**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-KSB** ****





**ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





**FOR
      FISCAL YEAR ENDED DECEMBER 31, 2005.**





000-29485


*Commission
      File Number*





**RESOLVE
          STAFFING, INC.**
 (Name
          of
          small business issuer in its charter)
 
 
 
 Nevada
                33-085-0639(State
                    or other jurisdiction of incorporation)
                (IRS
                    Employer Identification No.)
 
 3235
          Omni
          Drive
 Cincinnati,
          OH 45245
 (800)
          894-4250
 (Address
          and telephone number of principal executive offices)
 
 Securities
          registered under Section 12(b) of the Exchange Act: None.
 
 Securities
          registered under Section 12(g) of the Exchange Act: Common Stock, par value
          $0.0001
 
 Check
          whether the issuer (1) filed all reports required to be filed by Section
          13 or
          15(d) of the Exchange Act, during the past 12 months (or for such shorter
          period
          that the registrant was required to file such reports), and (2) has been
          subject
          to such filing requirements for the past 90 days. Yes x No o
 
 Check
          if
          there is no disclosure of delinquent filers in response to Item 405 of
          Regulation S-B is not contained in this form, and no disclosure will be
          contained, to the best of registrant's knowledge, in definitive proxy or
          information statements incorporated by reference in Part III of this Form
          10-KSB
          or any amendment to this Form 10-KSB. [X].
 
 The
          registrant's revenues for the year ended December 31, 2005 were $31,138,212.
 
 The
          aggregate market value of the voting and nonvoting common equity held by
          non-affiliates of the Registrant, computed by reference to the closing
          sale
          price of such common equity as quoted on the Over the Counter Electronic
          Bulletin Board of $1.44 per share as of December 31, 2005 was
          $1,748,278.
 
 As
          of
          March 20, 2006, the registrant had 15,219,101 shares of common stock, par
          value
          $0.0001 per share, outstanding.
  Page
              1
 Table
              of Contents
  Resolve
          Staffing, Inc.
 2005
          Annual Report on Form 10-KSB
 Table
          of Contents
 PagePART
                      IITEM
                      1. DESCRIPTION OF BUSINESS
                  3ITEM
                      2. DESCRIPTION OF PROPERTIES
                  7ITEM
                      3. LEGAL PROCEEDINGS
                  7ITEM
                      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
                      HOLDERS
                  8PART
                      II.ITEM
                      5. MARKET FOR COMMON EQUITY AND RELATED
                      STOCKHOLDER MATTERS
                  9ITEM
                      6.MANAGEMENT'S
                      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                  9ITEM
                      7. FINANCIAL STATEMENTS
                  14ITEM
                      8.CHANGES
                      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                      DISCLOSURE
                  36ITEM
                      8A.CONTROLS
                      AND PROCEDURES
                  36PART
                      IIIITEM
                      9.DIRECTORS,
                      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                      PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
                  37ITEM
                      10.EXECUTIVE
                      COMPENSATION
                  38ITEM
                      11.SECURITY
                      OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT
                  38ITEM
                      12.CERTAIN
                      RELATIONSHIPS AND RELATED TRANSACTIONS
                  39ITEM
                      13. EXHIBITS AND REPORTS ON FORM
                      8-K
                  40EXHIBITS
                  41SIGNATURES
                  42
 
 
  Page
              2
 Table
              of Contents
  **CAUTIONARY
          STATEMENT ABOUT FORWARD-LOOKING INFORMATION**
 
 The
          following information includes statements that are forward looking in nature.
          The accuracy of such statements depends on a variety of factors that may
          affect
          the business and operations of the Company. Certain of these factors are
          discussed under “Business - Factors Influencing Future Results and Accuracy of
          Forward-Looking Statements” included in PART I of this report and Management’s
          Discussion and Analysis of Financial Conditions and Results of Operations.
          When
          used in this discussion, the words “expect(s)”, “feel(s)”, “believe(s)”, “will”,
“may”, “anticipate(s)” and similar expressions are intended to identify
          forward-looking statements. Such statements are subject to certain risks
          and
          uncertainties, and actual results could differ materially from those projected.
          Readers are cautioned not to place undue reliance on these forward-looking
          statements, and are urged to carefully review and consider the various
          disclosures elsewhere in this Form 10-KSB.
 
 **PART
          I**
 
 **ITEM
          1. DESCRIPTION OF BUSINESS.**
 
 **Business
          Overview**
 
 Resolve
          Staffing, Inc., (“Resolve” or the “Company”) was organized under the laws of the
          State of Nevada on April 9, 1998. Integra Staffing, Inc., (“Integra”) is a
          wholly owned subsidiary that was organized under the laws of the State
          of
          Florida on August 16, 1999 (collectively referred to as “Resolve”) and acquired
          in 2001. The Company is a national provider of outsourced human resource
          services with approximately 52 offices reaching from California to New
          York. The
          Company provides a full range of supplemental staffing and outsourced solutions,
          including solutions for temporary, temporary-to-hire, or direct hire staffing
          in
          the clerical, office administration, customer service, professional and
          light
          industrial categories.
 
 On
          February 7, 2005, Resolve Staffing, Inc., entered into an equity purchase
          agreement (“Agreement”), to purchase ELS Personnel Services (“ELS”) (the
“Combination”) from Employee Leasing Services, Inc., (“ELS Inc.”), a
          privately-held company located in Cincinnati, Ohio. The Company’s Chief
          Executive Officer and director, Ronald Heineman, is a principal shareholder,
          officer and director of ELS. Pursuant to the equity purchase agreement,
          Resolve
          acquired the ownership interest in the group of companies which comprised
          ELS
          Personnel Services, (ELS Personnel Services, LLC, Five Star Staffing, Inc.,
          Five
          Star Staffing (NY), Inc., and American Staffing Resources, Ltd.) comprising
          a
          total of 10 temporary employee staffing locations. See Basis of Presentation
          section in the notes to the financial statements for discussion of accounting
          treatment of the acquisition of ELS.
 
 Employee
          Leasing Services, Inc., operated 3 locations and acquired the 7 temporary
          employee staffing locations throughout fiscal 2004. ELS Inc. acquired Five
          Star
          Staffing, Inc. which consisted of 3 locations, in August 2004, Five Star
          Staffing (NY), Inc., which consisted of 3 locations, in November 2004 and
          American Staffing Resources, Ltd which consisted of 1 location , in November
          2004. Prior to ELS Inc.’s acquisition of these entities, these entities were
          owned and operated by unrelated third parties in various locations throughout
          Florida, New York and Ohio.
 
 In
          connection with the Combination on February 7, 2005, ELS was deemed to
          be the
          acquiring company for accounting purposes and the Combination was accounted
          for
          as a reverse acquisition under the purchase method of accounting for business
          combinations in accordance with accounting principles generally accepted
          in the
          United States of America. The acquisition of the ELS entities was treated
          as a
          reverse acquisition for financial accounting purposes and therefore the
          accompanying comparative financial information is that of ELS rather than
          the
          historical financial statements of Resolve Staffing, Inc. In conjunction
          with
          this transaction, the group of companies known as ELS Personnel Services,
          which
          were legally acquired by Resolve Staffing, Inc., changed its name to Resolve
          Staffing, Inc.
 
 On
          various dates during 2005, Resolve Staffing, Inc., entered into purchase
          agreements (“Agreements”), to acquire all of the assets and/or ownership of
          various separate privately-held entities owned and operated by unrelated
          parties
          located throughout the United States. Pursuant to the acquisition agreements,
          Resolve acquired a total of 31 temporary employee staffing locations from
          the
          newly acquired entities. These include:
 
 ·
                On
                    January 24, 2005, Resolve acquired certain assets from Solaris
                    Staffing,
                    Inc. These assets included the operations of certain temporary
                    staffing
                    offices located in upstate New York.
 
 ·
                On
                    February 20, 2005, Resolve acquired SupportStaff Employment Services,
                    a
                    full-service staffing firm located in Sebring, FL.
 
 ·
                On
                    May 9, 2005, Resolve acquired certain assets from Pride Staffing,
                    Inc.
                    These assets include a temporary staffing office located in Erie,
                    PA.
  Page
              3
 Table
              of Contents
  On
          June
          13, 2005 Resolved acquired The Arnold Group, a Southern California staffing
          firm.
 
 ·
                On
                    June 20, 2005 Resolve acquired Taylor Personnel Services, Inc.,
                    a Buffalo,
                    New York staffing firm.
 
 ·
                On
                    August 22, 2005 Resolve acquired Truckers Plus, Inc., a thirteen
                    location
                    truck driver staffing firm headquartered in Memphis,
                    Tennessee.
 
 ·
                On
                    September 14, 2005 Resolve acquired QRD International Inc. d/b/a
                    Delta
                    Staffing, a Southern California staffing
                    firm.
 
 ·
                On
                    September 30, 2005 Resolve acquired Midwest Staffing Inc., a
                    medical
                    staffing firm located in Oklahoma City,
                    Oklahoma.
 
 ·
                On
                    October 21, 2005 Resolve acquired Star Personnel Services of
                    Kentucky,
                    LLC, a Northern KY staffing firm.
 
 ·
                On
                    October 31, 2005 Resolve acquired Project Solvers Inc., a temporary
                    and
                    permanent placement firm specific to the fashion, apparel, and
                    design
                    industries, with a New York office.
 
 ·
                On
                    November 10, 2005 Resolve acquired ProCare Medical Staffing,
                    LLC, a
                    medical staffing firm with an Illinois
                    office.
 
 ·
                On
                    November 28, 2005 Resolve acquired Big Sky Travel Nurses, Inc.,
                    a medical
                    staffing firm, with a Montana
                    office.
 
 ·
                On
                    December 11, 2005 Resolve acquired Assisted Staffing, Inc., a
                    medical
                    staffing firm with an Arizona office
                    location.
 
 ·
                On
                    December 26, 2005 Resolve acquired Pagnard Enterprises, Inc.,
                    a temporary
                    staffing firm with an Ohio office.
 
 ·
                On
                    December 27, 2005 Resolve acquired Drivers Plus, Inc., a truck
                    driver
                    staffing firm with an office in
                    Missouri.
 
 ·
                On
                    December 30, 2005 Resolve acquired Staffpro, Inc., a temporary
                    staffing
                    firm with one office in Kentucky and one office in
                    Ohio.
 
 Because
          the owners of ELS held approximately 90% of the Company’s outstanding common
          stock after the Combination, as well as the Company’s analysis of the other
          criteria used for determining which entity is the accounting acquirer under
          SFAS
          No. 141, ELS is deemed to be the acquiring company for accounting purposes
          and
          the Combination has been accounted for as a reverse acquisition under the
          purchase method of accounting for business combinations in accordance with
          accounting principles generally accepted in the United States of America.
          The
          audited financial statements of Resolve for each of the two years ended
          December 31, 2003 and 2004 are included in the Resolve Staffing, Inc.
          Annual Report on Form 10-KSB, filed with the Securities and Exchange Commission
          (the “SEC”) on April 15, 2005. The audited financial statements of ELS for the
          two years ended December 31, 2003 and 2004 or such time as the entity was
          under
          the control of ELS, Inc. through December 31, 2004 have been included in
          the
          Resolve Staffing amended report on Form 8-K pertaining to this acquisition
          which
          was filed in December, 2005. In accordance with the accounting treatment
          described above, the historical financial statements prior to the Combination
          reflect those of ELS. In conjunction with this transaction, the group of
          companies known as ELS Personnel Services, which were legally acquired
          by
          Resolve Staffing, Inc., changed its name to Resolve Staffing, Inc. The
          financial
          information for 2004 includes the combined balances and combined results
          of
          operations of the individual entities which comprise ELS. The combined
          results
          of operations for the acquired entities include the activities of each
          entity
          from the date of acquisition to December 31, 2004.
 
 We
          plan
          to continue to grow our business through the acquisition of private companies
          in
          the staffing industry that would provide types of staffing and/or related
          services with which we are familiar. We may seek private staffing companies
          for
          acquisitions or strategic alliances both in and out of our current markets.
          We
          believe that by acquiring existing staffing companies it will enable us
          to:
 
 ·
                recruit
                    well-trained, high-quality
                    professionals;
 ·
                expand
                    our service offerings;
 ·
                gain
                    additional industry expertise;
 ·
                broaden
                    our client base; and
 ·
                expand
                    our geographic presence.
 
  Page
              4
 Table
              of Contents
  On
          February 22, 2006, Resolve Staffing announced that it has reached an agreement
          in principle to merge with Employee Leasing Services, Inc. (ELS Inc.),
          and
          certain related affiliates. Headquartered in Cincinnati, Ohio. ELS Inc.
          (www.elshr.com), a professional employer organization (PEO), manages a
          payroll
          of over 10,000 worksite employees in over 40 states and has operation and
          service centers throughout the country. ELS Inc.’s 2005 gross (non-GAAP)
          revenues were over $200 million, which equates to approximately $39 million
          in
          net (GAAP) revenues and $3.5 million in Pretax Profit. Under the terms
          of the
          agreement, Resolve will acquire all outstanding shares of ELS Inc. for
          approximately $3 million in cash, a $7 million note and 1.4 million shares
          of
          Resolve common stock. Closing of the transaction is subject to certain
          customary closing conditions and is expected to occur in the second quarter
          of
          2006. Management believes that this transaction will be accounted for as
          a
          reverse acquisition if the transaction is completed under the current
          terms.
 
 We
          do not
          currently have any other agreements to acquire any company. While we may
          prefer
          to structure potential acquisitions in the form of a stock for stock exchange,
          we may acquire private companies for a combination of cash and stock. We
          currently do not have the cash reserves to effect an acquisition, although
          we
          would consider entering into some type of financing arrangement to secure
          the
          cash needed to effect an acquisition. Since we currently do not have any
          signed
          acquisition or financing agreements, the terms of any such acquisition
          or
          financing would be speculative. There can be no assurance that required
          financing will be available on acceptable terms. The principal factors
          that
          would effect whether a transaction is solely for stock or a combination
          of stock
          and cash are the tax and financial objectives of the prospective sellers.
          Three
          major factors in being able to acquire private companies are (1) workers
          compensation insurance coverage, (2) financing, and (3) an exit strategy
          for
          owners of these private companies. We have secured our workers compensation
          insurance with a major carrier with an excellent modification rate, and
          are
          poised to add additional staffing employees cost effectively. Although,
          except
          as described above, we have not actively attempted to attract or negotiate
          with
          acquisition candidates, we will attempt to secure temporary and permanent
          financing for the initial cash requirement of a limited number of acquisitions.
          Management further believes that negotiations with prospective target companies
          would be most effective once the Company's stock has a public market, of
          which
          there is no assurance. Management believes that private companies may be
          acquired using future payout and not require significant current cash outlay.
          Any such acquisition may require the issuance of large number of shares
          of
          common or preferred stock, which would have a dilutive effect on current
          shareholders. We do not anticipate that an acquisition of other staffing
          companies, if any, would result in a change in our control. However, since
          we
          cannot predict what the terms of any future acquisition, if any, there
          could
          exist a situation in which an acquisition might effect a change of control
          of
          our Company. If a change of control should occur, our current management
          may not
          be able to implement our current business plan, which could result in a
          new
          business plan by the new owners, which business plan may differ or completely
          deviate from our business plan. Upon a change of control, no assurances
          can be
          made of the future direction of our Company. The Company has no intention
          of
          becoming a “blank check” company, as defined in Rule 419 of the 1933 Securities
          Act.
 
 **General**
 
 The
          Company is engaged in providing human resource services (which include
          recruiting, training, and placement of temporary personnel) focusing on
          the
          professional, clerical, administrative and light industrial staffing market.
          As
          of March 20, 2006 we had approximately 3,000 employees, of whom approximately
          2,700 were flexible staffing personnel and 300 were employed in sales,
          administrative and management capacities. We have approximately 1,000
          clients.
 
 Staffing
          companies such as ours provide one or more of three basic services to clients:
          (i) flexible staffing; (ii) placement and search; and (iii) outplacement
          services. The North American staffing market is estimated to range between
          $80 billion (per Deutsche Bank Securities Inc.) and $97 billion
          according to Staffing Industry Analysts, Inc. This market includes
          temporary staffing, permanent placement and other services similar to the
          Company's for a variety of skills. Also see Development of Business,
          above.
 
 **Company
          Services**
 
 Resolve
          Staffing focuses on meeting our clients' flexible staffing needs, targeting
          opportunities in a fragmented; growing market that we believe has been
          under-served by large, full-service staffing companies. Significant benefits
          to
          clients include providing the ability to outsource the recruiting and many
          logistical aspects of their staffing needs, as well as converting the fixed
          cost
          of employees to the variable cost of outsourced services. A summary of
          our
          Payroll Administration Services and Aggregation of Statutory and Non-Statutory
          Employee Benefits Services are as follows:
 
 -
          PAYROLL
          ADMINISTRATION SERVICES: We assume responsibility for our employees for
          payroll
          and attendant record-keeping, payroll tax deposits, payroll tax reporting,
          and
          all federal, state, payroll tax reports (including 941s, 940s, W-2s, W-3s,
          W-4s
          and W-5s), state unemployment taxes, employee file maintenance, unemployment
          claims and monitoring and responding to changing regulatory
          requirements.
 
  Page
              5
 Table
              of Contents
  -
          AGGREGATION OF STATUTORY AND NON-STATUTORY EMPLOYEE BENEFITS SERVICES:
          We
          provide workers' compensation and unemployment insurance to our service
          employees. Workers' compensation is a state-mandated comprehensive insurance
          program that requires employers to fund medical expenses, lost wages, and
          other
          costs that result from work related injuries and illnesses, regardless
          of fault
          and without any co-payment by the employee. Unemployment insurance is an
          insurance tax imposed by both federal and state governments. Our human
          resources
          and claims administration departments monitor and review workers' compensation
          for loss control purposes.
 
 We
          are
          the employer of record with respect to flexible staffing services and assume
          responsibility for most employment regulations, including compliance with
          workers' compensation and state unemployment laws. As part of our basic
          services
          in the flexible staffing market, we conduct a human resources needs analysis
          for
          clients and client employees. Such analysis includes reviewing work schedules
          and productivity data, in addition to recruiting, interviewing, and qualifying
          candidates for available positions. Based on the results of that review,
          we
          recommend basic and additional services that the client should
          implement.
 
 We
          provide certain other services to our flexible industrial staffing clients
          on a
          fee-for-service basis. These services include screening, recruiting, training,
          workforce deployment, loss prevention and safety training, pre-employment
          testing and assessment, background searches, compensation program design,
          customized personnel management reports, job profiling, description,
          application, turnover tracking and analysis, drug testing policy administration,
          affirmative action plans, opinion surveys and follow-up analysis, exit
          interviews and follow-up analysis, and management development skills
          workshops.
 
 The
          focus
          of our temporary staffing service is to provide short and long term employees
          as
          well as temp to hire employees to financially secured employers. The average
          employee will work a 40 hour work week for a client and will work for an
          average
          of 2 employers per month. It is estimated an employee will work an average
          of 14
          days per month. Our service specializes in a variety of staffing fields
          including medical, truck driver, clerical, and light industrial staffing
          with
          the largest percentage in the clerical and light industrial fields. Each
          applicant is thoroughly interviewed tested and screened to meet the requirements
          of our customers. For long term and temp to hire positions a large percentage
          of
          our customers will interview our candidates and then select the one they
          believe
          to be best suited for the position.
 
 **Sales
          and Marketing**
 
 We
          market
          our flexible staffing services through a combination of direct sales,
          telemarketing, trade shows and advertising. We have ten full time
          salespersons.
 
 **Clients**
 
 Our
          clients represent a cross-section of the industrial sector, of which no
          client
          currently represents more than 5% of our total revenues. We attempt to
          maintain
          diversity within our client base in order to decrease our exposure to downturns
          or volatility in any particular industry, but we cannot assure you that
          we will
          be able to maintain such diversity or decrease our exposure to such volatility.
          All prospective clients fill out a questionnaire to help us evaluate workers'
          compensation risk, creditworthiness, unemployment history, and operating
          stability. Generally, flexible industrial staffing clients do not sign
          long-term
          contracts. We are not dependent on any one customer in any of the markets
          we
          serve.
 
 **Competition**
 
 We
          compete with many small providers in addition to several large public companies,
          including Ablest, Inc., Spherion, Adecco, S.A., Kelly Services, Inc., Manpower,
          Inc., and others. There are limited barriers to entry and new competitors
          frequently enter the market. Although a large percentage of flexible staffing
          providers are locally operated with fewer than five offices, most of the
          large
          public companies have significantly greater marketing, financial and other
          resources than us. We believe that by focusing primarily on customer service,
          we
          enjoy a competitive advantage over many of our competitors that attempt
          to
          provide a broader range of staffing services. We also believe that by targeting
          regional and local companies, rather than the national companies that are
          generally being pursued by our competitors; we can gain certain competitive
          advantages.
 
 We
          believe that several factors contribute to obtaining and retaining clients
          in
          the professional, clerical, administrative, light industrial and technical
          support staffing market. These factors include an understanding of clients'
          specific job requirements, the ability to reliably provide the correct
          number of
          employees on time, the ability to monitor job performance, and the ability
          to
          offer competitive prices. To attract qualified candidates for flexible
          employment assignments, companies must offer competitive wages, positive
          work
          environments, flexibility of work schedules, an adequate number of available
          work hours and, in some cases, vacation and holiday pay. We believe we
          are
          reasonably competitive in these areas in the markets in which we compete,
          although we cannot assure you that we will maintain a competitive standing
          in
          the future.
 
  Page
              6
 Table
              of Contents
  **Industry
          Regulation**
 
 *Overview*
 
 As
          an
          employer, we are subject to federal, state, and local statutes and regulations
          governing our relationships with our employees and affecting businesses
          generally, including employees at client worksites. We assume the sole
          responsibility and liability for the payment of federal and state employment
          taxes with respect to wages and salaries paid to our employees.
 
 We
          plan
          to offer various benefit plans to our worksite employees. These plans include
          a
          multiple-employer retirement plan, a cafeteria plan, a group health plan,
          a
          group life insurance plan, a group disability insurance plan and an employee
          assistance plan. Generally, employee benefit plans are subject to provisions
          of
          both the Internal Revenue Code and the Employee Retirement Income Security
          Act
          of 1974, as amended. In order to qualify for favorable tax treatment under
          the
          Code, the benefit plans must be established and maintained by an employer
          for
          the exclusive benefit of the employer's employees. An IRS examination may
          determine that we were not the employer of our worksite employees under
          Internal
          Revenue Code provisions applicable to employee benefit plans. If the IRS
          were to
          conclude that we were not the employer of our worksite employees for employee
          benefit plan purposes, those employees would not have qualified to make
          tax
          favored contributions to our multiple-employer retirement plans or cafeteria
          plan. If such conclusion were applied retroactively, employees' vested
          account
          balances, could become taxable immediately, we could lose our tax deduction
          to
          the extent the contributions were not vested, the plan trust could become
          a
          taxable trust and penalties could be assessed. In such a scenario, we could
          face
          the risk of potential litigation by some of our clients. As such, we believe
          that a retroactive application by the IRS of an adverse conclusion could
          have a
          material adverse effect on our financial position, results of operations
          and
          liquidity.
 
 ERISA
          also governs employee pension and welfare benefit plans. The United States
          Supreme Court has held that the common law test of employment must be applied
          to
          determine whether an individual is an employee or an independent contractor
          under ERISA. If we were found not to be an employer for ERISA purposes,
          our
          employee benefit plans would not be subject to ERISA. As a result of such
          finding, we and our employee benefit plans would not enjoy the preemption
          of
          state law provided by ERISA and could be subject to varying state laws
          and
          regulations, as well as to claims based upon state common law.
 
 *Workers'
          compensation*
 
 Workers'
          compensation is a state mandated comprehensive insurance program that requires
          employers to fund medical expenses, lost wages and other costs resulting
          from
          work-related injuries and illnesses. In exchange for providing workers'
          compensation coverage for employees, employers are generally immune from
          any
          liability for benefits in excess of those provided by the relevant state
          statutes. In most states, the extensive benefits coverage for both medical
          costs
          and lost wages is provided through the purchase of commercial insurance
          from
          private insurance companies, participation in state-run insurance funds,
          self-insurance funds or, if permitted by the state, employer self insurance.
          Workers' compensation benefits and arrangements vary on a state-by-state
          basis
          and are often highly complex. In Florida, for instance, employers are required
          to furnish, solely through managed care arrangements, the medically necessary
          remedial treatment for injured employees.
 
 **Trademarks
          and Service Marks**
 
 We
          do not
          have any registered trade or service marks. It is our intention to develop
          service marks as appropriate and seek federal registration when possible.
          We
          have begun the process of registering the mark "Resolve Staffing(TM)",
          and the
          name "Resolve Staffing" with a design, and, if federal registration is
          granted,
          we intend to develop Resolve Staffing as our brand identity.
 
 **ITEM
          2. DESCRIPTION OF PROPERTY.**
 
 Resolve’s
          headquarters are located at 3235 Omni Drive, Cincinnati, Ohio 45245. In
          addition
          to our corporate headquarters, Resolve leases facilities at approximately
          52
          locations throughout the United States. Our offices are adequate for our
          present
          level of operations. In the future we will need additional facilities in
          which
          to centralize our accounting, training, human resource, risk management
          and
          executive work activities. We anticipate that we will require larger scale
          data
          processing and network communication capabilities, which will be needed
          in order
          to facilitate the assimilation of acquired companies into our methods of
          operating and accounting standards, and to provide customers state-of-the-art
          service and support.
 
 **ITEM
          3. LEGAL PROCEEDINGS.**
 
 The
          Company is subject to legal proceedings and claims, which arise in the
          ordinary
          course of its business. In the opinion of management, the amount of ultimate
          liability with respect to currently pending or threatened actions is not
          expected to materially affect the financial position or results of operations
          of
          the Company. Litigation is subject to inherent uncertainties and an adverse
          result may arise that may harm our business
 
  Page
              7
 Table
              of Contents
  **ITEM
          4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**
 
 There
          were no submissions of matters to a vote of shareholders in 2005.
 
 On
          August
          20, 2004, the Board of Directors, with a written consent of shareholders,
          approved a one for five reverse split of the Company's common stock. An
          Information Statement was mailed on or about November 30, 2004 to the holders
          of
          record at the close of business on November 25, 2004, of the common stock,
          $.0001 par value per share (the "Common Stock") of Resolve Staffing, Inc.
          (the
          "Registrant"), in connection with action by written consent to authorize
          and
          approve the filing of an amendment to the Registrant’s Articles of Incorporation
          for the purpose of effecting:(i) a reverse stock split of the outstanding
          shares
          of the Registrant’s Common Stock on a one-for-five basis, with no fractional
          shares to issue for any uneven or odd number of shares. The Reverse Split
          shall
          be accomplished by using rounding up principals rather than issuing any
          fractional shares of common stock or cash in lieu of fractional shares;
          (ii)
          maintaining the par value of the Registrant’s Common Stock at $.0001; and (iii)
          maintaining the current number of shares of Common Stock the Registrant
          is
          authorized to issue at 50,000,000. Members of the Board of Directors and
          three
          shareholders owned or had voting authority representing approximately 73%
          of the
          total outstanding votes of all issued and outstanding shares of Common
          Stock of
          the Company and such votes were sufficient to approve the action on the
          record
          date of November 25, 2004. The reverse split took place on December 28,
          2004.
  Page
              8
 Table
              of Contents
  
 **PART
          II**
 
 **ITEM
          5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.**
 
 **Market
          for Common Equity**
 
 Our
          stock
          is currently quoted on the OTCBB. Our symbol is RSFF.
 
 As
          of
          March 20, 2006, management believes there to be approximately 82 holders
          of
          record of our common stock. To date, we have not paid any dividends on
          our
          common stock. We do not currently intend to pay dividends in the future.
          We are
          prohibited from declaring or paying dividends while certain debentures
          or
          warrants are outstanding.
 
 **Recent
          Sale of Unregistered Securities**
 
 On
          June
          1, 2004, Resolve issued 72,000 shares of common stock to Ronald Heinemen
          the
          Company’s Chief Executive Officer as part of an extension of his employment
          contract listed previously.
 
 On
          June
          30, 2004, Resolve issued 200 shares of common stock to Barbara Green pursuant
          to
          the extension of a note payable.
 
 On
          February 7, 2005, Resolve issued a total of 13,000,000 shares of common
          stock as
          part of the payment for the acquisition of ELS, Inc..
 
 On
          May
          25, 2005, Resolve Staffing, Inc. issued 100,000 shares to certain consultants
          as
          part of their compensation.
 
 On
          August
          18, 2005, Resolve issued 50,000 shares to a certain vendor as part of his
          compensation and 100,000 shares as per an employment agreement with certain
          shareholders and employees of Truckers Plus.
 
 On
          November 22, 2005, Resolve issued 430,000 shares to various consultants
          as part
          of their compensation.
 
 **ITEM
          6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**
 
 The
          financial information set forth in the following discussion should be read
          in
          conjunction with the Company's audited financial statements and notes included
          herein under Item 6 of Part II. The results described below are not necessarily
          indicative of the results to be expected in any future period. Certain
          statements in this discussion and analysis, including statements regarding
          our
          strategy, financial performance and revenue sources, are forward-looking
          information based on current expectations and entail various risks and
          uncertainties that could cause actual results to differ materially from
          those
          expressed in the forward-looking statements.
 
 As
          discussed above the 2004 amounts represent the combined operations of
          ELS.
 
 **Results
          of Operations**
 
 *COMPARISON
          OF CONSOLIDATED OPERATIONS FOR YEAR ENDED DECEMBER 31, 2005 TO
          YEAR* ** *ENDED
          DECEMBER 31, 2004.*
 
 Service
          revenues for the year ended December 31, 2004 compared to 2005 increased
          from
          $4,284,006 to $31,138,212, a 627% increase, reflecting an increase in business
          recovery and our aggressive acquisition and marketing efforts. This growth
          is
          also attributable to both growth through acquisition and growth with our
          existing clients as well as expanding our customer base.
 
 Cost
          of
          services increased from $3,567,164 in 2004 to $25,356,038, in 2005, an
          increase
          of 611% from the prior year. This increase is attributable to our aggressive
          sales growth and acquisitions. Our gross margin increased, as a percent
          of
          sales, from approximately 17% to approximately 19%. We expect our gross
          profit
          margins to increase, as a percent of sales, in the future as we continue
          to grow
          our business in higher margin areas such as the truck driver and medical
          staffing market niches.
 
 Selling,
          General and Administrative expenses (“SG&A”) have increased from $759,586 in
          2004 to $6,004,356 in 2005. This increase is attributable to our aggressive
          growth through acquisitions. Resolve has grown into a national provider
          of
          staffing services with approximately 52 offices. This increase in SG&A
          expenses includes marketing, salaries, rents, and various other expenses
          associated with these locations. These costs have increased from approximately
          18% to 19% as a percent of Sales. This increase is attributable to the
          continued
          development of our infrastructure to support our growth and as a result
          of non
          cash related Amortization of Non Compete Agreements and
          depreciation.
   Page
              9
 Table
              of Contents
  Interest
          expense increased from $13,160 in 2004 to $266,140 in 2005. The increase
          is
          attributable to increase debt obligations related to our aggressive acquisition
          strategy. A majority of our debt is through affiliated parties, including
          Ron
          Heineman and ELS, Inc. This is discussed in detail in the footnotes to
          our
          financial statements.
 
 No
          provision for income taxes have been reflected or recorded on these financial
          statements. We incurred a net loss of $488,322 for the year ended December
          31,
          2005 as a result of the matters discussed above. This represents a $432,418
          increase in operating loss from 2004. Losses to date may be used to offset
          future taxable income, assuming the Company becomes profitable.
 
 *LIQUIDITY
          AND CAPITAL RESOURCES*
 
 As
          reflected in the accompanying financial statements, the Company has a net
          working capital balance of $2,345,556 and a stockholder’s deficit of $210,220,
          as of December 31, 2005. Prior to the third quarter of 2005, the Company
          had
          incurred losses and has been dependent upon the financial support of
          stockholders, management and other related parties.
 
 For
          the
          year ended December 31, 2005 we incurred a net loss of $488,322. Of this
          loss,
          $314,525 did not represent the use of cash. Non-cash expenditures consisted
          of
          depreciation of $71,586, stock issuances for services provided to the Company
          of
          $58,000, increase in allowance for doubtful accounts of $78,022, and
          amortization of non compete agreements of $106,917. Changes in accounts
          receivable, prepaid and other expenses, and bank overdraft, along with
          decreases
          in accounts payable, payroll, salary, and other accruals brought the total
          cash
          used by operations to $3,691,110. Additionally we used $172,517 to purchase
          computer equipment, software and office equipment during this
          period.
 
 Management
          has successfully obtained additional financial resources, which the Company
          believes will support operations. These financial resources include financing
          from both related and non-related third parties, are discussed in the
          accompanying footnotes to the financial statements. There can be no assurance
          that management will be successful in continuing operations without additional
          financing efforts. The financial statements do not reflect any adjustments
          that
          may arise as a result of this uncertainty.
 
 The
          Company expects its operating expenses to increase significantly in the
          near
          future as the Company attempts to build its brand and expand itsr customer
          base.
          The Company hopes our expenses will be funded from operations and short-term
          loans from officers, shareholders or others; however, the Company’s operations
          may not provide such funds and the Company may not be able to obtain short-term
          loans from officers, shareholders or others. The Company’s officers and
          shareholders are under no obligation to provide additional loans to the
          Company.
 
 **Off
          Balance Sheet Arrangements**
 
 Depending
          on certain goals and performances being met, Resolve has the following
          off
          balance sheet arrangements which are the result of the various acquisitions
          described previously.
 
 ·
                The
                    Arnold Group - Based on sales targets, the prior owners may receive
                    contingent performance payments not to exceed $125,000 through
                    May 31,
                    2007.
 
 ·
                Taylor
                    Personnel Services, Inc. - Based on sales targets, the prior
                    owners may
                    receive contingent performance payments not to exceed $80,000
                    through May
                    31, 2007.
 
 ·
                QRD
                    International, Inc. dba Delta Staffing - Based on gross profit
                    targets,
                    the prior owners may receive contingent performance payments
                    of up to
                    approximately $150,000 through September 11, 2006, and $75,000
                    through
                    September 11, 2007.
 
 ·
                Midwest
                    Staffing, Inc. - Based on pre-tax profit targets, the prior owners
                    may
                    receive contingent performance payments not to exceed $75,000
                    through
                    September 27, 2006 and approximately $75,000 through September
                    27,
                    2007.
 
 ·
                Star
                    Personnel Services of Kentucky, LLC. - Based on sales targets,
                    the prior
                    owners may receive contingent performance payments not to exceed
                    $50,000
                    through December 31, 2006.
 
 ·
                Project
                    Solvers, Inc. - Based on pre-tax profit targets, the prior owners
                    may
                    receive contingent performance payments not to exceed $200,000
                    through
                    October 25, 2008.
 
 ·
                Pro
                    Care Medical Staffing, LLC. - Based on pre-tax targets the prior
                    owners
                    may receive contingent performance payments not to exceed $ 650,000
                    in
                    total through November 9, 2007.
 
 ·
                Big
                    Sky Travel Nurses, Inc. - Based on pre- tax profit targets, the
                    prior
                    owners may receive contingent performance payments of up to approximately
                    $15,000 through November 27, 2006 and $15,000 through November
                    27,
                    2007.
 ·
                Assisted
                    Staffing, Inc. - Based on pre- tax profit targets, the prior
                    owners may
                    receive contingent performance payments of up to approximately
                    $25,000
                    through December 10, 2007.
 
 ·
                Pagnard
                    Enterprises Inc. - Based on sales targets, the prior owners may
                    receive
                    contingent performance payments of up to approximately $150,000
                    through
                    February 15, 2008.
 
 ·
                Driver’s
                    Plus, Inc. - Based on pre- tax profit targets, the prior owners
                    may
                    receive contingent performance payments of up to approximately
                    $10,000
                    through December 26, 2006, and $10,000 through December 26,
                    2007.
 
 ·
                StaffPro,
                    LLC. - Based on sales targets, the prior owners may receive contingent
                    performance payments of approximately $25,000 through December
                    29,
                    2006.
 
 The
          following off balance sheet arrangements are based on transactions completed
          after December 31, 2005.
 
 ·
                R
                    & R Staffing Services, Inc. - Based on gross profit targets, the
                    prior
                    owners may receive contingent performance payments of up to approximately
                    $350,000 through January 5, 2007.
 
 ·
                Ready
                    Nurse, LLC. - Based on pre- tax profit targets, the prior owners
                    may
                    receive contingent performance payments of up to approximately
                    $10,000
                    through March 5, 2008.
 
  Page
              10
 Table
              of Contents
  **RISK
          FACTORS**
 
 INVESTORS
          MAY LOSE THEIR INVESTMENT IN OUR COMMON STOCK IF, BECAUSE WE HAVE A LIMITED
          OPERATING HISTORY, PROSPECTIVE INVESTORS HAVE A LIMITED HISTORICAL BASIS
          TO
          JUDGE WHETHER OUR BUSINESS CAN BE SUCCESSFUL
 
 We
          were
          incorporated in April 1998, and have been engaged in the staffing business
          since
          August 1999. We have a limited operating history upon which an investor
          may
          evaluate our business and prospects. Our potential for future profitability
          must
          be considered in light of the risks, uncertainties, expenses and difficulties
          frequently encountered by companies in their early stages of development,
          particularly companies in rapidly evolving markets, such as staffing services
          in
          general and those catering to small to medium businesses in particular.
          Since we
          do not have a lengthy history in the staffing business; therefore, prospective
          investors do not have a historical basis from which to evaluate our performance.
 
 WE
          HAVE
          LOST MONEY IN EACH YEAR SINCE INCEPTION AND MAY NEVER BECOME PROFITABLE.
 
 We
          have
          incurred net losses from operations in each year since inception. Our net
          loss
          for the fiscal year ended December 31, 2005 was $488,322 and as of December
          31,
          2005 had an accumulated deficit of $1,399,217. While we expect to become
          profitable in 2006, we can not guarantee profitability. We expect our operating
          expenses to continue to increase as we attempt to build our brand, expand
          our
          customer base and make acquisitions. While we expect to be profitable in
          2006,
          to become profitable, we must increase revenue substantially and achieve
          and
          maintain positive gross margins. We may not be able to increase revenue
          and
          gross margins sufficiently to achieve profitability.
 
 UNLESS
          WE
          FIND A NEW WORKING CAPITAL FUNDING SOURCE, WE RISK LOSING EMPLOYEES, CUSTOMERS
          AND WORKERS' COMPENSATION COVERAGE
 
 We
          pay
          our flexible staffing employees on a weekly basis. However, on average,
          we
          receive payment for these services from our customers 30 to 60 days after
          the
          date of invoice. As we establish or acquire new offices, or as we expand
          existing offices, we will have increasing requirements for cash to fund
          these
          payroll obligations. Our primary sources of working capital funds for payroll
          related and workers' compensation expenditures have been loans or private
          placements of securities to individuals, including certain of our shareholders.
          If we do not obtain an institutional financing source and we are unable
          to
          secure alternative financing on acceptable terms, we will lose employees,
          customers, and may be unable to pay payroll related premiums.
 
 WE
          ARE
          SUBJECT TO GOVERNMENT REGULATIONS AND ANY CHANGE IN THESE REGULATIONS,
          OR THE
          POSSIBLERETROACTIVE APPLICATION OF THESE REGULATIONS COULD RESULT IN ADDITIONAL
          TAX LIABILITY
 
 As
          an
          employer, we are subject to all federal, state and local statutes and
          regulations governing our relationships with our employees and affecting
          businesses generally, including our employees assigned to work at client
          company
          locations (sometimes referred to as worksite employees).
  OUR
          EMPLOYEE RELATED COSTS ARE SIGNIFICANT AND, IF INCREASED, AND WE ARE UNABLE
          TO
          PASS THESE COSTS ON TO OUR CUSTOMERS, WILL INCREASE OUR COST OF DOING
          BUSINESS
 
 We
          are
          required to pay a number of federal and state payroll taxes and related
          payroll
          costs, including unemployment taxes, workers' compensation insurance premiums
          and claims, Social Security, and Medicare, among others, for our employees.
          We
          also incur costs related to providing additional benefits to our employees,
          such
          as insurance premiums for health care. Health insurance premiums, unemployment
          taxes and workers' compensation insurance premiums and costs are significant
          to
          our operating results, and are determined, in part, by our claims experience.
          We
          attempt to increase fees charged to our customers to offset any increase
          in
          these costs, but we may be unable to do so or we may lose customers if
          we do. If
          the federal or state legislatures adopt laws specifying additional benefits
          for
          temporary workers, demand for our services may be adversely affected. In
          addition, workers' compensation expenses are based on our actual claims
          experiences in each state and our actual aggregate workers' compensation
          costs
          may exceed estimates.
 
 BECAUSE
          OUR STAFFERS WORK AT THE CLIENTS' PLACE OF BUSINESS, WE MAY BE EXPOSED
          TO
          EMPLOYMENT RELATED CLAIMS AND COSTS THAT ARISE FROM THAT CLIENTS' WORK
          PLACE
          LOCATION AND WE DO NOT CONTROL THE CLIENTS' WORKING ENVIRONMENT
 
 Temporary
          staffing companies, such as ours, employ people in the workplace of their
          customers. This creates a risk of potential litigation based on claims
          by
          customers of employee misconduct or negligence, claims by employees of
          discrimination or harassment, including claims relating to actions of our
          customers, claims related to the inadvertent employment of illegal aliens
          or
          unlicensed personnel, payment of workers' compensation claims and other
          similar
          claims. We may be held responsible for the actions at a job site of workers
          not
          under our direct control.
  Page
              11
 Table
              of Contents
  WE
          MAY
          LOSE CUSTOMERS IF WE ARE UNABLE TO ATTRACT QUALIFIED TEMPORARY PERSONNEL
          DUE TO
          LOW UNEMPLOYMENT RATES AND AN INCREASE IN COMPETITION FOR QUALIFIED TEMPORARY
          PERSONNEL
 
 We
          compete with other temporary personnel companies to meet our customer's
          needs.
          We must continually attract reliable temporary workers to fill positions
          and may
          from time to time experience shortages of available temporary workers.
          During
          periods of increased economic activity and low unemployment, the competition
          among temporary staffing firms for qualified personnel increases. Many
          regions
          in which we operate are experiencing historically low rates of unemployment
          and
          we have experienced, and may continue to experience, significant difficulties
          in
          hiring and retaining sufficient number of qualified personnel to satisfy
          the
          needs of our customers. Also, we may face increased competitive pricing
          pressures during these periods of low unemployment rates.
 
 WE
          REQUIRE ADDITIONAL CAPITAL TO FUND OUR CURRENT OPERATIONS AND TO MAKE
          ACQUISITIONS. WE MAY HAVE TO CURTAIL OUR BUSINESS IF WE CANNOT FIND ADEQUATE
          FUNDING
 
 The
          expansion and development of our business will require significant additional
          capital, which we may be unable to obtain on suitable terms, or at all.
          We
          currently have no legally binding commitments with any third parties to
          obtain
          any material amount of additional equity or debt financing. If we are unable
          to
          obtain adequate funding on suitable terms, or at all, we may have to delay,
          reduce or eliminate some or all of our advertising, marketing, acquisition
          activity, general operations or any other initiatives.
 
 IF
          WE ARE
          UNABLE TO SUCCESSFULLY INTEGRATE AND MANAGE ACQUIRED BUSINESSES WITHOUT
          SUBSTANTIAL EXPENSE OR DELAY WE MAY NOT BE ABLE TO EFFECTIVELY OPERATE
          OUR
          BUSINESS AND/OR IT MAY DECREASE THE VALUE OF OUR COMMON STOCK
 
 In
          the
          future, we intend to expand our operations through acquisitions of small
          and
          medium size private companies, or divisions or segments of major private
          and
          public companies. We will do this to:
 
 ·
                recruit
                    well−trained, high−quality
                    professionals;
 ·
                expand
                    our service offerings;
 ·
                gain
                    additional industry expertise;
 ·
                broaden
                    our client base; and
 ·
                expand
                    our geographic presence.
 
 We
          may
          not be able to integrate successfully businesses which we may acquire in
          the
          future without substantial expense, delays or other operational or financial
          problems. We may not be able to identify, acquire or profitably manage
          additional businesses.
 
 OUR
          PLAN
          TO MAKE ACQUISITIONS MAY DIVERT MANAGEMENT'S ATTENTION FROM DAY−TO−DAY BUSINESS
          OPERATIONS WHICH COULD PREVENT OUR BUSINESS FROM GROWING
 
 If
          we are
          able to identify acquisition candidates, management's time and attention
          will be
          diverted from such activities as sales, marketing and tailoring staffing
          solutions to meet customer's needs. If management is not able to address
          these
          day−to−day operational tasks, we may lose customers or fail to increase
          revenue.
 
 ACQUISITION
          ACTIVITIES MAY CAUSE US TO LOSE EXISTING CUSTOMERS BECAUSE OF CONFLICTS
          OR
          SERVICE PROBLEMS
 
 The
          clients of companies we may acquire may be in the same or similar businesses
          with our existing clients. Although we do not enter into agreements to
          restrict
          the type of business which we service, providing staff services to existing
          clients' direct competition may cause such existing clients to look elsewhere
          for staffing services.
 
 OUR
          PRINCIPAL STOCKHOLDERS, OFFICERS AND DIRECTORS WILL OWN A CONTROLLING INTEREST
          IN OUR
 VOTING
          STOCK AND INVESTORS WILL NOT HAVE ANY VOICE IN OUR MANAGEMENT
 
 Our
          officers, directors and stockholders with greater than 5% holdings will,
          in the
          aggregate, beneficially own approximately 90% of our outstanding common
          stock.
          As a result, these stockholders, acting together, will have the ability
          to
          control substantially all matters submitted to our stockholders for approval,
          including:
  ·
                election
                    of our board of directors;
 ·
                removal
                    of any of our directors;
 ·
                amendment
                    of our certificate of incorporation or bylaws;
                    and
 ·
                adoption
                    of measures that could delay or prevent a change in control or
                    impede a
                    merger, takeover or other business combination involving
                    us.
  Page
              12
 Table
              of Contents
  
 As
          a
          result of their ownership and positions, our directors and executive officers
          collectively are able to influence all matters requiring stockholder approval,
          including the election of directors and approval of significant corporate
          transactions. In addition, sales of significant amounts of shares held
          by our
          directors and executive officers, or the prospect of these sales, could
          adversely affect the market price of our common stock. Management's stock
          ownership may discourage a potential acquirer from making a tender offer
          or
          otherwise attempting to obtain control of us, which in turn could reduce
          our
          stock price or prevent our stockholders from realizing a premium over our
          stock
          price.
 
 THERE
          ARE
          A LARGE NUMBER OF SHARES UNDERLYING OUR WARRANTS THAT MAY BE AVAILABLE
          FOR
          FUTURE SALE AND THE SALE OF THESE SHARES MAY CAUSE THE PRICE OF OUR STOCK
          TO
          DROP
 
 As
          of
          March 20, 2006, we had 15,619,101 shares of common stock issued and outstanding,
          which includes 400,000 shares held in escrow as described in Note E to
          the
          accompanying financial statements. We also have 4,851,320 shares issuable
          upon
          exercise of our warrants and options, which includes the option grant to
          acquire
          4,000,000 shares of Company stock which was made during January 2006. The
          sale
          of these shares may cause the market price of our common stock to drop.
          The
          issuance of shares upon conversion or exercise of the warrants may result
          in
          substantial dilution to the interests of other stockholders.
 
 THE
          APPLICATION OF THE "PENNY STOCK REGULATION" COULD HARM THE MARKET PRICE
          OF OUR
          COMMON STOCK
 
 Our
          securities may be deemed a penny stock. Penny stocks generally are equity
          securities with a price of less than $5.00 per share other than securities
          registered on certain national securities exchanges or quoted on the NASDAQ
          Stock Market, provided that current price and volume information with respect
          to
          transactions in such securities is provided by the exchange or system.
          Our
          securities may be subject to "penny stock rules" that impose additional
          sales
          practice requirements on broker−dealers who sell such securities to persons
          other than established customers and accredited investors (generally those
          with
          assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000
          together with their spouse). For transactions covered by these rules, the
          broker−dealer must make a special suitability determination for the purchase of
          such securities and have received the purchaser's written consent to the
          transaction prior to the purchase. Additionally, for any transaction involving
          a
          penny stock, unless exempt, the "penny stock rules" require the delivery,
          prior
          to the transaction, of a disclosure schedule prescribed by the Commission
          relating to the penny stock market. The broker−dealer also must disclose the
          commissions payable to both the broker−dealer and the registered representative
          and current quotations for the securities. Finally, monthly statements
          must be
          sent disclosing recent price information on the limited market in penny
          stocks.
          Consequently, the "penny stock rules" may restrict the ability of broker−dealers
          to sell our securities and may have the effect of reducing the level of
          trading
          activity and price of our common stock in the secondary market.
 
 SHOULD
          WE
          ENTER INTO AN ACQUISITION IN EXCHANGE FOR THE ISSUANCE OF SHARES OF OUR
          COMMON
          STOCK, SUCH ISSUANCE MAY HAVE A DILUTIVE EFFECT FOR OUR CURRENT SHAREHOLDERS
          AND
          MAY CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE
 
 The
          future issuance of all or part of our remaining authorized but currently
          unissued common stock in connection with an acquisition may result in
          substantial dilution in the percentage of our common stock held by our
          then
          existing shareholders. We may value any common stock issued in the future
          on an
          arbitrary basis. The issuance of common stock for future services or
          acquisitions or other corporate actions may have the effect of diluting
          the
          value of the shares held by our investors, and might cause the price of
          our
          common stock to decline.
 
  Page
              13
 Table
              of Contents
   
 **ITEM
          7. FINANITEM 7. FINANCIAL STATEMENTS.**
  
 **RESOLVE
          STAFFING, INC.**
 **FORM
          10-KSB FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 
 
 **INDEX
          TO FINANCIAL STATEMENTS**
 
 Report
                    of PKF for Year Ended December 31, 2005Report
                    of Jason F. Clausen and Associates for Year Ended December 31,
                    2004Consolidated
                    Balance Sheets as of December 31, 2005 and 2004Consolidated
                    Statements of Operations for the Years Ended December 31, 2005
                    and 2004Consolidated
                    Statements of Stockholders’ Deficit for the Years Ended December 31, 2005
                    and 2004Consolidated
                    Statements of Cash Flows for the Years Ended December 31, 2005
                    and
                    2004Notes
                    to Consolidated Financial Statements
 
  
  Page
              14
 Table
              of Contents
   
 
 
 
 **REPORT
          OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 
 Board
          of
          Directors and Stockholders
 Resolve
          Staffing, Inc.
 Cincinnati,
          Ohio
 
 
 We
          have
          audited the accompanying consolidated balance sheet of Resolve Staffing,
          Inc.
          and Subsidiaries (the “Company”) as of December 31, 2005, and the related
          consolidated statements of operations, stockholder’s deficit, and cash flows for
          the year 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
          audit.
 
 We
          conducted our audit in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audit to obtain reasonable assurance about whether the
          consolidated financial statements are free of material misstatement. 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 audit provides a reasonable basis for our
          opinion.
 
 In
          our
          opinion, the consolidated financial statements referred to above present
          fairly,
          in all material respects, the consolidated financial position of Resolve
          Staffing, Inc. and Subsidiaries as of December 31, 2005, and the consolidated
          results of its operations and cash flows for the year then ended, in conformity
          with accounting principles generally accepted in the United States of
          America.
 
 
 
 
 March
                    11, 2006
                PKFSan
                    Diego, California
                Certified
                    Public AccountantsA
                    Professional Corporation
 
 
  Page
              15
 Table
              of Contents
  
 INDEPENDENT
          AUDITOR’S REPORT
 
 
 
 The
          Shareholders and Owners
 ELS
          Personnel Services
 Cincinnati,
          OH
 
 
 We
          have
          audited the combined balance sheet of ELS Personnel Services (a group of
          commonly controlled entities) as of December 31, 2004, and the related
          combined
          statement of operations, owner’s/shareholder’s equity, and cash flows for the
          year ended December 31, 2004. These combined financial statements are the
          responsibility of the Company's management. Our responsibility is to express
          an
          opinion on the combined financial statements based on our audit.
 
 We
          conducted our audit in accordance with auditing standards generally accepted
          in
          the United States of America. Those standards require that we plan and
          perform
          the audit to obtain reasonable assurance about whether the financial statements
          are free of material misstatement. An audit includes examining, on a test
          basis,
          evidence supporting the amounts and disclosures in the 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 audit provides a reasonable
          basis
          for our opinion.
 
 As
          mentioned in Note A to the financial statements, ELS Personnel Services
          is a
          group of commonly controlled entities that entered into a reverse acquisition
          with Resolve Staffing, Inc. Each of the commonly controlled entities was
          owned
          by a single owner and accordingly the financial information as of December
          31,
          2004 and for the year then ended has been prepared on a combined basis.
 
 In
          our
          opinion, the combined financial statements referred to above present fairly,
          in
          all material respects, the financial position of ELS Personnel Services
          as of
          December 31, 2004, and the results of its operations and its cash flows
          for the
          year then ended, in conformity with accounting principles generally accepted
          in
          the United States of America.
  
 
 
 
 Warren,
                    Michigan
                Jason
                    F. Clausen & Associates, P.C.November
                    10, 2005
                Certified
                    Public Accountants
 
 
 
 
  Page
              16
 Table
              of Contents
  
 **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          BALANCE SHEETS**
 **DECEMBER
          31, 2005 AND 2004**
 **ASSETS**
                  **2005**
                  **2004****Current
                      Assets:**Cash
                  $
                      -
                  $75,356Accounts
                      receivable, net of allowance for doubtful
                    accounts
                      of $96,986 for 2005 and $10,700 for 2004
                  6,638,782
                  1,054,522Prepaid
                      and other assets
                  330,368
                  474,363Note
                      receivable from related party
                  -
                  560,193Total
                      current assets
                  6,969,150
                  2,164,434**Property
                      and Equipment:**Property
                      and equipment
                  866,196
                  312,298Less:
                      Accumulated depreciation
                  (264,935)
                  (162,342)Net
                      property and equipment
                  601,261
                  149,956**Other
                      Assets:**Deposits
                  -
                  -Goodwill
                  6,695,579
                  640,000Non
                      competes, net of accumulated amortization of $106,917
                  231,083
                  -Total
                      other assets
                  6,926,662
                  640,000**Total
                      Assets**
                  **$14,497,073**
                  **$2,954,390****LIABILITIES
                      AND STOCKHOLDERS’ (DEFICIT) EQUITY****Current
                      Liabilities:**Bank
                      overdraft
                  $205,551
                  $37,871Accounts
                      payable and accrued liabilities
                  1,011,903
                  37,745Accounts
                      payable related party
                  825,921
                  -Accrued
                      salaries and payroll taxes
                  639,474
                  395,268Notes
                      payable and lines of credit
                  1,849,246
                  525,621Notes
                      payable - related parties
                  91,500
                  1,484,226Total
                      current liabilities
                  4,623,595
                  2,480,731**Long
                      Term Liabilities**Notes
                      payable
                  4,209,762
                  393,556Notes
                      payable - related parties
                  5,873,936
                  -Total
                      long term debt
                  10,083,698
                  393,556Total
                      Liabilities
                  14,707,293
                  2,874,287**Stockholders’
                      (Deficit) Equity:**Common
                      stock, $.0001 par value, 50,000,000 shares
                    authorized,
                      issued and outstanding:
                    2005
                      - 15,219,101 shares; 2004 - 13,000,000 shares
                  1,522
                  1,300Paid-in
                      capital
                  1,187,475
                  989,698Accumulated
                      deficit
                  (1,399,217)
                  (910,895)Total
                      stockholders’ (deficit) equity
                  (210,220)
                  80,103**Total
                      Liabilities and Stockholders’ (Deficit) Equity**
                  **$14,497,073**
                  **$2,954,390**
  See
          accompanying notes.
  Page
              17
 Table
              of Contents
  
 **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 
 **2005**
                
                **2004****Staffing
                    Services Revenue**
                
                $31,138,212
                
                $4,284,006**Cost
                    of Staffing Services Revenue**
                
                25,356,038
                
                3,567,164**Gross
                    Profit**
                
                5,782,174
                
                716,842**Operating
                    Expenses**
                
                6,004,356
                
                759,586**Loss
                    From Operations**
                
                (222,182)
                
                (42,744)**Other
                    Income (Expense):**Interest
                    expense
                
                (266,140)
                
                (13,160)Other
                    income (expenses), net
                
                (266,140)
                
                (13,160)**Net
                    Loss**
                
                $(488,322)
                
                $(55,904)**Net
                    Loss Per Share**Basic
                    and diluted
                
                $(.03)
                
                $(.00)**Weighted
                    Average Number of Shares Used in Loss Per Share
                    Computation:**Basic
                    and diluted
                
                14,540,838
                
                13,000,000
 
 
 
  See
          accompanying notes.
  Page
              18
 Table
              of Contents
   **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF STOCKHOLDERS’ DEFICIT**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 **Common
                      Shares**
                  **Stock
                      Amount**
                  **Paid
                      in Capital**
                  **Accumulated
                      Deficit**
                  **Total****Balance,
                      December 31, 2003**
                  13,000,000
                  $
                      1,300
                  $
                      989,698
                  $
                      (854,991)
                  $
                      136,007Net
                      Loss
                  
                  
                  
                  (55,904)
                  (55,904)**Balance
                      December 31, 2004**
                  13,000,000
                  1,300
                  989,698
                  (910,895)
                  80,103Issuance
                      of common stock for acquisitions
                  1,639,101
                  164
                  139,835
                  -
                  139,999Issuance
                      of common stock for services
                  580,000
                  58
                  57,942
                  -
                  58,000Net
                      Loss
                  
                  
                  
                  (488,322)
                  (488,322)**Balance
                      December 31, 2005**
                  15,219,101
                  $1,522
                  $
                      1,187,475
                  $
                      (1,399,217)
                  $
                      (210,220)
  See
            accompanying notes.
 
  Page
              19
 Table
              of Contents
   **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 **2005**
                  
                  **2004****Cash
                      Flows From Operating Activities**Net
                      loss
                  $(488,322)
                  
                  $(55,904)Adjustments
                      to reconcile net loss to net cash flows from operating
                      activities:Stock-based
                      compensation
                  58,000
                  
                  -Depreciation
                  71,586
                  
                  10,120Change
                      in allowance for doubtful accounts
                  78,022
                  
                  -Amortization
                      of non-compete agreements
                  106,917
                  
                  -Changes
                      in operating assets and liabilities:Accounts
                      receivable
                  (5,404,372)
                  
                  (426,396)Prepaid
                      and other assets
                  269,854
                  
                  (231,766)Accounts
                      payable and accrued liabilities
                  547,078
                  
                  265,307Payables
                      to related party
                  825,921
                  
                  -Accrued
                      salaries and payroll taxes
                  244,206
                  
                  58,081Net
                      cash flows used in operating activities
                  (3,691,110)
                  
                  (380,558)**Cash
                      Flows From Investing Activities******Purchases
                      of property and equipment
                  (172,517)
                  
                  -****Acquisition
                      of net assets of subsidiaries, net of cash
                  (1,941,480)****Net
                      cash flows used in investing activities
                  (2,113,997)
                  
                  -**Cash
                      Flows From Financing Activities**Bank
                      overdraft
                    ****Borrowings
                      (paydowns) on line of credit
                  167,680
                    (400,000)
                  
                  21,734
                    400,000Proceeds
                      from notes payable
                  3,914,919
                  
                  519,177Paydowns
                      on notes payable
                    Borrowings
                      from related parties
                  (1,164,107)
                    6,713,463
                  
                  -
                    -Paydowns
                      on related party debt
                    Shareholder
                      distributions
                  (3,502,204)
                    -
                  
                  (73,541)
                    (491,450)****Net
                      cash provided by financing activities
                  5,729,751
                  
                  375,920**Net
                      Increase (Decrease) in Cash**
                  (75,356)
                  
                  (4,638)**Cash,
                      Beginning of the Period**
                  75,356
                  
                  79,994**Cash,
                      End of the Period**
                  $-
                  
                  $75,356
 See
          accompanying notes.
  Page
              20
 Table
              of Contents
  **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          A - NATURE OF OPERATIONS, LIQUIDITY AND MANAGEMENT’S PLANS, AND SUMMARY OF
          SIGNIFICANT ACCOUNTING POLICIES**
 
 Resolve
          Staffing, Inc., (“Resolve” or the “Company”) was organized under the laws of the
          State of Nevada on April 9, 1998. Integra Staffing, Inc., (“Integra”) is a
          wholly owned subsidiary that was organized under the laws of the State
          of
          Florida on August 16, 1999 (collectively referred to as “Resolve”) and acquired
          in 2001. The Company is a national provider of outsourced human resource
          services with 52 offices reaching from California to New York. The Company
          provides a full range of supplemental staffing and outsourced solutions,
          including solutions for temporary, temporary-to-hire, or direct hire staffing
          in
          the clerical, office administration, customer service, professional and
          light
          industrial categories.
 
 On
          February 7, 2005, Resolve Staffing, Inc., entered into an equity purchase
          agreement (“Agreement”), to purchase ELS Personnel Services (“ELS”) (the
“Combination”) from Employee Leasing Services, Inc., (“ELS Inc.”), a
          privately-held company located in Cincinnati, Ohio. The Company’s Chief
          Executive Officer and director, Ronald Heineman, is a principal shareholder,
          officer and director of ELS. Pursuant to the equity purchase agreement,
          Resolve
          acquired the ownership interest in the group of companies which comprised
          ELS
          Personnel Services, (ELS Personnel Services, LLC, Five Star Staffing, Inc.,
          Five
          Star Staffing (NY), Inc., and American Staffing Resources, Ltd.) comprising
          a
          total of 10 temporary employee staffing locations. See Basis of Presentation
          section for discussion of accounting treatment of the acquisition of
          ELS.
 
 Employee
          Leasing Services, Inc., operated 3 locations and acquired the 7 temporary
          employee staffing locations throughout fiscal 2004. ELS Inc. acquired Five
          Star
          Staffing, Inc. which consisted of 3 locations, in August 2004, Five Star
          Staffing (NY), Inc., which consisted of 3 locations, in November 2004 and
          American Staffing Resources, Ltd which consisted of 1 location, in November
          2004. Prior to ELS Inc.’s acquisition of these entities, these entities were
          owned and operated by unrelated third parties in various locations throughout
          Florida, New York and Ohio.
 
 In
          connection with the Combination on February 7, 2005, ELS was deemed to
          be the
          acquiring company for accounting purposes and the Combination was accounted
          for
          as a reverse acquisition under the purchase method of accounting for business
          combinations in accordance with accounting principles generally accepted
          in the
          United States of America. The acquisition of the ELS entities was treated
          as a
          reverse acquisition for financial accounting purposes and therefore the
          accompanying comparative financial information is that of ELS rather than
          the
          historical financial statements of Resolve Staffing, Inc. In conjunction
          with
          this transaction, the group of companies known as ELS Personnel Services,
          which
          were legally acquired by Resolve Staffing, Inc., changed its name to Resolve
          Staffing, Inc. The financial information for 2004 includes the combined
          balances
          and combined results of operations of the individual entities which comprise
          ELS. The combined results of operations for the acquired entities include
          the
          activities of each entity from the date of acquisition to December 31,
          2004.
  On
          various dates during 2005, Resolve Staffing, Inc., entered into purchase
          agreements (“Agreements”), to acquire all of the assets and/or ownership of
          various separate privately-held entities owned and operated by unrelated
          parties
          located throughout the United States. Pursuant to the acquisition agreements,
          Resolve acquired a total of 31 temporary employee staffing locations from
          the
          newly acquired entities. The results of operations for each of the entities
          below have been included from the date of acquisition through December
          31, 2005.
          These include:
 
 ·
                On
                    January 24, 2005, Resolve acquired certain assets from Solaris
                    Staffing,
                    Inc. These assets included the operations of certain temporary
                    staffing
                    offices located in upstate New York.
 
 ·
                On
                    February 20, 2005, Resolve acquired SupportStaff Employment Services,
                    a
                    full-service staffing firm located in Sebring, FL.
 
 ·
                On
                    May 9, 2005, Resolve acquired certain assets from Pride Staffing,
                    Inc.
                    These assets include a temporary staffing office located in Erie,
                    PA.
 
 ·
                On
                    June 13, 2005 Resolved acquired The Arnold Group, a Southern
                    California
                    staffing firm.
 
 ·
                On
                    June 20, 2005 Resolve acquired Taylor Personnel Services, Inc.,
                    a Buffalo,
                    New York staffing firm.
 
 ·
                On
                    August 22, 2005 Resolve acquired Truckers Plus, Inc., a thirteen
                    location
                    truck driver staffing firm headquartered in Memphis,
                    Tennessee.
 
  Page
              21
 Table
              of Contents
 **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          A - NATURE OF OPERATIONS, LIQUIDITY AND MANAGEMENT’S PLANS, AND SUMMARY OF
          SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 ·
                On
                    September 14, 2005 Resolve acquired QRD International, Inc.,
                    dba. Delta
                    Staffing, a Southern California staffing
                    firm.
 
 ·
                On
                    September 30, 2005 Resolve acquired Midwest Staffing Inc., a
                    medical
                    staffing firm located in Oklahoma City,
                    Oklahoma.
 
 ·
                On
                    October 21, 2005 Resolve acquired Star Personnel Services of
                    Kentucky,
                    LLC, a Northern KY staffing firm.
 
 ·
                On
                    October 31, 2005 Resolve acquired Project Solvers Inc., a temporary
                    and
                    permanent placement firm specific to the fashion, apparel, and
                    design
                    industries, with a New York office.
 
 ·
                On
                    November 10, 2005 Resolve acquired ProCare Medical Staffing,
                    LLC, a
                    medical staffing firm with an Illinois
                    office.
 
 ·
                On
                    November 28, 2005 Resolve acquired Big Sky Travel Nurses, Inc.,
                    a medical
                    staffing firm, with a Montana
                    office.
 
 ·
                On
                    December 11, 2005 Resolve acquired Assisted Staffing, Inc., a
                    medical
                    staffing firm with an Arizona office
                    location.
 
 ·
                On
                    December 26, 2005 Resolve acquired Pagnard Enterprises, Inc.,
                    a temporary
                    staffing firm with an Ohio office.
 
 ·
                On
                    December 27, 2005 Resolve acquired Drivers Plus, Inc., a truck
                    driver
                    staffing firm with an office in
                    Missouri.
 
 ·
                On
                    December 30, 2005 Resolve acquired Staffpro, Inc., a temporary
                    staffing
                    firm with one office in Kentucky and one office in
                    Ohio.
 
 Acquisition
          of Entities from Related Parties
 
 In
          connection with the Combination on February 7, 2005, described below in
          the
          Basis of Presentation section of the notes to consolidated financial statements,
          ELS was deemed to be the acquiring company for accounting purposes and
          the
          Combination was accounted for as a reverse acquisition under the purchase
          method
          of accounting for business combinations in accordance with accounting principles
          generally accepted in the United States of America.. In conjunction with
          this
          transaction, Resolve issued 13,000,000 shares of restricted common stock
          valued
          at $130,000, a note payable in the amount of $1,500,000, and paid cash
          of
          $17,125, in exchange for 100% of the ownership interest in 4 entities with
          10
          staffing locations. The fair value of the assets and liabilities assumed,
          on the
          date of acquisition were as follows:
 
 Accounts
                    receivable
                
                
                $
                    30,457Prepaid
                    and other assets
                
                56,378Property
                    and equipment
                
                15,280Goodwill
                
                
                
                2,035,679Accounts
                    payable and accrued liabilities
                (71,425)Notes
                    payable
                
                
                (419,244)$
                    1,647,125
 
  Page
              22
 Table
              of Contents
  **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          A - NATURE OF OPERATIONS, LIQUIDITY AND MANAGEMENT’S PLANS, AND SUMMARY OF
          SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 Acquisition
          of Entities from Unrelated Parties
 
 On
          various dates during 2005, as described above, Resolve Staffing, Inc.,
          entered
          into purchase agreements (“Agreements”), to acquire all of the assets and/or
          ownership of various separate privately-held entities owned and operated
          by
          unrelated parties located throughout the United States. Pursuant to the
          acquisition agreements, Resolve acquired a total of 31 temporary employee
          staffing locations from the newly acquired entities.
 
 Resolve
          paid cash, issued common stock, and issued notes payable in the amount
          of
          $4,419,881 in exchange for the assets and liabilities of the above staffing
          entities as described below. The following table summarizes the estimated
          fair
          values of the assets acquired and liabilities assumed, on the date of
          acquisition of each entity:
 
 **Midwest
                    Staffing**
                **Project
                    Solvers**
                **Assisted
                    Staffing**
                **Other**
                **Total**Accounts
                    Receivable
                $-
                $92,203
                $-
                $135,252
                $227,455Prepaid
                    & Other Assets
                -
                -
                -
                77,376
                77,376Property
                    & Equipment
                25,000
                40,000
                6,000
                264,095
                335,095Goodwill
                641,509
                817,047
                101,031
                2,469,496
                4,029,083Non-Compete
                    Agreements
                -
                -
                44,000
                294,000
                338,000Accounts
                    Payable & Accrued Liabilities
                -
                -
                -
                (355,607)
                (355,607)Notes
                    Payable
                -
                -
                -
                (231,521)
                (231,521)Total
                    Assets Acquired:
                $666,509
                $949,250
                $151,031
                $2,653,091
                $4,419,881
 
 In
          conjunction with the acquisitions from all parties during 2005, approximately
          $6,056,000 has been assigned to goodwill.
 
 The
          financial results of these acquired entities are included in the consolidated
          financial statements from the date of acquisition.
 
 Basis
          of Presentation
 
 Because
          the owners of ELS held approximately 90% of the Company’s outstanding common
          stock after the Combination, as well as the Company’s analysis of the other
          criteria used for determining which entity is the accounting acquirer under
          SFAS
          No. 141, ELS is deemed to be the acquiring company for accounting purposes
          and
          the Combination has been accounted for as a reverse acquisition under the
          purchase method of accounting for business combinations in accordance with
          accounting principles generally accepted in the United States of America.
          The
          audited financial statements of Resolve for each of the two years ended
          December 31, 2003 and 2004 are included in the Resolve Staffing, Inc.
          Annual Report on Form 10-KSB, filed with the Securities and Exchange Commission
          (the “SEC”) on April 15, 2005. The audited financial statements of ELS for the
          two years ended December 31, 2003 and 2004 or such time as the entity was
          under
          the control of ELS, Inc. through December 31, 2004 have been included in
          the
          Resolve Staffing, Inc. amended report on Form 8-K pertaining to this acquisition
          which was filed in December, 2005. In accordance with the accounting treatment
          described above, the historical financial statements prior to the Combination
          reflect those of ELS. In conjunction with this transaction, the group of
          companies known as ELS Personnel Services, which were legally acquired
          by
          Resolve Staffing, Inc., changed its name to Resolve Staffing, Inc. The
          financial
          information for 2004 includes the combined balances and combined results
          of
          operations of the individual entities which comprise ELS. The combined
          results
          of operations for the acquired entities include the activities of each
          entity
          from the date of acquisition to December 31, 2004.
 
  Page
              23
 Table
              of Contents
  **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          A - NATURE OF OPERATIONS, LIQUIDITY AND MANAGEMENT’S PLANS, AND SUMMARY OF
          SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 Liquidity
          and Management’s Plans
 
 As
          reflected in the accompanying consolidated financial statements, the Company
          has
          a net working capital balance of $2,345,556 and a stockholder’s deficit of
          $210,220, as of December 31, 2005. Prior to the third quarter of 2005,
          the
          Company had incurred losses and has been dependent upon the financial support
          of
          stockholders, management and other related parties.
 
 For
          the
          year ended December 31, 2005 the Company incurred a net loss of $488,322.
          Of
          this loss, $314,525 did not represent the use of cash. Non-cash expenditures
          consisted of depreciation of $71,586, stock issuances for services provided
          to
          the Company of $58,000, increase in allowance for doubtful accounts of
          $78,022,
          and amortization of non compete agreements of $106,917. Changes in accounts
          receivable, prepaid and other expenses, and financing, along with decreases
          in
          accounts payable, payroll, salary, and other accruals brought the total
          cash
          used by operations to $3,691,110. Additionally the Company used $172,517
          to
          purchase computer equipment, software and office equipment during this
          period.
 
 Management
          has successfully obtained additional financial resources, which the Company
          believes will support operations. These financial resources include financing
          from both related and non-related third parties, are discussed in the
          accompanying footnotes to the financial statements. There can be no assurance
          that management will be successful in continuing operations without additional
          financing efforts. The financial statements do not reflect any adjustments
          that
          may arise as a result of this uncertainty.
 
 We
          expect
          our operating expenses to increase significantly in the near future as
          we
          attempt to build our brand and expand our customer base. We hope our expenses
          will be funded from operations and short-term loans from officers, shareholders
          or others; however, our operations may not provide such funds and we may
          not be
          able obtain short-term loans from officers, shareholders or others. Our
          officers
          and shareholders are under no obligation to provide additional loans to
          us.
 
 **SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES**
 
 Use
          of
          Estimates
 
 The
          preparation of financial statements in conformity with accounting principles
          generally accepted in the United States of America requires management
          to make
          estimates and assumptions that affect the reported amounts of assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date of
          the financial statements and the reported amounts of revenues and expenses
          during the reporting period. Actual results could differ from those
          estimates.
 
 The
          Company provides for workers' compensation, health care insurance and
          unemployment taxes related to its employees. A deterioration in claims
          experience could result in increased costs to the Company in the future.
          The
          Company records an estimate of any existing liabilities under these programs
          at
          each balance sheet date. The Company's future costs could also increase
          if there
          are any material changes in government regulations related to employment
          law or
          employee benefits.
 
 Principles
          of Consolidation
 
 The
          consolidated financial statements for 2005 include the accounts of the
          Company
          and its subsidiaries. All significant inter-company accounts and transactions
          have been eliminated in preparing the accompanying financial statements.
 
 Revenue
          Recognition
 
 Staffing
          and managed service revenue and the related labor costs and payroll are
          recorded
          in the period in which services are performed. The Company follows Emerging
          Issues Task Force (“EITF”) 99-19, “Reporting Revenue Gross as a Principal versus
          Net as an Agent,” in the presentation of revenues and expenses. This guidance
          requires Resolve to assess whether it acts as a principal in the transaction
          or
          as an agent acting on behalf of others. In situations where Resolve is
          the
          principal in the transaction and has the risks and rewards of ownership,
          the
          transactions are recorded gross in the consolidated statements of
          operations.
 
  Page
              24
 Table
              of Contents
  **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          A - NATURE OF OPERATIONS, LIQUIDITY AND MANAGEMENT’S PLANS, AND SUMMARY OF
          SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 Stock
          Based Employee Compensation
 
 Resolve
          accounts for and reports its stock-based employee compensation arrangements
          using the intrinsic value method as prescribed in Accounting Principles
          Board
          Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), Financial
          Accounting Standards Board Interpretation No, 44, Accounting for Certain
          Transactions Involving Stock Compensation (“FIN 44”), and Statement of Financial
          Accounting Standards No. 148, Accounting for Stock-Based Compensation -
          Transition and Disclosure (“SFAS 148”). Accordingly, compensation cost for stock
          options are measured as the excess, if any, of the fair value of the Company’s
          stock at the date of grant over the stock option exercise price. Resolve
          accounts for stock issued to non-employees in accordance with the provisions
          of
          Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
          Compensation (“SFAS 123”). Under SFAS 123, stock option awards issued to
          non-employees are accounted for at their fair value on the date issued,
          where
          fair value is determined using the Black-Scholes option pricing
          method.
 
 There
          are
          no differences between the historical and pro-forma stock based compensation
          value.
 
 Accounts
          Receivable
 
 Resolve's
          trade accounts receivable result from the sale of its services, and consist
          primarily of private companies. Resolve uses the allowance method to account
          for
          uncollectible accounts. Bad debt expense for the years ended December 31,
          2005
          and 2004 was $88,483 and $6,300 respectively. The Company’s policy for
          determining when receivables are past due is 31 days after original invoice
          date. The
          Company’s policy for charging off uncollectible accounts receivable requires
          approval of the Chief Financial Officer, after reviewing Corporate Credit
          recommendation in consultation with the specific branch involved, determining
          that the debt has little, if any chance, of being collected.
 
 Concentration
          of Credit Risk
 
 Financial
          instruments, which potentially expose Resolve to concentrations of credit
          risk
          consist principally of trade accounts receivable.
 
 Resolve's
          trade accounts receivable result from the sale of its services to customers,
          and
          customers consist primarily of private companies. In order to minimize
          the risk
          of loss from these private companies, credit limits, ongoing credit evaluation
          of its customers, and account monitoring procedures are utilized. Collateral
          is
          not generally required. Management analyzes historical bad debt, customer
          concentrations, customer credit-worthiness, current economic trends, and
          changes
          in customer payment tendencies, when evaluating the allowance for doubtful
          accounts. As of December 31, 2005, no customer accounted for 10% or more
          of
          gross accounts receivable and no customer accounted for 10% or more of
          the net
          revenues for the year ended December 31, 2005. As of December 31, 2004,
          no
          customer accounted for 10% or more of gross accounts receivable and no
          customers
          accounted for 10% or more of net revenues for the year ended December 31,
          2004.
 
 The
          Company is obligated to pay the salaries, wages, related benefit costs,
          and
          payroll taxes of worksite employees. Accordingly, the Company's ability
          to
          collect amounts due from customers could be affected by economic fluctuations
          in
          its markets or these industries.
 
 Financial
          Instruments
 
 Resolve
          estimates that the fair value of all financial instruments at December
          31, 2005
          and 2004 do not differ materially from the aggregate carrying value of
          its
          financial instruments recorded in the accompanying balance sheets.
 
 Property
          and Equipment
 
 Property
          and equipment are recorded at historical cost and include expenditures,
          which
          substantially increase the useful lives of existing property and equipment.
          Maintenance and repairs are charged to operations when incurred.
 
 Depreciation
          of property and equipment is computed primarily using the straight-line
          method
          based on estimated useful lives (furniture and fixtures, 6 to 7 years,
          office
          equipment 5 to 7 years, and computers and software, 3 to 5 years). Depreciation
          for income tax purposes is computed principally using the straight line
          method
          and estimated useful lives.
  Page
              25
 Table
              of Contents
  
 **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          A - NATURE OF OPERATIONS, LIQUIDITY AND MANAGEMENT’S PLANS, AND SUMMARY OF
          SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 Advertising
          Costs
 
 Advertising
          costs, except for costs associated with direct-response advertising, are
          charged
          to operations when incurred. The costs of direct-response advertising are
          capitalized and amortized over the period during which future benefits
          are
          expected to be received. Resolve did not have direct-response advertising
          costs
          during the years ended December 31, 2005 and 2004. Total advertising costs
          for
          the years ended December 31, 2005 and 2004 were $311,376 and $24,533,
          respectively.
 
 Stock
          Split
 
 On
          December 28, 2004, the Company initiated a reverse stock split of the Company’s
          common stock on a 1 for 5 basis. The Company maintained the par value of
          the
          Company’s common stock at $.0001 and also maintained the number of shares of
          common stock the Company is authorized to issue at 50,000,000.
 
 Income
          Tax
 
 Resolve
          records its federal and state income tax liability in accordance with Statement
          of Financial Accounting Standards Statement No. 109 "Accounting for Income
          Taxes". Deferred taxes are provided for differences between the basis of
          assets
          and liabilities for financial statements and income tax purposes, using
          current
          tax rates. Deferred tax assets represent the expected benefits from net
          operating losses carried forward and general business credits that are
          available
          to offset future income taxes.
 
 Loss
          Per Share
 
 Net
          loss
          per share is computed based upon the weighted average number of outstanding
          shares of the Company’s common stock for each period presented. The weighted
          average number of shares excludes 851,320 common stock equivalents, representing
          warrants and stock options, since the effect of including them would be
          anti-dilutive.
 
 Recent
          Accounting Pronouncements
 
 Effective
          as of December 31, 2004, the Company adopted the revised interpretation
          of
          Financial Accounting Standards Board (FASB) Interpretation No. 46 (FIN
          46),
“Consolidation of Variable Interest Entities,” (FIN 46-R). FIN 46-R requires
          that certain variable interest entities be consolidated by the primary
          beneficiary of the entity if the equity investors in the entity do not
          have the
          characteristics of a controlling financial interest or do not have sufficient
          equity at risk for the entity to finance its activities without additional
          subordinated financial support from other parties. The Company does not
          have any
          investments in entities it believes are variable interest entities for
          which the
          Company is the primary beneficiary.
 
 In
          December 2004, the Financial Accounting Standards Board (“FASB”) issued
          Statement of Financial Accounting Standards No. 123 (revised 2004), *Share-Based
          Payment* (SFAS
          No.
          123R). SFAS No. 123R revised SFAS No. 123, *Accounting
          for Stock-Based Compensation* ,
          and
          supersedes APB Opinion No. 25, *Accounting
          for*  *Stock
          Issued to Employees* ,
          and its
          related implementation guidance. SFAS No. 123R will require compensation
          costs
          related to share-based payment transactions to be recognized in the financial
          statement (with limited exceptions). The amount of compensation cost will
          be
          measured based on the grant-date fair value of the equity or liability
          instruments issued. Compensation cost will be recognized over the period
          that an
          employee provides service in exchange for the award.
  In
          April
          2005, the Securities and Exchange Commission (“SEC”) adopted a new rule that
          amends the compliance dates for SFAS No. 123R. The Statement requires that
          compensation cost relating to share-based payment transactions be recognized
          in
          financial statements and that this cost be measured based on the fair value
          of
          the equity or liability instruments issued. SFAS No. 123R covers a wide
          range of
          share-based compensation arrangements including share options, restricted
          share
          plans, performance-based awards, share appreciation rights, and employee
          share
          purchase plans. The Company will adopt SFAS No. 123R on January 1, 2006
          and is
          currently evaluating the impact the adoption of the standard will have
          on the
          Company’s results of operations.
 
  Page
              26
 Table
              of Contents
  **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          A - NATURE OF OPERATIONS, LIQUIDITY AND MANAGEMENT’S PLANS, AND SUMMARY OF
          SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 In
          March
          2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB No. 107”), *Share-Based
          Payment* ,
          providing guidance on option valuation methods, the accounting for income
          tax
          effects of share-based payment arrangements upon adoption of SFAS No. 123R,
          and
          the disclosures in MD&A subsequent to the adoption. The Company will provide
          SAB No. 107 required disclosures upon adoption of SFAS No. 123R on January
          1,
          2006 and is currently evaluating the impact the adoption of the SAB will
          have on
          the Company’s financial condition, results of operations, and cash flows.
  In
          December 2004, FASB issued SFAS No. 153, *Exchanges
          of Nonmonetary Assets- An Amendment of APB Opinion No. 29* .
          The
          guidance in APB Opinion No. 29, *Accounting
          for Nonmonetary Transactions* ,
          is
          based on the principle that exchanges of nonmonetary assets should be measured
          based on the fair value of the assets exchanged. The guidance in that Opinion,
          however, included certain exceptions to that principle. SFAS No. 153 amends
          Opinion No. 29 to eliminate the exception for nonmonetary exchanges of
          similar
          productive assets and replaces it with a general exception for exchanges
          of
          nonmonetary assets that do not have commercial substance. A nonmonetary
          exchange
          has commercial substance if the future cash flows of the entity are expected
          to
          change significantly as a result of the exchange. The provisions of SFAS
          No. 153
          are effective for nonmonetary asset exchanges occurring in fiscal periods
          beginning after June 15, 2005. Early application is permitted and companies
          must
          apply the standard prospectively. The adoption of this standard is not
          expected
          to have any effect on the Company’s results of operations or financial position.
 
 In
          June
          2005, the FASB issued SFAS No. 154, *Accounting
          Changes and Errors*  *Corrections,
          a replacement of APB Opinion No. 20 and FAS No. 3* .
          The
          Statement applies to all voluntary changes in accounting principle, and
          changes
          the requirements for accounting for and reporting of a change in accounting
          principle. SFAS No. 154 requires retrospective application to prior periods’
financial statements of a voluntary change in accounting principle unless
          it is
          impractical. APB Opinion No. 20 previously required that most voluntary
          changes
          in accounting principle be recognized by including in net income of the
          period
          of the change the cumulative effect of changing to the new accounting principle.
          SFAS No.154 improves the financial reporting because its requirements enhance
          the consistency of financial reporting between periods. SFAS No.154 is
          not
          expected to have any effect on the Company's financial position or results
          of
          operations.
 
 In
          February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid
          Financial Instruments-an amendment of FASB Statements No. 133 and 140.
          This
          statement resolves issues addressed in FAS No. 133 Implementation Issue
          No. D1,
          Application of Statement 133 to Beneficial Interest in Securitized Financial
          Assets. SFAS No. 155: (a) permits fair value remeasurement for any hybrid
          financial instrument that contains an embedded derivative that otherwise
          would
          require bifurcation; (b) clarifies which interest-only strips and principal-only
          strips are not subject to the requirements of SFAS No. 133; (c) establishes
          a
          requirement to evaluate beneficial interests in securitized financial assets
          to
          identify interests that are freestanding derivatives or that are hybrid
          financial instruments that contain an embedded derivative requiring bifurcation;
          (d) clarifies that concentrations of credit risk in the form of subordination
          are not embedded derivatives; and, (e) eliminates restrictions on a qualifying
          special-purpose entity's ability to hold passive derivative financial
          instruments that pertain to beneficial interests that are or contain a
          derivative financial instrument. SFAS No. 155 also requires presentation
          within
          the financial statements that identifies those hybrid financial instruments
          for
          which the fair value election has been applied and information on the income
          statement impact of the changes in fair value of those instruments. The
          Company
          is required to apply SFAS No. 155 to all financial instruments acquired,
          issued
          or subject to a remeasurement event beginning January 1, 2007. The Company
          does
          not expect the adoption of SFAS No. 155 to have a material impact on the
          Company's financial statements.
 
 Reclassifications
 
 Certain
          amounts in the 2004 financial statements have been reclassified to conform
          with
          the presentation in 2005. Such reclassifications are not considered material
          to
          the financial statements.
 
  Page
              27
 Table
              of Contents
  **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          B - PROPERTY AND EQUIPMENT**
 
 Property
          and equipment as of December 31, 2005 and 2004 is summarized as
          follows:
 
 2005
                
                2004Computer
                    software
                $148,420
                
                $-Computers
                283,212
                
                153,366Furniture
                    and fixtures
                383,677
                
                111,815Office
                    equipment
                50,887
                
                47,117Total
                    property and equipment
                866,196
                
                312,298Less,
                    accumulated depreciation
                (264,935)
                
                (162,342)Net
                    property and equipment
                $601,261
                
                $149,956
 
 Depreciation
          expense for the years ended December 31, 2005 and 2004 was $71,586 and
          $10,120,
          respectively.
 
 **NOTE
          C - INTANGIBLE ASSETS**
 
 The
          Company’s intangible assets are comprised of goodwill and covenants not to
          compete arising from acquisitions. Goodwill will be assessed for impairment
          annually by management. The Company’s covenants not to compete have contractual
          lives principally ranging from one to two years and are being amortized
          over the
          period of benefit.
 
 Intangibles
          consist of the following at December 31:
 
 2005
                
                2004Covenants
                    not to compete
                
                $
                    338,000
                
                $
                    -Less
                    amortization
                
                (106,917)
                
                -$
                    231,083
                
                $-Goodwill
                
                $6,695,579
                
                $640,000
  Page
              28
 Table
              of Contents
  **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          D - NOTES PAYABLE AND LINES OF CREDIT**
 
 Notes
          payable and lines of credit as of December 31, 2005 and 2004 are as
          follows:
 
 2005
                
                2004Lines
                    of credit to two banks totaling $7,000,000, interest payable
                    monthly at
                    rates ranging from prime to 8.50%, maturing February 2007
                $
                    3,341,927
                
                $
                    400,000Note
                    payable to a bank, principal and interest payable monthly of
                    $9,845,
                    maturing September 2009
                398,100
                
                475,563Note
                    payable to a bank, interest at 5.25%, 10 equal monthly installments
                    due of
                    $3,797 beginning 2/1/2005 and down payment of $6,542; secured
                    by loan
                    proceeds and down payment.
                -
                
                43,614Notes
                    payable to ELS Inc., accruing interest at 3% per annum, due March
                    2007
                5,873,936
                
                1,484,226Notes
                    payable to various individuals for the acquisition of various
                    staffing
                    entities during 2005. Notes are due at varying dates through
                    December 2007
                    with monthly payment amounts ranging from $5,833 to $34,891.
                    These notes
                    bear no interest and accordingly management has imputed interest
                    at 7.25%
                    per annum. Balance is shown net of unamortized loan discount
                    of
                    $140,106.
                2,278,981
                
                -Notes
                    payable to two individuals accruing interest at 5% to 12% per
                    annum,
                    maturity dates are being extended verbally on a month to month
                    basis
                131,500
                
                -Total
                    notes payable and lines of credit
                
                12,024,444
                
                2,403,403Current
                    portion of notes payable and lines of credit
                
                (1,940,746)
                
                (2,009,847)Long
                    term portion of notes payable and lines of credit
                
                $
                    10,083,698
                
                $
                    393,556
 
 Maturities
          of notes payable and lines of credit are as follows:
 
 Year
                    ending December 31,2006
                
                $
                    1,940,7462007
                
                9,890,7742008
                
                110,9202009
                
                82,004$
                    12,024,444
 
 See
          Note
          E—Related Party Balances and Transactions, for information about the Credit
          Agreement with ELS, Inc.
 
 See
          Note
          E - Related Party Balances and Transactions, for information about the
          Note
          Payable to William Brown.
 
 
 
  Page
              29
 Table
              of Contents
  
 **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          E - RELATED PARTY BALANCES AND TRANSACTIONS**
 
 Notes
          payable—related party includes borrowings of $91,500 from William Brown, a
          director and shareholder. The underlying note bears interest at 5% and
          was due
          on March 31, 2004. The Company has a verbal agreement to extend the maturity
          date on a month-to-month basis.
 
 On
          December 8, 2003, the Company entered into a non-interest bearing short-term
          credit agreement with ELS, Inc., that provides for borrowings of up to
          $200,000.
          ELS, Inc. is a company owned by Ronald Heineman, the Company’s Chief Executive
          Officer. The underlying promissory note is secured by 400,000 shares of
          common
          stock that were released to an escrow agent, but not issued for accounting
          or
          reporting purposes. As of December 31, 2005, Resolve had a balance of $5,873,936
          outstanding, which includes the note payable for the purchase of ELS of
          $1,500,000. Balances due under the credit agreement were originally due
          May 8,
          2004, but the agreement was extended on a month-to-month basis, and provided
          for
          an additional $100,000 in borrowings. On June 1, 2004, the agreement was
          amended
          to extend the line to a maximum of $500,000. During 2005, the agreement
          was
          extended for an additional 18 months, becoming due March 31, 2007 with
          interest
          due at 3% per annum, and the maximum amount was increased on a case by
          case
          basis upon review.
 
 On
          December 29, 2003, Resolve entered into a six month consulting agreement
          with
          Ronald Heineman, the Company’s Chief Executive Officer, to provide Resolve with
          the following services: development of a business plan and strategic marketing
          plan; enhancement of the Company’s revenue base through the recruitment of
          additional staffing personnel; development of an acquisition based growth
          plan;
          development and implementation of an investor relations strategy; the provision
          of back office administrative and sales support; as well as day to day
          management oversight of the Company’s personnel. Under the terms of the
          agreement Resolve agreed to issue Ronald Heineman 200,000 shares of the
          Company’s common stock.
 
 During
          2004, Five Star Florida (one of the ELS entities) advanced funds to ELS
          Inc. The
          advances bore no interest and no formal agreement or repayment schedule
          existed.
          During the year ended December 31, 2005, the advances to ELS Inc. were
          offset
          against amounts payable by other ELS entities, as described above, to ELS
          Inc.
          At December 31, 2005 and 2004 the balance of the note receivable from ELS
          Inc.
          was $0 and $560,193, respectively.
  Page
              30
 Table
              of Contents
  **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          F - INCOME TAXES**
 
 Deferred
          income taxes are provided for temporary differences in recognizing certain
          income and expense items for financial and tax reporting purposes. The
          deferred
          tax asset of $157,000 as of December 31, 2005 consisted primarily of the
          income
          tax benefits from net operating losses. A valuation allowance has been
          recorded
          to fully offset the deferred tax asset as the Company believes it is more
          likely
          than not that the assets will not be utilized. Significant components of
          the
          benefit for income taxes for the year ended December 31, 2005 are as
          follows:
 
 2005CurrentFederal
                $
                    -State
                --DeferredFederal
                -State
                --Income
                    tax expense
                $
                    -
 
 At
          December 31, 2005, the Company had federal tax net operating loss carry
          forwards
          of approximately $457,000. The federal and state tax loss carry forwards
          will
          begin to expire in 2015, unless previously utilized.
 
 At
          December 31, 2005 and 2004, no deferred tax assets or liabilities were
          recorded
          in the accompanying financial statements. The Company’s effective tax rate
          differs from the statutory rates associated with taxing jurisdictions because
          of
          changes in the valuation allowance. The valuation allowance at December
          31,
          2005, increased approximately $157,000 from 2004.
 
 Pursuant
          to Internal Revenue Code Section 382, the Company’s use of its net operating
          loss carry forwards may be limited as a result of cumulative changes in
          ownership of more than 50% over a three year period.
 
 A
          reconciliation of the statutory income tax rates and the Company’s effective tax
          rate is as follows:
 
 Year
                    Ended December 31,
                2005Statutory
                    U.S. federal rate
                34.00%Permanent
                    differences
                6.00%Change
                    in valuation allowance
                -40.00%Provision
                    for income taxes
                0.00%
 
  Page
              31
 Table
              of Contents
  **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          F - INCOME TAXES (CONTINUED)**
 
 The
          tax
          effects of the temporary differences and carry forwards that give rise
          to
          deferred tax assets consist of the following:
 
 December
                    31,
                2005Deferred
                    tax assets:Loss
                    carry forwards
                $
                    156,300Other
                700Gross
                    deferred tax assets
                157,000Valuation
                    allowance
                (157,000)$
                    -
 
 As
          of
          December 31, 2005, the Company recorded a valuation allowance of $157,000
          related to the deferred tax assets.
 
 Income
          taxes for 2004 for ELS have not been provided for as each of these entities
          was
          a wholly owned subsidiary of ELS Inc. and reported all income and expenses
          on
          the consolidated income tax returns of ELS, Inc. ELS Inc. has elected to
          be
          taxed under the provisions of Subchapter S of the Internal Revenue Code.
          Under
          those provisions, ELS had no liability. Instead the owners of ELS are liable
          for
          income taxes on the respective share of ELS’s taxable income.
 
 **NOTE
          G - CASH FLOW SUPPLEMENTAL INFORMATION**
 
 Cash
          paid
          for interest during the years ended December 31, 2005 and 2004 amounted
          to
          $238,454 and $13,160, respectively.
 
 During
          the year ended December 31, 2005, the following non-cash transactions were
          recorded:
 
 Non-cash
          investing and financing activities:
 
 In
          conjunction with the Combination on February 7, 2005, described below in
          the
          basis of Presentation section of the notes to consolidated financial statements,
          ELS was deemed to be the acquiring company for accounting purposes and
          the
          Combination was accounted for as a reverse acquisition under the purchase
          method
          of accounting for business combinations in accordance with accounting principles
          generally accepted in the United States of America. In conjunction with
          this
          transaction, Resolve issued 13,000,000 shares of restricted common stock
          valued
          at $130,000 and a note payable in the amount of $1,500,000 in exchange
          for 100%
          of the ownership interest in 4 entities with 10 staffing locations. The
          fair
          value of the assets and liabilities assumed, on the date of acquisition
          were as
          follows:
 
 Accounts
                    receivable
                $30,457Prepaid
                    and other assets
                48,483Property
                    and equipment
                15,280Goodwill
                2,026,496Accounts
                    payable and accrued liabilities
                (71,472)Notes
                    payable
                (419,244)$1,630,000
 
 Acquisition
          of Entities from Unrelated Parties
 
 On
          various dates during 2005, Resolve Staffing, Inc., entered into purchase
          agreements (“agreements”), to acquire all of the assets and/or ownership of
          various separate privately-held entities owned and operated by unrelated
          parties. Pursuant to the acquisition agreements, Resolve acquired a total
          of 31
          temporary employee staffing locations from the newly acquired
          entities.
 
  Page
              32
 Table
              of Contents
  **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          G - CASH FLOW SUPPLEMENTAL INFORMATION (CONTINUED)**
 
 Resolve
          issued notes payable and common stock valued at $2,492,416 in exchange
          for the
          assets and liabilities of the above staffing entities as described below.
          The
          following table summarizes the estimated fair value, of the assets acquired
          and
          liabilities assumed, on the date of acquisition of each entity:
 
 Accounts
                    receivable
                $135,252Property
                    and equipment
                104,489Prepaid
                    and other assets
                21,815Goodwill
                2,659,971Non-compete
                    agreements
                144,000Accounts
                    payable and accrued liabilities
                (355,608)Notes
                    payable
                (217,503)$2,492,416
 
 The
          Company had no non-cash investing or financing activities during
          2004.
 
 **NOTE
          H - STOCKHOLDERS’ (DEFICIT) EQUITY**
 
 Issuance
          of Common Stock
 
 On
          February 7, 2005, the Company entered into the Combination described above.
          In
          conjunction with the Combination and the treatment as a reverse acquisition,
          the
          13,000,000 shares of common stock issued as part of this transaction have
          been
          presented as if they were outstanding for all periods presented.
 
 On
          May
          25, 2005, Resolve Staffing, Inc. issued 100,000 shares to certain consultants
          as
          part of their compensation.
 
 On
          August
          18, 2005, Resolve issued 50,000 shares to certain consultants as part of
          their
          compensation and 100,000 shares as per an employment agreement with certain
          shareholders and employees of Truckers Plus.
 
 On
          November 22, 2005, Resolve issued 430,000 shares to various consultants
          as part
          of their compensation.
 
 Common
          Stock Warrants
 
 As
          of
          December 31, 2005 and 2004 there were 851,320 stock warrants outstanding
          which
          are due to expire on June 30, 2007. Each warrant has an exercise price
          of $.75
          per share price. All stock warrants are exercisable.
 
 Equity
          Incentive Plan
 
 During
          the year ended December 31, 2001, Resolve adopted a 2001 Equity Incentive
          Plan
          ("Incentive Plan") for the benefit of key employees (including officers
          and
          employee directors) and consultants of Resolve and its affiliates. The
          Incentive
          Plan is intended to provide those persons who have substantial responsibility
          for the management and growth of Resolve with additional incentives and
          an
          opportunity to obtain or increase their proprietary interest in Resolve,
          encouraging them to continue in the employ of Resolve.
 
 On
          May
          28, 2002, Resolve's 2001 Stock Incentive Plan was amended to restore the
          number
          of shares which may be issued under the plan to 600,000 and to permit the
          issuance of unrestricted shares. No shares have been issued under this
          plan.
 
  Page
              33
 Table
              of Contents
  **RESOLVE
          STAFFING, INC. AND SUBSIDIARIES**
 **NOTES
          TO** **CONSOLIDATED** **FINANCIAL
          STATEMENTS**
 **DECEMBER
          31, 2005 AND 2004**
 
 **NOTE
          I - COMMITMENTS AND CONTINGENCIES**
 
 Operating
          Leases
 
 The
          Company rents various office space for each of its locations across the
          United
          States, under lease terms ranging from month-to-month to expiring September,
          2010. Monthly payments due under these leases range from $210 to $4,970.
          Resolve
          has the option to renew various leases under the same terms and conditions
          as
          the original leases and anticipates exercising certain of these
          options.
 
 The
          future maturities of minimum lease payments under the Company’s operating leases
          are as follows:
 
 Operatingleases2006
                
                $637,1652007
                
                485,5482008
                
                332,2852009
                
                185,2422010
                
                85,838Total
                    minimum lease payments
                $1,726,078
 
 Total
          rent expense for the years ended December 31, 2005 and 2004 was $385,831
          and
          $50,425, respectively.
 
 Litigation
 
 The
          Company is subject to legal proceedings and claims, which arise in the
          ordinary
          course of its business. In the opinion of management, the amount of ultimate
          liability with respect to currently pending or threatened actions is not
          expected to materially affect the financial position or results of operations
          of
          the Company.
 
 Off
          Balance Sheet Arrangements
 
 Depending
          on certain goals and performances being met, Resolve has the following
          off
          balance sheet arrangements in which Resolve is obligated to pay the previous
          owners of the following entities certain contingent amounts, which are
          the
          result of the various acquisitions described previously. If additional
          amounts
          are paid these amounts will be recorded as additional goodwill when
          paid.
 
 ·
                The
                    Arnold Group - Based on sales targets, the prior owners may receive
                    contingent performance payments not to exceed $125,000 through
                    May 31,
                    2007.
 
 ·
                Taylor
                    Personnel Services, Inc. - Based on sales targets, the prior
                    owners may
                    receive contingent performance payments not to exceed $80,000
                    through May
                    31, 2007.
 
 ·
                QRD
                    International, Inc. dba Delta Staffing - Based on gross profit
                    targets,
                    the prior owners may receive contingent performance payments
                    of up to
                    approximately $150,000 through September 11, 2006, and $75,000
                    through
                    September 11, 2007.
 
 ·
                Midwest
                    Staffing, Inc. - Based on pre-tax profit targets, the prior owners
                    may
                    receive contingent performance payments not to exceed $75,000
                    through
                    September 27, 2006 and approximately $75,000 through September
                    27,
                    2007.
 
 ·
                Star
                    Personnel Services of Kentucky, LLC. - Based on sales targets,
                    the prior
                    owners may receive contingent performance payments not to exceed
                    $50,000
                    through December 31, 2006.
  Page
              34
 Table
              of Contents
  
 ·
                Project
                    Solvers, Inc. - Based on pre-tax profit targets, the prior owners
                    may
                    receive contingent performance payments not to exceed $200,000
                    through
                    October 25, 2008.
 
 ·
                Pro
                    Care Medical Staffing, LLC. - Based on pre-tax targets the prior
                    owners
                    may receive contingent performance payments not to exceed $650,000
                    in
                    total through November 9, 2007.
 
 ·
                Big
                    Sky Travel Nurses, Inc. - Based on pre- tax profit targets, the
                    prior
                    owners may receive contingent performance payments of up to approximately
                    $15,000 through November 27, 2006 and $15,000 through November
                    27,
                    2007.
 
 ·
                Assisted
                    Staffing, Inc. - Based on pre- tax profit targets, the prior
                    owners may
                    receive contingent performance payments of up to approximately
                    $25,000
                    through December 10, 2007.
 
 ·
                Pagnard
                    Enterprises Inc. - Based on sales targets, the prior owners may
                    receive
                    contingent performance payments of up to approximately $150,000
                    through
                    February 15, 2008.
 
 ·
                Driver’s
                    Plus, Inc. - Based on pre- tax profit targets, the prior owners
                    may
                    receive contingent performance payments of up to approximately
                    $10,000
                    through December 26, 2006, and $10,000 through December 26,
                    2007.
 
 ·
                StaffPro,
                    LLC. - Based on sales targets, the prior owners may receive contingent
                    performance payments of approximately $25,000 through December
                    29,
                    2006.
 
 The
          following off balance sheet arrangements are based on transactions completed
          after December 31, 2005.
 
 ·
                R
                    & R Staffing Services, Inc. - Based on gross profit targets, the
                    prior
                    owners may receive contingent performance payments of up to approximately
                    $350,000 through January 5, 2007.
 
 ·
                Ready
                    Nurse, LLC. - Based on pre- tax profit targets, the prior owners
                    may
                    receive contingent performance payments of up to approximately
                    $10,000
                    through March 5, 2008.
 
 Employment
          Agreeements
 
 In
          accordance with certain of the acquisition agreements entered during 2005,
          the
          Company entered into employment agreements with previous owners and selected
          individuals. The terms of these employment agreements range from six months
          to
          two years in length and are considered to be in the normal course of
          business.
 
 **NOTE
          J - SUBSEQUENT EVENTS**
 
 On
          January 3, 2006 Resolve Staffing elected three new officers. Steve Ludders
          has
          been promoted to Executive VP, Chief Operating Officer of the Company.
          Scott
          Horne has been promoted to Executive VP, Chief Financial Officer of the
          Company.
          Tom Lawry has been promoted to Controller, Treasurer of the Company.
 
 On
          January 9, 2006, Resolve Staffing entered into a consulting agreement with
          Dan
          Seifer. Under the term of the agreement, Mr. Seifer will be paid in options
          to
          acquire up to 4,000,000 shares of common stock of the Company and is to
          provide
          the following services in a timely manner:
 
 ·
                Business
                    Plan Development - Become familiar with the business and operations
                    of the
                    Company and review and analyze the Company’s formal and informal
                    financial, strategic, and business plans. In conjunction with
                    the Company,
                    prepare and update a formal strategic business plan along with
                    a detailed
                    financial model/projection, and update the business plan and
                    financial
                    model as needed during the term of this
                    Agreement;
 ·
                Strategic
                    Consulting - Assist the Company in sourcing and locating joint-venture
                    partners. Advise
                    the Company in strategic planning matters and assist in the implementation
                    of short- and long-term strategic planning initiatives to fully
                    develop
                    and enhance the Company’s assets, resources, products, and technologies.
                    Provide
                    advice to and consult with the Company concerning management,
                    product
                    marketing, strategic planning, and corporate organization in
                    connection
                    with the Company’s business and advise the Company regarding its overall
                    development, progress, needs, and condition. If requested by
                    the Company,
                    assist in the due diligence of prospective strategic
                    partners.
 ·
                Other
                    Services - Perform
                    other services as may be reasonably requested by the Company
                    that are
                    within the normal scope of operations of Dan
                    Seifer.
 
 On
          January 24, 2006 Resolve Staffing acquired R & R Staffing Services, Inc.,
          located in Syracuse, New York. With $4 million in annual revenue, this
          acquisition gave Resolve its 13th office in various Northeast
          markets.
 
 On
          February 22, 2006, Resolve Staffing announced that it has reached an agreement
          in principle to merge with Employee Leasing Services, Inc. (ELS Inc.),
          and
          certain related affiliates. Headquartered in Cincinnati, Ohio. ELS Inc.,
          a
          professional employer organization (PEO), manages a payroll of over 10,000
          worksite employees in over 40 states and has operation and service centers
          throughout the country. ELS Inc.’s 2005 gross (non-GAAP) revenues were over $200
          million, which equates to approximately $50 million in net (GAAP) revenues
          and
          $3.5 million in Pretax Profit. Under the terms of the agreement, Resolve
          will
          acquire all outstanding shares of ELS Inc. for approximately $3 million
          in cash,
          a $7 million note and 1.4 million shares of Resolve common stock. Closing
          of the transaction is subject to certain customary closing conditions and
          is
          expected to occur in the second quarter of 2006. Management believes that
          this
          transaction will be accounted for as a reverse acquisition if the transaction
          is
          completed under the current terms.
 
 On
          March
          27, 2006 Resolve Staffing acquired Ready Nurses LLC, a Fulton, Missouri
          based
          medical staffing firm. Ready Nurses provides a variety of medical staffing
          services including travel nurses and other healthcare related professionals.
          With $1 million in annual sales, this acquisition was Resolve’s fourth in the
          burgeoning medical staffing industry.
 
 
 
 
  Page
              35
 Table
              of Contents
  **ITEM
          8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
          DISCLOSURE.**
 
 On
          August
          16, 2004, Aidman, Piser and Company ("APC"), the Registrant's independent
          auditors, notified the Registrant that they were resigning from the
          client-auditor relationship with the Registrant effective as of that date.
          With
          respect to Item 304(a)(1) of Regulation S-B, the Registrant further discloses
          the following information:
 
 APC
          was
          engaged by Registrant to serve as the Registrant's independent auditors
          for the
          fiscal year ended December 31, 2003. The report of APC with respect to
          the
          Registrant's financial statements for the fiscal year ended December 31,
          2003
          was modified for the uncertainty surrounding our ability to continue as
          a going
          concern. During the fiscal year ended December 31, 2003 and the period
          from
          December 31, 2003 through the date of APC's resignation, there were no
          disagreements between the Registrant and APC on any matter of accounting
          principles or practices, financial statement disclosure, or auditing scope
          or
          procedure, which disagreements, if not resolved to the satisfaction of
          APC,
          would have caused APC to make reference to the subject matter of the
          disagreements in connection with its report on the Registrant's financial
          statements for such year.
 
 As
          stated
          in APC's resignation letter dated August 16, 2004, a review of the Registrant's
          Forms 10-QSB for the first and second quarter of the current year has not
          been
          completed. As a result, the Registrant's previously issued financial statements
          for the first quarter of 2004 and the financial statements to be issued
          for the
          second quarter of 2004 were subsequently reviewed by the Registrant's new
          auditors.
 
 On
          September 21, 2004, the Company engaged PKF San Diego, Certified Public
          Accountants, A Professional Corporation located in San Diego, California,
          ("PKF"), as its independent registered public accounting firm. The Company
          did
          not previously consult with PKF regarding any matter, including but not
          limited
          to:
 
 1.
          the
          application of accounting principles to a specified transaction, either
          completed or proposed; or the type of audit opinion that might be rendered
          on
          the Company's financial statements; or
 
 2.
          any
          matter that was either the subject matter of a disagreement as defined
          in Item
          304(a)(1)(iv) of Regulation S-B and the related instructions) or a reportable
          event (as defined in Item 304(a)(1)(v) of Regulation S-B).
 
 **ITEM
          8A. CONTROLS AND PROCEDURES**
 
 Evaluation
          of disclosure controls and procedures
 
 As
          of
          December 31, 2005, we carried out an evaluation of the effectiveness of
          the
          design and operation of our disclosure controls and procedures pursuant
          to
          Exchange Act Rule 13a-14. This evaluation was done under the supervision
          and
          with the participation of our Principal Executive Officer and Principal
          Financial Officer. Based upon that evaluation, they concluded that our
          disclosure controls and procedures are effective in gathering, analyzing
          and
          disclosing information needed to satisfy our disclosure obligations under
          the
          Exchange Act.
 
 Changes
          in internal controls
 
 There
          were no changes in our internal controls or in other factors that could
          significantly affect those controls since the most recent evaluation of
          such
          controls.
  Page
              36
 Table
              of Contents
  **PART
          III**
 
 **ITEM
          9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
          WITH
          SECTION 16(A) OF THE EXCHANGE ACT.**
 
 **Name**
                **Age**
                **Position**Ronald
                    Heineman
                47
                Chief
                    Executive OfficerDonald
                    E. Quarterman, Jr.
                37
                DirectorWilliam
                    A. Brown
                47
                DirectorWilliam
                    Walton
                70
                Director
 Directors
          serve until the next annual meeting and until their successors are elected
          and
          qualified. Officers are appointed to serve for one year until the meeting
          of the
          board of directors following the annual meeting of stockholders and until
          their
          successors have been elected and qualified.
 
 **Ronald
          Heineman.** Ron
          Heineman is the President & CEO of ELS, Human Resource Solutions. ELS is a
          professional employer organization (PEO) operating in 28 states. Prior
          to this,
          Mr. Heineman was Corporate, Vice President, Human Resources for Frisch’s
          Restaurants, Inc. a large publicly held restaurant chain operating Big
          Boy,
          Golden Corral, Roy Rogers Restaurants and several large Hotels. Mr. Heineman
          was
          responsible for attaining results in the areas of Employment, Training,
          Benefits, Loss Prevention and Government Compliance. Mr. Heineman was employed
          with Frisch’s for 23 years.
 
 **Donald
          E. Quarterman.** Mr.
          Quarterman joined us as President, Chief Operating Officer and director
          December
          4, 2002. Mr. Quarterman brings with him over 7 years of staffing industry
          experience in venture capital, mergers and acquisitions, and strategic
          consulting. Mr. Quarterman is a Managing Partner and co-founder of Pinnacle
          Corporate Services, LLC, a business consulting firm that works with emerging
          growth companies in the areas of business and strategic planning, business
          development strategies, and executive and director recruitment, since August
          2001. From 1997 to 2000, Mr. Quarterman was Director of Operations for
          Catalyst
          Ventures, an Investment Banking firm located in Tampa, Florida. From 1993
          to
          1997, Mr. Quarterman was a Vice President at Geneva Corporate Finance,
          one of
          the largest middle-market merger and acquisition firms in the United States.
          Mr.
          Quarterman earned an MBA degree, with a concentration in Finance and
          Entrepreneurship, from the University of South Florida. Mr. Quarterman
          resigned
          as an officer of Resolve on September 22, 2004. He remains with Resolve
          as a
          Director.
 
 **William
          A. Brown.** Mr.
          Brown
          joined Resolve Staffing, Inc as Vice-President and director on December
          4, 2002.
          From October 2001 to April 2002, Mr. Brown was President of Integra Staffing,
          Inc., our predecessor company, and prior to that as an investor. After
          the
          acquisition of Integra Staffing, Inc. by Resolve, Mr. Brown continued to
          be
          involved as an investor and major shareholder. Mr. Brown is founder and
          President of J. B. Carrie Properties, Inc., a real estate management and
          development company which was organized in 1988. Mr. Brown is also involved
          in
          the senior assisted living business managing 3 facilities in the state
          of
          Florida. Mr. Brown graduated from Florida State University with a degree
          in
          Sociology. Mr. Brown resigned as an officer of Resolve on September 22,
          2004. He
          remains as a Director.
 
 **William
          Walton.** Mr.
          Walton joined Resolve Staffing as a member of the Board of Directors after
          the
          acquisition of ELS’ staffing offices in February of 2005. Mr. Walton is a
          partner of ELS Human Resource Solutions. Mr. Walton entered the staffing
          industry in the mid 1980s and eventually purchased a Snelling Personnel
          franchise in 1989. In 1991, he joined ELS and helped to grow it into a
          company
          generating in excess of $200 million in annual revenues. Mr. Walton brings
          a
          diverse experience base to Resolve and is expected to play a key role as
          Resolve
          strives to become a Total Human Resource Outsourcing Company.
 
 **COMPLIANCE
          WITH SECTION 16(a) OF THE EXCHANGE ACT**
 
 Since
          we
          are governed under Section 15(d) of the Exchange Act, we are not required
          to
          file reports of executive officers and directors and persons who own more
          than
          10% of a registered class of our equity securities pursuant to Section
          16(a) of
          the Exchange Act.
 
  Page
              37
 Table
              of Contents
  **ITEM
          10. EXECUTIVE COMPENSATION.**
 
 The
          following table sets forth certain compensation paid or accrued by us to
          certain
          of our executive officers during fiscal years ended 2005 and 2004. Summary
          Compensation Table
 
 **Name
                    & Principal Position**
                **Year**
                **Salary**
                **Bonus**
                **Annual
                    Compensation**
                **Other
                    Restricted Stock Rewards**
                **Options
                    SARs**
                **LTIP
                    Payouts**
                **All
                    Other Compensation**Donald
                    E. Quarterman,
                  Director
                2004
                  2005
                0
                  0
                0
                  0
                0
                  0
                0
                  0
                0
                  0
                0
                  0
                0
                  0Ron
                    Heineman,
                  CEO
                2004
                  2005
                0
                  0
                0
                  0
                0
                  0
                39,200
                  162,001
                0
                  0
                0
                  0
                0
                  0
 
 Options
 
 No
          options were exercised or granted during the last fiscal year.
 
 There
          were no long-term incentive plans or rewards made in fiscal 2005.
 
 Employment
          Agreements
 
 None.
 
 **ITEM
          11. SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT.**
 
 As
          of
          March 20, 2006, there were 15,219,101 shares of common stock, par value
          $.0001
          outstanding. The following table sets forth certain information regarding
          the
          beneficial ownership of our common stock as of March 20, 2006:
 
 -  all
          directors
 -
                each
                    person who is known by us to be the beneficial owner of more
                    than five
                    percent (5%) of the outstanding common
                    stock
 -
                each
                    executive officer named in the Summary Compensation
                    Table
 -
                all
                    directors and executive officers as a group
 
 The
          number of shares beneficially owned by each director or executive officer
          is
          determined under rules of the SEC, and the information is not necessarily
          indicative of beneficial ownership for any other purpose. Under the SEC
          rules,
          beneficial ownership includes any shares as to which the individual has
          the sole
          or shared voting power or investment power. In addition, beneficial ownership
          includes any shares that the individual has the right to acquire within
          60 days.
          Unless otherwise indicated, each person listed below has sole investment
          and
          voting power (or shares such powers with his or her spouse). In certain
          instances, the number of shares listed includes (in addition to shares
          owned
          directly), shares held by the spouse or children of the person, or by a
          trust or
          estate of which the person is a trustee or an executor or in which the
          person
          may have a beneficial interest.
  Page
              38
 Table
              of Contents
  
 
 **Title
                    of Class**
                **Name
                    and Address of Beneficial Owner**
                **Amount
                    of Beneficial Ownership**
                **Percent
                    of Class**Common
                    Stock
                Ronald
                    Heineman (1)
                  c/o
                    Resolve Staffing, Inc.
                  3235
                    Omni Drive
                  Cincinnati,
                    OH 45245
                7,772,000
                47.7%Common
                    Stock
                Don
                    Quarterman, Jr. (2)
                  c/o
                    Resolve Staffing, Inc.
                  3235
                    Omni Drive
                  Cincinnati,
                    OH 45245
                370,000
                2.3%Common
                    Stock
                William
                    Brown (3)
                  c/o
                    Resolve Staffing, Inc.
                  3235
                    Omni Drive
                  Cincinnati,
                    OH 45245
                2,549,179
                15.6%Common
                    Stock
                William
                    Walton
                  c/o
                    Resolve Staffing, Inc.
                  3235
                    Omni Drive
                  Cincinnati,
                    OH 45245
                4,000,000
                24.5%Common
                    Stock
                Shares
                    of all officers and directors as a group (4 persons)
                14,691,179
                90.1%
 
 (1)
          Includes 400,000 shares pledged to Employee Leasing Services, Inc., of
          which Mr.
          Heineman is President and majority shareholder, to secure a line of credit.
          This
          amount also includes 7,372,000 owned by Mr. Heineman individually.
 
 (2)
          Includes 10,000 shares owned by Pinnacle Corporate Services, of which Mr.
          Quarterman is a managing partner. It also includes 360,000 shares owned
          by Mr.
          Quarterman individually.
 
 (3)
          Includes 1,766,826 shares owned by the William A. Brown Family Trust, of
          which
          Mr. Brown is trustee, 400 shares owned by his wife, Christina Brown and
          95,793
          shares owned by Work Holdings LLC, of which Mr. Brown is the majority owner.
          This amount also includes 453,460 warrants owned by the William A. Brown
          Family
          Trust and 232,700 warrants owned by Work Holdings, LLC.
 
 **STOCK
          OPTION AND INCENTIVE PLANS**
 
 During
          the year ended December 31, 2001, Resolve adopted a 2001 Equity Incentive
          Plan
          ("Incentive Plan") for the benefit of key employees (including officers
          and
          employee directors) and consultants of Resolve and its affiliates. The
          Incentive
          Plan is intended to provide those persons who have substantial responsibility
          for the management and growth of Resolve with additional incentives and
          an
          opportunity to obtain or increase their proprietary interest in Resolve,
          encouraging them to continue in the employ of Resolve.
 
 On
          May
          28, 2002, Resolve's 2001 Stock Incentive Plan was amended to restore the
          number
          of shares which may be issued under the plan to 600,000 and to permit the
          issuance of unrestricted shares. No shares have been issued under this
          plan.
 
 **ITEM
          12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.**
 
 On
          December 8, 2003, the Company entered into a non-interest bearing short-term
          credit agreement with ELS, Inc that provides for borrowings of up to $200,000.
          ELS, Inc. is a company owned by Ronald Heineman, the Company’s Chief Executive
          Officer. The underlying promissory note is secured by 400,000 shares of
          common
          stock that were released to an escrow agent, but not issued for accounting
          or
          reporting purposes. As of December 31, 2005, $5,873,936 was outstanding
          under
          the agreement. Balances due under the credit agreement were originally
          due May
          8, 2004, but the agreement was extended on a month-to-month basis. On February
          7, 2005, the note was extended for an additional 18 months and the maximum
          amount was increased based on a case by case basis upon review by ELS.
 
 During
          the year ended December 31, 2002, Resolve borrowed $67,000 from William
          A.
          Brown, executive vice-president and major shareholder of Resolve. As of
          December
          31, 2004, the balance of the Note was $91,500. The debt is evidenced by
          a
          promissory note due on March 31, 2004, with interest at the rate of 5%
          per annum
          payable quarterly in arrears. The note has been verbally extended on a
          month-to-month basis.
 
  Page
              39
 Table
              of Contents
  **ITEM
          13. EXHIBITS AND REPORTS ON FORM 8-K.**
 
 We
          filed
          the following reports on Form 8-K during 2005:
 
 Form
          8-K,
          January 13, 2005, Item 5 - Change in Registrant’s Officers; Reporting the
          resignation of Mr. Michael Knox as an officer of the Company.
 
 Form
          8-K,
          February 9, 2005, Item 1.01 - Entry into a Material Definitive Agreement;
          Reporting entering into an agreement to purchase certain assets from ELS,
          Inc.
          Item 2.01 - Completion of Acquisition or Disposition of Assets; Reporting
          the
          acquisition of certain assets of ELS, Inc. Item 3.02 - Unregistered Sales
          of
          Equity Securities; Reporting the issuance of an aggregate of 13,000,000
          shares
          of restricted common stock to ELS, Inc., or its principal Shareholders.
          Item
          7.01 - Regulation FD Disclosure; Reporting the issuance of a press release
          disclosing completion of the acquisition of certain assets of ELS, Inc.
          Item
          9.01 - Financial Statements and Exhibits; Reporting the pro forma financial
          information required.
 
 Form
          8-K,
          April 22, 2005, Item 5 - Change in Registrant’s Directors; Reporting the
          appointment of William Walton as director of the Company.
 
 Form
          8-K,
          August 24, 2005, Item 1.01 - Entry into a Material Definitive Agreement;
          Reporting the entry into an agreement to purchase certain assets from Truckers
          Plus Leasing, Inc. Item 2.01 - Completion of Acquisition or Disposition
          of
          Assets; Reporting the acquisition of certain assets of Truckers Plus Leasing,
          Inc. Item 3.02 - Unregistered Sales of Equity Securities; Reporting the
          issuance
          of an aggregate of 100,000 shares of restricted common stock to Truckers
          Plus
          Leasing, Inc., or its principal shareholders, in connection with the acquisition
          of certain assets of Truckers Plus, Inc. Item 7.01 - Regulation FD Disclosure;
          Reporting the issuance of a press release disclosing completion of the
          acquisition of certain assets of Truckers Plus, Leasing, Inc. Item 9.01
          -
          Financial Statements and Exhibits; Reporting the pro forma financial information
          required by this Item 9(b).
 
 Form
          8-K,
          October 27, 2005, Item 4.02 - Non Reliance on Previously Issued Financial
          Statements; Reporting the Registrant had determined that the financial
          statements contained in the Forms 10-QSB.
  Form
          8-K/A, November 14, 2005, Item 4.02 Non-Reliance on Previously Issued Financial
          Statements; Reporting the U.S. Securities and Exchange Commission ("Commission")
          issued comments to the Registrant in connection with the Commission's review
          of
          the Form 8-K filed by the Registrant on October 27, 2005.
 
 Form
          8-K/A, December 12, 2005, Item 1.01 - Entry into a Material Definitive
          Agreement; Reporting entering into an agreement to purchase ELS Personnel
          Services ("ELS"), from Employee Leasing Services, Inc. Item 2.01 - Completion
          of
          Acquisition or Disposition of Assets; Reporting the acquisition of equity
          interest in certain companies from ELS, Inc. Item 3.02 - Unregistered Sales
          of
          Equity Securities; Reporting the issuance of an aggregate of 13,000,000
          shares
          of restricted common stock to ELS, Inc. Item 7.01 - Regulation FD Disclosure;
          Reporting the issuance of a press release disclosing completion of the
          acquisition of certain equity interests from ELS, Inc. Item 9.01 - Financial
          Statements and Exhibits; Reporting Financial Statements of Businesses
          Acquired.
 
  Page
              40
 Table
              of Contents
  **Exhibits**
 
 2.1
                Stock
                    Purchase Agreement between M. Richard Cutler, Vi Bui and Premier
                    Ventures,
                    Inc. dated as of September 24, 2001 (1)2.2
                Stock
                    Purchase Agreement between Premier Ventures, Inc. and Work Holdings,
                    LLC
                    dated as of September 27, 2001 (1)2.3
                Securities
                    Exchange Agreement dated November 23, 2001 between Columbialum,
                    Ltd. and
                    the shareholders of Integra Staffing, Inc. (2)3.1
                Articles
                    of Incorporation of the Company (3)3.2
                Bylaws
                    of the Company (3)3.3
                Amendment
                    to Articles of Incorporation dated January 15, 2002, filed January
                    22,
                    2002 (4)3.4
                Amendment
                    to Articles of Incorporation filed May 29, 2002 (5)4.1
                Form
                    of 5% Convertible Subordinated Debenture due December 31, 2002
                    (5)4.2
                Form
                    of 6% Convertible Subordinated Debenture due June 30, 2003
                    (5)4.3
                Form
                    of 18% Convertible Note due October 1, 2002 (5)4.4
                Form
                    of $.15 warrant expiring June 30, 2007 (6)10.1
                Lease
                    dated August 23, 1999 between Fletcher Associates, Inc. and Integra
                    Staffing, Inc. (5)10.2
                Consulting
                    Agreement dated October 1, 2001 between the Company and Apogee
                    Business
                    Consultants, Inc. (5)10.3
                The
                    Company's 2001 Equity Incentive Plan (5)10.4
                Amendment
                    to the 2001 Equity Incentive Plan (6)10.5
                Form
                    of Registration Rights Agreement (6)10.6
                Lease
                    dated June 19, 2002 between the Company and Tampa Associates
                    (6)10.7
                Lock-up
                    and Registration Agreement with R. Gale Porter, dated November
                    22, 2002
                    (7)10.8
                Note
                    Extension of Barbara Green dated February 3, 2003 (8)10.9
                Employment
                    Agreement Letter between the Company and Wanda Dearth dated February
                    7,
                    2003. (8)10.10
                Promissory
                    Note with William A. Brown (8)10.11
                Revolving
                    line of credit agreement between the Company and Mercantile Bank
                    (9)10.12
                Note
                    Extension of Barbara Green dated May 3, 2003 (9)10.13
                Consulting
                    Agreement between the Company and Pinnacle (10)10.14
                Note
                    Extension of Barbara Green, dated June 3, 2003 (10)10.15
                Amended
                    Consulting Agreement between the Company and Pinnacle16.1
                Letter
                    dated March 5, 2002, from Haskell & White LLP, Certified Public
                    Accountants to the Registrant regarding change of certifying
                    accountant.(4)16.2
                Letter
                    dated March 5, 2002, from Haskell & White LLP, Certified Public
                    Accountants regarding agreement with comments in Form 8-K
                    (4)21
                List
                    of Subsidiaries - Integra Staffing, Inc. (Florida) 100%
                    (7)31.1
                Certification
                    by Chief Executive Officer pursuant to Sarbanes-Oxley Section
                    302.32.1
                Certification
                    by Chief Executive Officer pursuant to 18 U.S. C. Section
                    1350.
 
 (1)
          Incorporated by reference to the exhibits filed with the Company's Current
          Report on Form 8-K dated September 27, 2001.
  (2)
          Incorporated by reference to the exhibits filed with the Company's Current
          Report on Form 8-K dated December 12, 2001.
  (3)
          Incorporated by reference to the exhibits filed with the corresponding
          exhibits
          numbers filed with the Company's Form 10-SB Registration Statement field
          February 14, 2000.
  (4)
          Incorporated by reference to the exhibits filed with the Company's Current
          Report on Form 8-K dated March 1, 2002.
  (5)
          Incorporated by reference to the exhibits filed with the Company's Report
          on
          Form 10-KSB for year ended December 31, 2001.
  (6)
          Filed
          with the initial filing of the Registration Statement on Form SB-2 on July
          29,
          2002.
  (7)
          Filed
          with Amendment No. 1 of Registration Statement on December 23,
          2002.
  (8)
          Filed
          as an exhibit to the Company’s Form 10-KSB for the year ended December 31, 2002
          and filed with the Commission
  (9)
          Filed
          as an exhibit to the Company’s Form 10-KSB/A for the year ended December 31,
          2002 and filed with the Commission
  (10) Filed
          with Amendment No. 4 to this Registration Statement on June 30,
          2003.
 
 
 
  Page
              41
 Table
              of Contents
  
 
 
 **SIGNATURES**
 
 In
          accordance with Section 13 or 15(d) of the Exchange Act, the registrant
          caused
          this report to be signed on its behalf by the undersigned, thereunto duly
          authorized.
 
 Resolve
          Staffing, Inc., a Nevada Corporation
 
 Dated
                    April 15, 2006
                By:*/s/
                    Ronald Heineman*Ronald
                    Heineman, Chief Executive Officer
 
 
 In
          accordance with the Exchange Act, this report has been signed below by
          the
          following persons on behalf of the registrant and in the capacities and
          on the
          dates indicated.
 
 **Signature**
                **Title**
                **Date***/s/
                    Ronald Heineman*
                
                April
                    15, 2006Ronald
                    Heineman
                Chief
                    Executive Officer and Director*/s/
                    Donald Quarterman, Jr.*
                
                April
                    15, 2006Donald
                    Quarterman, Jr.
                Director*/s/
                    William Brown*
                
                April
                    15, 2006William
                    Brown
                Director*/s/
                    William Walton*
                
                April
                    15, 2006William
                    Walton
                Director
 
  Page
              42
 Table
              of Contents