mautz, vice president of the Company and thus the shares owned by Ms. Mautz may be deemed to be beneficially owned by Mr. Mautz
in which case Mr. Mautz would own 2,000,000 shares or 28%.



ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE



Prior to the merger,
from time to time, the First Rate California advanced amounts to, as well as received payments from, First Rate Nevada, an affiliate
company under common control by the same shareholders of First Rate California for working capital needs. As of September 30, 2012
and December 31, 2011, the amounts due from the affiliate company are $125,994 and $23,198, respectively.



From time to time,
First Rate Nevada advanced amounts to, as well as received payments from, First Rate California, an affiliate company under common
control by the same shareholders of First Rate Nevada for working capital needs. As of September 30, 2012 and December 31, 2011,
the amount due to the affiliate company is $125,994 and $23,198, respectively.



The reason for these
transactions between the affiliated entities (First Rate California and First Rate Nevada, and vice-versa) was due to the manner
in which the entities were originally organized. Prior to the mergers, deposits and expenses were sometimes interrelated between
the two entities, and transfers had to be made between the two companies to settle these transfers. The inter-company transfers
are no longer needed, due to the mergers (as the entities are combined into the Company), and these transfers are not expected
to continue on a going forward basis.



The Company has promissory
notes outstanding of $255,128 from monies advanced by Cliff Blake, an officer and sole director of the Company, to the Company,
as follows:



Three-year Promissory Note, as of March
2012, for $50,000, at 6.00% simple interest rate, maturing in April 2015.

Three-year Promissory Note, as of April
2012, for $45,000, at 6.00% simple interest rate, maturing in April 2015.

Three-year Promissory Note, as of April
2012, for $15,600, at 6.00% simple interest rate, maturing in April 2015.

Three-year Promissory Note, as of June
2012, for $109,826, at 6.00% simple interest rate, maturing in June 2015.











Three-year Promissory Note, as of June
2012, for $15,600, at 6.00% simple interest rate, maturing in June 2015.

Three-year Promissory Note, as of December
2012, for $19,102, at 6.00% simple interest rate, maturing in December 2015.



James Cassidy, a partner
in the law firm which acts as counsel to the Company, is the sole owner and director of Tiber Creek Corporation which owns 250,000
shares of the Company's common stock. Tiber Creek has received consulting fees of $45,000 to date from the Company (and is eligible
to receive an additional $20,000) and also holds shares in the Company. Tiber Creek and its affiliate, MB Americus LLC, a California
limited liability company, each currently hold 250,000 shares in the Company.



James Cassidy and James
McKillop, who is the sole officer and owner of MB Americus, LLC, were both formerly officers and directors of the Company. As the
organizers and developers of Moosewood, Mr. Cassidy and Mr. McKillop were involved with the Company prior to the Mergers. Mr. Cassidy
provided services to the Company without charge, including preparation and filing of the charter corporate documents and the registration
statement on Form 10.



Certain officers, directors and five percent
shareholders have family relationships amongst them:



Cliff Blake, an officer and director
of the Company, and Terry Blake, a five percent shareholder of the Company, are married. Mr. and Mrs. Blake are also parents/step-parents
of Joy Mautz, an officer of the Company, and Julie Galpin, an officer of the Company.



Michael Mautz, an officer
of the Company, is married to Joy Mautz.



Devon Galpin, an officer
of the Company, is married to Julie Galpin.



ITEM 14. PRINCIPAL ACCOUNTING FEES AND
SERVICES



Audit Fees



The aggregate fees
incurred for each of the last two years for professional services rendered by the independent registered public accounting firm
for the audits of the Company's annual financial statements and review of financial statements included in the Company's Form 10-K
and Form 10-Q reports and services normally provided in connection with statutory and regulatory filings or engagements were as
follows:



|December 31, 2011 |     |  | December 31, 2012 |  
|----------------- | --- |  | ----------------- | -
|$                 | 750 |  |                   | $



Tax Fees



The Company incurred
$0 for tax related services.



All Other Fees



The Company incurred
$0 for other fees by the principal accountant for the years ended December 31, 2011 and 2012



The Company does not
currently have an audit committee serving and as a result its board of directors performs the duties of an audit committee. The
board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor
renders audit and non-audit services. The Company does not rely on pre-approval policies and procedures.











PART IV



ITEM 15. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES



There are no financial
statement schedules nor exhibits filed herewith. The exhibits filed in earlier reports and the Company's Form 10 are incorporated
herein by reference.

















FIRST RATE STAFFING CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012 and 2011



INDEX TO FINANCIAL STATEMENTS



|Report of Independent Registered Public Accounting Firm                                                             |  | F-2   
|------------------------------------------------------------------------------------------------------------------- |  | ------
|Consolidated Balance Sheets as of December 31, 2012  and December 31, 2011                                          |  | F-3   
|Consolidated Statements of Operations for the Years Ended December 31, 2012 and 2011                                |  | F-4   
|Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2011 and 2012 |  | F-5   
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2012 and 2011                                |  | F-6   
|Consolidated Notes to Consolidated Financial Statements                                                             |  | F-7-14





F-1











REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM



The Board of Directors and Shareholders of



First Rate Staffing Corporation:



We have audited the accompanying consolidated
balance sheets of First Rate Staffing Corporation (the “Company”) as of December 31, 2012 and 2011, and the related
consolidated statements of operations, changes in shareholders’ equity (deficit), and cash flows for the years then ended.
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 of America). 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 financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over 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. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial
statements referred to the above present fairly, in all material respects, the consolidated financial position of First Rate Staffing
Corporation as of December 31, 2012 and 2011, and the consolidated results of their operations and cash flows for the year ended,
in conformity with accounting principles generally accepted in the United States of America.



The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. As shown in the consolidated financial
statements, the Company has incurred an accumulated deficit of $99,455 from inception to December 31, 2012. This raises substantial
doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are described
in Note 4. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ Anton & Chia, LLP



Newport Beach, California



April 10, 2013



F-2







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



|                                                                                                                                                       |  | December 31, 2012 |         |   | December 31, 2011 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ------- | - | ----------------- | -
|ASSETS                                                                                                                                                 |  |                   |         |   |                   |  
|                                                                                                                                                       |  |                   |         |   |                   |  
|Current Assets                                                                                                                                         |  |                   |         |   |                   |  
|Cash                                                                                                                                                   |  | $                 | 185,587 |   |                   | $
|Accounts receivables, net                                                                                                                              |  |                   | 53,578  |   |                   |  
|Total current assets                                                                                                                                   |  |                   | 239,165 |   |                   |  
|                                                                                                                                                       |  |                   |         |   |                   |  
|Deposits and other assets                                                                                                                              |  |                   | 84,726  |   |                   |  
|                                                                                                                                                       |  |                   |         |   |                   |  
|Total Assets                                                                                                                                           |  | $                 | 323,891 |   |                   | $
|                                                                                                                                                       |  |                   |         |   |                   |  
|LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                                                                                                         |  |                   |         |   |                   |  
|                                                                                                                                                       |  |                   |         |   |                   |  
|Current Liabilities                                                                                                                                    |  |                   |         |   |                   |  
|Bank overdraft                                                                                                                                         |  | $                 | -       |   |                   | $
|Accounts payable                                                                                                                                       |  |                   | 30,658  |   |                   |  
|Other current liabilities                                                                                                                              |  |                   | 75,508  |   |                   |  
|Total current liabilities                                                                                                                              |  |                   | 106,166 |   |                   |  
|Note Payable-related parties                                                                                                                           |  |                   | 255,128 |   |                   |  
|Total Liabilities                                                                                                                                      |  |                   | 361,294 |   |                   |  
|                                                                                                                                                       |  |                   |         |   |                   |  
|Commitments                                                                                                                                            |  |                   |         |   |                   |  
|                                                                                                                                                       |  |                   |         |   |                   |  
|Shareholders' Deficit                                                                                                                                  |  |                   |         |   |                   |  
|Preferred stock; $0.0001 par value; 20,000,000 shares authorized; 0 shares issued and outstanding as of December 31, 2012 and 2011                     |  |                   | -       |   |                   |  
|Common stock; $0.001 par value;  100,000,000 shares authorized, 7,000,000 and 4,000,000 shares issued and outstanding as of December 31, 2012 and 2011 |  |                   | 700     |   |                   |  
|Additional paid-in capital                                                                                                                             |  |                   | 61,352  |   |                   |  
|Retained Earnings (accumulated deficit)                                                                                                                |  |                   | (99,455 | ) |                   |  
|Total Shareholders' Deficit                                                                                                                            |  |                   | (37,403 | ) |                   |  
|                                                                                                                                                       |  |                   |         |   |                   |  
|Total Liabilities and Shareholders' Deficit                                                                                                            |  | $                 | 323,891 |   |                   | $



(1) The December 31, 2011 capital accounts of the Company have
been retroactively restated to reflect the equivalent number of common shares based on the exchange ratio of the merger transaction.
See Note 1.



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



F-3







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



|                                     |  | For the year ended |           |   | For the year  ended |  
|------------------------------------ |  | ------------------ | --------- | - | ------------------- | -
|                                     |  | December 31, 2012  |           |   | December 31, 2011   |  
|                                     |  |                    |           |   |                     |  
|Revenues                             |  | $                  | 6,937,349 |   |                     | $
|Cost of revenues                     |  |                    | 6,251,249 |   |                     |  
|Gross profit                         |  |                    | 686,100   |   |                     |  
|                                     |  |                    |           |   |                     |  
|Operating expenses                   |  |                    | 795,762   |   |                     |  
|Income (loss) from operations        |  |                    | (109,662  | ) |                     |  
|                                     |  |                    |           |   |                     |  
|Other income (expenses):             |  |                    |           |   |                     |  
|Interest expense                     |  |                    | (10,533   | ) |                     |  
|Other income                         |  |                    | —         |   |                     |  
|                                     |  |                    | (10,533   | ) |                     |  
|Income (loss) before income tax      |  |                    | (120,195  | ) |                     |  
|                                     |  |                    |           |   |                     |  
|Income tax expense                   |  |                    | —         |   |                     |  
|                                     |  |                    |           |   |                     |  
|Net Income (loss)                    |  | $                  | (120,195  | ) |                     | $
|                                     |  |                    |           |   |                     |  
|Net income (loss) per share:         |  |                    |           |   |                     |  
|Basic and diluted                    |  | $                  | (0.02     | ) |                     | $
|                                     |  |                    |           |   |                     |  
|Weighted average shares outstanding: |  |                    |           |   |                     |  
|Basic and diluted                    |  |                    | 5,465,929 |   |                     |  



(2) The capital accounts of the Company have been retroactively
restated to reflect the equivalent number of common shares based on the exchange ratio of the merger transaction in determining
the basic and diluted weighted average shares. See Note 1.



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



F-4







|FIRST RATE STAFFING CORPORATION                                                     
|------------------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF CHANGES IN
        STOCKHOLDERS’
        EQUITY (DEFICIT)



|                                                                    |  |                 |   |  |              |   |   |         |  |  |             |  |  | Additional    |     |  |         |   |        | Total            | 
|------------------------------------------------------------------- |  | --------------- | - |  | ------------ | - | - | ------- |  |  | ----------- |  |  | ------------- | --- |  | ------- | - | ------ | ---------------- | 
|                                                                    |  | Preferred Stock |   |  | Common Stock |   |   | Paid-In |  |  | Accumulated |  |  | Shareholders' |    
|                                                                    |  | Shares          |   |  | Amount       |   |   | Shares  |  |  | Amount      |  |  | Capital       |     |  | Deficit |   |        | Equity (Deficit) | 
|                                                                    |  |                 |   |  |              |   |   |         |  |  |             |  |  |               |     |  |         |   |        |                  | 
|Balance, December 31, 2010                                          |  |                 | - |  |              | $ | - |         |  |  | 4,000,000   |  |  | $             | 400 |  |         | $ | 68,262 |                  | 
|                                                                    |  |                 |   |  |              |   |   |         |  |  |             |  |  |               |     |  |         |   |        |                  | 
|Proceeds from shareholders                                          |  |                 | - |  |              |   | - |         |  |  | -           |  |  |               | -   |  |         |   | 3,101  |                  | 
|Net loss                                                            |  |                 | - |  |              |   | - |         |  |  | -           |  |  |               | -   |  |         |   | -      |                  | 
|                                                                    |  |                 |   |  |              |   |   |         |  |  |             |  |  |               |     |  |         |   |        |                  | 
|Balance, December 31, 2011                                          |  |                 | - |  |              |   | - |         |  |  | 4,000,000   |  |  |               | 400 |  |         |   | 71,363 |                  | 
|                                                                    |  |                 |   |  |              |   |   |         |  |  |             |  |  |               |     |  |         |   |        |                  | 
|Return of capital                                                   |  |                 | - |  |              |   | - |         |  |  | -           |  |  |               | -   |  |         |   | (9,911 | )                | 
|Common stock issued to management and related parties at a discount |  |                 | - |  |              |   | - |         |  |  | 2,000,000   |  |  |               | 200 |  |         |   | (100   | )                | 
|Common stock issued to unrelated investors for cash                 |  |                 | - |  |              |   | - |         |  |  | 1,000,000   |  |  |               | 100 |  |         |   | -      |                  | 
|Net loss                                                            |  |                 | - |  |              |   | - |         |  |  | -           |  |  |               | -   |  |         |   | -      |                  | 
|                                                                    |  |                 |   |  |              |   |   |         |  |  |             |  |  |               |     |  |         |   |        |                  | 
|Balance, December 31, 2012                                          |  |                 | - |  |              | $ | - |         |  |  | 7,000,000   |  |  | $             | 700 |  |         | $ | 61,352 |                  | 



(3) The December 31, 2011 and 2010 capital accounts of the Company
have been retroactively restated to reflect the equivalent number of common shares based on the exchange ratio of the merger transaction.
See Note 1.



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



F-5







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



|                                                                             |  | For the year ended |          |   | For the year ended |  
|---------------------------------------------------------------------------- |  | ------------------ | -------- | - | ------------------ | -
|                                                                             |  | December 31, 2012  |          |   | December 31, 2011  |  
|                                                                             |  |                    |          |   |                    |  
|Operating Activities:                                                        |  |                    |          |   |                    |  
|Net income (loss)                                                            |  | $                  | (120,195 | ) |                    | $
|Adjustments to reconcile net loss to net cash 
used by operating activities: |  |                    |          |   |                    |  
|Provision for doubtful accounts receivable                                   |  |                    | -        |   |                    |  
|Depreciation and amortization                                                |  |                    | 736      |   |                    |  
|Changes in operating assets and liabilities                                  |  |                    |          |   |                    |  
|Accounts receivable                                                          |  |                    | 10,381   |   |                    |  
|Prepaid expense                                                              |  |                    | -        |   |                    |  
|Deposits and other assets                                                    |  |                    | (39,232  | ) |                    |  
|Accounts payable                                                             |  |                    | 22,197   |   |                    |  
|Tax payable                                                                  |  |                    | -        |   |                    |  
|Other current liabilities                                                    |  |                    | 72,143   |   |                    |  
|Net cash used in operating activities                                        |  |                    | (53,970  | ) |                    |  
|                                                                             |  |                    |          |   |                    |  
|Investing Activities:                                                        |  |                    |          |   |                    |  
|Purchase of equipment                                                        |  |                    | (3,848   | ) |                    |  
|Net cash used by investing activities                                        |  |                    | (3,848   | ) |                    |  
|                                                                             |  |                    |          |   |                    |  
|Financing Activities:                                                        |  |                    |          |   |                    |  
|Cash acquired from reverse merger transaction                                |  |                    | 200      |   |                    |  
|Changes in bank overdraft                                                    |  |                    | (13,924  | ) |                    |  
|Proceeds from note-payable-related party                                     |  |                    | 255,128  |   |                    |  
|Payments to shareholders for return of capital                               |  |                    | (9,911   | ) |                    |  
|Net cash provided by financing activities                                    |  |                    | 231,493  |   |                    |  
|                                                                             |  |                    |          |   |                    |  
|Net change in cash                                                           |  |                    | 173,675  |   |                    |  
|Cash, beginning of period                                                    |  |                    | 11,912   |   |                    |  
|Cash, end of period                                                          |  | $                  | 185,587  |   |                    | $
|                                                                             |  |                    |          |   |                    |  
|Supplemental disclosure of cash flow information:                            |  |                    |          |   |                    |  
|Cash paid for interest                                                       |  | $                  | 6,461    |   |                    | $
|Cash paid for taxes                                                          |  | $                  | 190      |   |                    | $



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



F-6







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



1. ORGANIZATION AND BUSINESS

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



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



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



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



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



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



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



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



2. BASIS OF PRESENTATION

The accompanying consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”),
and include all the notes required by generally accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the consolidated
financial statements have been included.



3. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

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



F-7







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



Use of Estimates

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



Cash and Cash Equivalents

The Company considers all highly-liquid
investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents
as of December 31, 2012 or 2011. Under the terms of the Company’s bank agreements, outstanding checks in excess of the cash
balances in the Company’s primary disbursement accounts create a bank overdraft liability. Bank overdrafts were $0 and $13,924
at December 31, 2012 and December 31, 2011, respectively.



Accounts Receivable and Factoring

Accounts receivable are carried at the
original amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management
determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering each customer's
financial condition and credit history, as well as current economic conditions. Accounts receivable are written off when deemed
uncollectible. Recoveries of accounts receivable previously written off are recorded when received. The allowance for doubtful
accounts as of December 31, 2012 and 2011 were zero and $29,824.



During 2012, the Company entered into a
new accounts receivable factoring arrangement with a non-related third party financial institution (the "Factor"). Pursuant
to the terms of the arrangement, the Company, from time to time, shall sell to the Factor certain of its accounts receivable balances
on a non-recourse basis for credit approved accounts. The Factor remits 90% of the accounts receivable balance to the Company,
with the remaining balance, less fees, to be forwarded to the Company once the Factor collects the full accounts receivable balance
from the customer. An administrative fee of 0.015% per diem is charged on the gross amount of accounts receivables assigned to
Factor, plus interest to be calculated at 0.011806% per day. The total amount of accounts receivables factored was $586,867 and
$571,330 at December 31, 2012 and December 31, 2011, respectively.



Fair Value of Financial Instruments

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



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

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

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

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

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



F-8









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



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



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



| | • | Level 3 — Inputs
that are unobservable and reflect the Company’s own assumptions about the assumptions market participants would use in pricing
the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding
the timing and amount of expected cash flows). The Company did not measure any financial instruments presented on the Consolidated
Balance Sheets at fair value on a recurring basis using significantly unobservable inputs (Level 3) during the years ended December
31, 2012 and 2011, although the disclosed fair value of certain assets that are not carried at fair value, as presented later
in this Note, are classified within Level 3.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table summarizes the Company’s
financial assets and financial liabilities measured at fair value on a recurring basis, categorized by GAAP’s valuation hierarchy
(as described in the preceding paragraphs), as of December 31:



|                    |  | 2012  |        |  | 2011    | 
|------------------- |  | ----- | ------ |  | ------- | 
|                    |  | Total |        |  | Level 1 | 
|Assets:             |  |       |        |  |         | 
|Accounts Receivable |  |       | 53,578 |  |         | 
|Total assets        |  |       | 53,578 |  |         | 



Concentration of Credit Risk

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



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



Revenue Recognition

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



Cost of Revenue

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



Net Income (Loss) Per Share

Basic net income (loss) per share is computed
by using the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed giving
effect to all dilutive potential common shares that were outstanding during the period. The Company had no dilutive securities
outstanding as of December 31, 2012 or 2011.



F-9







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



Income Taxes

The Company accounts for income taxes using
the asset and liability method in accordance with ASC 740, Income Taxes. Accordingly, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Valuation allowances are established when it is more likely
than not that some or all of the deferred tax assets will not be realized.



ASC 740 also clarifies the accounting for
income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial
statements. It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim
periods, disclosure and transition. We believe that our income tax filing positions and deductions will be sustained on audit and
do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain
income tax positions have been recorded pursuant to ASC 740. In addition, we did not record a cumulative effect adjustment related
to the adoption of ASC 740. Our policy for recording interest and penalties associated with income-based tax audits is to record
such items as a component of income taxes.



Recent Accounting Pronouncements



Adopted

Effective January 2012, the Company adopted
ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (ASU 2011-04).
ASU 2011-04 represents the converged guidance of the Financial Accounting Standards Board (FASB) and the International Accounting
Standards Board (IASB) on fair value measurement. A variety of measures are included in the update intended to either clarify existing
fair value measurement requirements, change particular principles requirements for measuring fair value or for disclosing information
about fair value measurements. For many of the requirements, the FASB does not intend to change the application of existing requirements
under Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements. ASU 2011-04 was effective for interim and annual
periods beginning after December 15, 2011. The adoption of this update did not have a material impact on the consolidated financial
statements.



Effective January 2012, the Company adopted
ASU No. 2011-05, Presentation of Comprehensive Income (ASU 2011-05). ASU 2011-05 is intended to increase the prominence of items
reported in other comprehensive income and to facilitate convergence of accounting guidance in this area with that of the IASB.
The amendments require that all nonowner changes in shareholders’ equity be presented in a single continuous statement of
comprehensive income or in two separate but consecutive statements. In December 2011, the FASB issued ASU No. 2011-12, Comprehensive
Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated
Other Comprehensive Income in Accounting Standards Update No. 2011-05 (ASU 2011-12). ASU 2011-12 defers the provisions of ASU 2011-05
that require the presentation of reclassification adjustments on the face of both the statement of income and statement of other
comprehensive income. Amendments under ASU 2011-05 that were not deferred under ASU 2011-12 will be applied retrospectively for
fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this update did not have
a material impact on the consolidated financial statements.



Not Adopted

In December 2011, the FASB issued ASU No.
2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (ASU 2011-11). The amendments in ASU 2011-11
require the disclosure of information on offsetting and related arrangements for financial and derivative instruments to enable
users of its financial statements to understand the effect of those arrangements on its financial position. Amendments under ASU
2011-11 will be applied retrospectively for fiscal years, and interim periods within those years, beginning after January 1, 2013.
The Company is evaluating the effect, if any, adoption of ASU 2011-11 will have on its consolidated financial statements.



F-10







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



In February 2013, the FASB issued ASU No.
2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive (ASU 2013-02). This guidance is the culmination
of the FASB’s deliberation on reporting reclassification adjustments from accumulated other comprehensive income (AOCI).
The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income. However,
the amendments require disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement
of operations or in the notes thereto. Amounts that are not required to be reclassified in their entirety to net income must be
crossreferenced to other disclosures that provide additional detail. This standard is effective prospectively for annual and interim
reporting periods beginning after December 15, 2012. The Company is evaluating the effect, if any, the adoption of ASU 2013-02
will have on its consolidated financial statements.



4. GOING CONCERN

The Company has sustained operating losses of $99,455 since
inception. These losses are primarily the result of increased operating expenses during 2012 associated with professional fees
necessary to complete the merger transaction in November 2012, as described in Note 1. During 2012, the Company incurred audit
related fees of approximately $62,000, as well as $65,000 relating to professional’s fees incurred during the going public
process. Going forward, the Company expects these annual expenses to be lower. In addition, in September of 2012, the Company entered
into a new factoring agreement with TAB Bank which reduced financing costs from an average APR of 24% to 12%. We expect this will
generate an annual savings of approximately $40,000 to $70,000.



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



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



5. ACCOUNTS RECEIVABLE

The Company’s accounts receivable
consists of the following as of:



|                                   |  | December 31 |         
|---------------------------------- |  | ----------- | --------
|                                   |  | 2012        |         
|Account receivable                 |  | $           | 581,758 
|Factor reserve at 10%              |  |             | 58,687  
|                                   |  |             | 640,445 
|Less: factored accounts receivable |  |             | (586,867
|                                   |  |             | 53,578  
|Allowance for doubtful accounts    |  |             | -       
|                                   |  | $           | 53,578  



F-11







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



6. OTHER ASSETS

The Company’s other assets consist
of the following as of:



|                                      |  | December 31 |       
|------------------------------------- |  | ----------- | ------
|                                      |  | 2012        |       
|Deposit for insurance                 |  | $           | 73,718
|Deposit on office lease and utilities |  |             | 3,800 
|Other                                 |  |             | 3,000 
|Total                                 |  | $           | 80,518



7. SHAREHOLDERS’ EQUITY

The
Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock. As of December 31,
2012, 7,000,000 shares of common stock and no preferred stock were issued and outstanding.



On April 20, 2011, 10,000,000 shares of
common stock were issued to Tiber Creek Corporation for total consideration paid of $1,000.00. Subsequently, in May 2012, the Company
redeemed an aggregate of 9,750,000 of these shares for the redemption price of $975.



On April 20, 2011, 10,000,000 shares of
common stock were issued to MB Americus, LLC for total consideration paid of $1,000.00. Subsequently, in May 2012, the Company
redeemed an aggregate of 9,750,000 of these shares for the redemption price of $975.



On May 22, 2012, 1,000,000 shares of common
stock were issued by the Company to Cliff Blake pursuant to the change of control in the Company. The aggregate consideration paid
for these shares was $100.



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



On November 13, 2012, the Company issued
4,000,000 shares of common stock to Devon Galpin, Julie Galpin, Joy Mautz and Michael Mautz, four management personnel in connection
with the Mergers at a discount. The 4,000,000 shares were retroactively restated to reflect the recapitalization of common stock.



On November 13, 2012, the Company issued
1,000,000 shares of common stock at a discount to Terry Blake, wife of Cliff Blake, the Chief Executive Officer and sole director
of the Company.



8. NOTES PAYABLE - RELATED PARTY

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



F-12







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



9. INCOME TAXES

The components of the provision for income taxes are summarized
as follows for the years ended December 31:



|               |  | 2012 |    |  | 2011 |  
|-------------- |  | ---- | -- |  | ---- | -
|               |  |      |    |  |      |  
|Current        |  |      |    |  |      |  
|Federal        |  | $    | -  |  |      | $
|State          |  |      | 50 |  |      |  
|Total current  |  |      | 50 |  |      |  
|               |  |      |    |  |      |  
|Deferred       |  |      |    |  |      |  
|Federal        |  |      | -  |  |      |  
|State          |  |      | -  |  |      |  
|Total deferred |  |      | -  |  |      |  
|Total          |  | $    | 50 |  |      | $



Significant components of deferred income tax assets and liabilities
are as follows:



|                                 |  | 2012 |         |   | 2011 |  
|-------------------------------- |  | ---- | ------- | - | ---- | -
|                                 |  |      |         |   |      |  
|Net operating loss carryforwards |  | $    | 24,904  |   |      | $
|State income taxes               |  |      | (1,195  | ) |      |  
|Allowance for doubful accounts   |  |      | -       |   |      |  
|Depreciation and amortization    |  |      | -       |   |      |  
|Other                            |  |      | 17      |   |      |  
|Total, net                       |  |      | 23,726  |   |      |  
|Valuation allowance              |  |      | (23,726 | ) |      |  
|Deferred tax assets, net         |  | $    | -       |   |      | $



At December 31, 2012, the Company has Federal and Arizona State
net operating loss carryforwards ("NOL") available to offset future taxable income of approximately $62,909 and $50,445,
respectively. These NOLs will begin to expire in the year ending December 31, 2030. These NOL's may be subject to various limitations
on utilization based on ownership changes in the prior years under Internal Revenue Code Section 382. Based on its analysis, management
does not believe that an ownership change has occurred that would trigger such a limitation.



The Company periodically evaluates the likelihood of the realization
of deferred tax assets, and adjusts the carrying amount of the deferred tax assets by the valuation allowance to the extent the
future realization of the deferred tax assets is not judged to be more likely than not. Management considers many factors when
assessing the likelihood of future realization of the Company's deferred tax assets, including its recent cumulative earnings experience
by taxing jurisdiction, expectations of future taxable income or loss, the carryforward periods available to the Company for tax
reporting purposes, and other relevant factors.



F-13







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



At December 31, 2012 and 2011, based on the weight of available
evidence, management determined that it was unlikely that the Company's deferred tax assets would be realized and have provided
for a full valuation allowance associated with the net deferred tax assets.



The Company periodically analyzes its tax positions taken and
expected to be taken and has determined that since inception there has been no need to record a liability for uncertain tax positions.
The Company classifies income tax penalties and interest, if any, as part of selling, general and administrative expenses in the
accompanying consolidated statements of operations. There was no accrued interest or penalties as of December 31, 2012 or 2011.



The Company is neither under examination by any taxing authority,
nor has it been notified of any impending examination. The Company's tax years for its Federal and State jurisdictions which are
currently open for examination are the years of 2010 - 2012.



10. CONTINGENCIES



Litigation

During the ordinary course of the Company’s
business, it is subject to various claims and litigation. As of December 31, 2012, the Company has an open claim involving a former
employee, which is in the discovering phase. The estimate of potential loss cannot be made as of December 31, 2012 and April 10,
2013, the date then when the consolidated financial statement were issued.



F-14











SIGNATURES



Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.



| | FIRST RATE STAFFING CORPORATION
| | -------------------------------
| |                                
| | By:                            
| | Chief Executive Officer        



Dated: April 11, 2013



| | By:                         | /s/ Cliff Blake
| | --------------------------- | ---------------
| | Principal Financial Officer



Dated: April 11, 2013



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



|NAME        | OFFICE   | DATE          
|----------- | -------- | --------------
|            |          |               
|Cliff Blake | Director | April 11, 2013