**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-K/A** ****





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


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





**FOR
      FISCAL YEAR ENDED DECEMBER 31, 2006.**





Commission
      File Number 000-29485





**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 [ ]





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-K 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-K
      or any amendment to this Form 10-K. [].





Check
      whether the registrant is a large accelerated filer, an accelerated filer,
      or a
      non-accelerated filer (as indicated by Exchange Act Rule 12 b-2). Large
      accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer
      [X]





Check
      whether the registrant is a shell company (as defined in Rule 12b-2 of the
      Act).
      Yes [ ] No [X]





Check
      if
      the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
      Securities Act. Yes [ ] No [X]





Check
      if
      the registrant is not required to file reports pursuant to Section 13 or Section
      15(d) of the Act. Yes [ ] No [X]





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 $2.99 per share as of December 31, 2006 was
      $13,066,638.





As
      of
      November 13, 2007, the registrant had 19,428,511 shares of common stock, par
      value $.0001 per share, outstanding.





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          -
          1


**Resolve
      Staffing, Inc.**


**2006
      Annual Report on Form 10-K/A**


**Table
      of Contents**





PagePART
                IITEM
                1. BUSINESS
            3ITEM
                1A. RISK FACTORS
            8ITEM
                1B. UNRESOLVED STAFF COMMENTS
            16ITEM
                2. PROPERTIES
            16ITEM
                3. LEGAL PROCEEDINGS
            17ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
            17PART
                II.ITEM
                5. MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS
                AND ISSUER SALES OF UNREGISTERED SECURITIES
            18ITEM
                6. SELECTED FINANCIAL DATA
            19ITEM
                7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
                RESULTS OF OPERATIONS
            20ITEM
                7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK
            26ITEM
                8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
            26ITEM
                9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                FINANCIAL DISCLOSURE
            26ITEM
                9A. CONTROLS AND PROCEDURES
            27ITEM
                9B. OTHER INFORMATION
            27PART
                IIIITEM
                10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
            27ITEM
                11. EXECUTIVE COMPENSATION
            28ITEM
                12. SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT
                AND
                RELATED STOCKHODER MATTERS
            30ITEM
                13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
                INDEPENDENCE
            32ITEM
                14. PRINCIPAL ACCOUNTING FEES AND SERVICES
            33PART
                IVITEM
                15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
            33FINANCIAL
                STATEMENTS
            33SIGNATURES
            59EXHIBIT
                INDEX
            60





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          2


**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-K/A.





**PART
      I**





**ITEM
      1. BUSINESS**





**About
      Us**





Resolve
      Staffing, Inc. (“Company” or “Registrant”), headquartered in Cincinnati, Ohio,
      is a national provider of outsourced human resource services with approximately
      74 offices reaching from California to New York. The Company provides a full
      range of human resource outsourcing services, including Professional Employer
      Organization (“PEO”) services and solutions for temporary, temporary-to-hire, or
      direct hire staffing in the medical, truck driver, clerical, office
      administration, customer service, professional and light industrial
      categories.





We
      offer
      a comprehensive range of human resource management services to help small and
      medium-sized businesses manage the increasing costs and complexities of a broad
      array of employment-related issues. We believe that the combination of these
      two
      principal services, PEO and staffing, enables us to provide our clients with
      a
      unique blend of services not offered by our competition. Our platform of human
      resource outsourcing (“HRO”) services is built upon our expertise in payroll
      processing, employee benefits and administration, workers' compensation
      coverage, effective risk management and workplace safety programs and human
      resource administration.





In
      a PEO
      arrangement, we enter into a contract to become a co-employer of the client's
      existing workforce and assume responsibility for some or all of the client's
      human resource management responsibilities. Staffing services include on-demand
      or short-term staffing assignments, long-term or indefinite-term contract
      staffing and comprehensive on-site management. Our staffing services also
      include direct placement services, which involve fee-based search efforts for
      specific employee candidates at the request of our PEO clients, staffing
      customers or other companies.





On
      February 7, 2005, the Company, entered into an equity purchase agreement
      (“Agreement”), to purchase ELS Personnel Services (“ELS”) (the “Reverse
      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, the
      Company 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 Reverse Combination on February 7, 2005, ELS was deemed
      to
      be the acquiring company for accounting purposes and the Reverse 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 the Company. In conjunction
      with this transaction, the group of companies known as ELS Personnel Services,
      which were legally acquired by the Company, changed its name to Resolve
      Staffing, Inc.


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          -
          3


On
      various dates during 2005, the Company, 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, the
      Company acquired a total of 31 temporary employee staffing locations from the
      newly acquired entities. These include:





·
            On
                January 24, 2005, the Company 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, the Company acquired SupportStaff Employment Services,
                a full-service staffing firm located in Sebring, FL.





·
            On
                May 9, 2005, the Company acquired certain assets from Pride Staffing,
                Inc.
                These assets include a temporary staffing office located in Erie,
                PA.





·
            On
                June 13, 2005 the Company acquired The Arnold Group, a Southern California
                staffing firm.




·
            On
                June 20, 2005 the Company acquired Taylor Personnel Services, Inc.,
                a
                Buffalo, New York staffing firm.





·
            On
                August 22, 2005 the Company acquired Truckers Plus, Inc., a thirteen
                location truck driver staffing firm headquartered in Memphis,
                Tennessee.





·
            On
                September 14, 2005 the Company acquired QRD International Inc. d/b/a
                Delta
                Staffing, a Southern California staffing
                firm.





·
            On
                September 30, 2005 the Company acquired Midwest Staffing Inc., a
                medical
                staffing firm located in Oklahoma City,
                Oklahoma.





·
            On
                October 21, 2005 the Company acquired Star Personnel Services of
                Kentucky,
                LLC, a Northern KY staffing firm.





·
            On
                October 31, 2005 the Company 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 the Company acquired ProCare Medical Staffing,
                LLC, a
                medical staffing firm with an Illinois
                office.





·
            On
                November 28, 2005 the Company acquired Big Sky Travel Nurses, Inc.,
                a
                medical staffing firm, with a Montana
                office.





·
            On
                December 11, 2005 the Company acquired Assisted Staffing, Inc., a
                medical
                staffing firm with an Arizona office
                location.





·
            On
                December 26, 2005 the Company acquired Pagnard Enterprises, Inc.,
                a
                temporary staffing firm with an Ohio
                office.





·
            On
                December 27, 2005 the Company acquired Drivers Plus, Inc., a truck
                driver
                staffing firm with an office in
                Missouri.





·
            On
                December 30, 2005 the Company 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 Reverse 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 Reverse 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


Page
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          4


financial
      statements of the Company for the year ended December 31, 2004 are included
      in the Company’s 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 Company’s 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 Reverse Combination reflect those of ELS. In conjunction with this
      transaction, the group of companies known as ELS Personnel Services, which
      were
      legally acquired by the Company, 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
      January 24, 2006, the Company acquired R & R Staffing Services, Inc.,
      located in Syracuse, New York.





On
      March
      27, 2006, the Company acquired Ready Nurses LLC, a Fulton, Missouri based
      medical staffing firm.





On
      May 5,
      2006, the Company acquired Steadystaff, a Baltimore/Washington D. C. based
      staffing firm.





On
      June
      1, 2006, the Company announced that it has completed the acquisition of Star
      Personnel, headquartered in Cincinnati, Ohio.





On
      October 1, 2006, the Company, entered into an equity purchase agreement
      (“Agreement”), to purchase Employee Leasing Services, Inc. (“ELS Inc.”)
      (“Combination”), a group of privately-held companies known as ELS Inc. located
      in Cincinnati, Ohio. The Company’s Chief Executive Officer and Director, Ronald
      Heineman, is a principal shareholder, officer and director of ELS Inc. Pursuant
      to the equity purchase agreement, the Company acquired the ownership interest
      in
      the group of companies which comprised ELS Inc.





In
      connection with the Combination on October 1, 2006, Resolve was deemed to be
      the
      acquiring company for accounting purposes and the Combination was accounted
      for
      as an acquisition under the purchase method of accounting for business
      combinations in accordance with accounting principles generally accepted in
      the
      United States of America. The financial information for 2006, 2005 and 2004
      includes the consolidated balances as of December 31, 2006 and 2005 and the
      consolidated results of operations of the individual entities which comprise
      Resolve for the years ended December 31, 2006, 2005 and 2004. The consolidated
      results of operations for the acquired entities include the activities of each
      entity from the date of acquisition to the end of the period.





Our
      ability to offer clients a broad range of services allows us to become an
      outsourced human resource department and strategic partner for our clients.
      We
      believe our approach allows our clients to focus on their core business rather
      than human resources, thus making them more productive.





**Our
      Business**





The
      Company focuses on meeting our clients' flexible human resource outsourcing
      needs, targeting opportunities in a fragmented; growing market that we believe
      has been under-served by large, full-service staffing and PEO companies.
      Significant benefits to clients include providing the ability to outsource
      the
      recruiting and many logistical aspects of their human resource 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:





·
            Professional
                Employer Organization - In a PEO arrangement, we enter into a contract
                to
                become a co-employer of the client's existing workforce and assume
                responsibility for some or all of the client's human resource management
                responsibilities.·
            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.





·
            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 two 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.





**The
      Market**





The
      Human
      Resource Outsourcing (HRO) market is large and growing rapidly. Some of the
      key
      factors driving growth include the desire of businesses to outsource non-core
      business functions, to reduce regulatory compliance risk, to rationalize the
      number of service providers that they use, and to reduce costs by integrating
      human resource systems and processes.





The
      outsourcing of business processes represents a growing trend within the United
      States. By utilizing the expertise of outsourcing service providers, businesses
      are able to reduce processing costs and administrative burdens while at the
      same
      time offering competitive benefits for their employees. The technical
      capabilities, knowledge and operational expertise that we have built, along
      with
      our broad portfolio of services for clients, have enabled us to capitalize
      on
      the growing business processing outsourcing trend.





Our
      goal
      is to become a leading national provider of HRO services for small and
      medium-sized businesses. We seek to differentiate our strategic position by
      offering a full spectrum of PEO and staffing services. We believe that the
      integrated nature of our service platform assists our clients and customers
      in
      successfully aligning and strengthening their organizational structure to meet
      the demands of their businesses. In pursuit of this goal, we have adopted the
      operating and growth strategies described below to provide the framework for
      our
      future growth, while maintaining the quality and integrity of our current
      service offerings.





**Competition**





The
      HRO
      industry is characterized by intense competition. In staffing, 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.





PEO
      companies that periodically compete with us in the same markets have greater
      financial and marketing resources than we do, such as Administaff, Inc.,
      Gevity HR, Inc., and Paychex, Inc., among others. Competition in the
      PEO industry is based largely on price, although service and quality can also
      provide competitive advantages. A significant limiting factor to the growth
      of
      the PEO industry is the perception of potential clients that they have the
      capacity to handle human resource issues internally. We believe that our growth
      is attributable to our ability to provide small and medium-sized companies
      with
      the opportunity to reduce workers' compensation costs and to provide enhanced
      benefits to their employees while reducing their overall personnel
      administration costs.


Page
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          5





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.




**Employees**





As
      of
      December 31, 2006 we employed over 10,000 PEO employees and over 4,000 temporary
      employees.





**Typical
      Client**





Our
      HRO
      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. We are not dependent on any one customer in any of the markets we
      serve.




**Our
      Offices**





Our
      Company headquarters are located at 3235 Omni Drive, Cincinnati, Ohio 45245.
      Our
      telephone number is 800-894-4250.





In
      addition to our corporate headquarters, we lease facilities at approximately
      74
      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.





**Industry
      Regulation**





*Overview*





We
      are
      subject to the laws and regulations of the jurisdictions within which we
      operate, including those governing high deductible employers under the workers'
      compensation systems in certain states. We believe we are in compliance with
      all
      HRO licensing requirement. 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.





Our
      operations are affected by numerous federal and state laws relating to labor,
      tax and employment matters. By entering into a co-employer relationship with
      employees who are assigned to work at client locations (sometimes referred
      to as
      "work-site employees"), we assume certain obligations and responsibilities
      of an
      employer under these federal and state laws. Because many of these federal
      and
      state laws were enacted prior to the development of nontraditional employment
      relationships, such as professional employer, temporary employment, and
      outsourcing arrangements, many of these laws do not specifically address the
      obligations and responsibilities of nontraditional employers. In addition,
      the
      definition of "employer" under these laws is not uniform. As an employer, we
      are
      subject to all federal statutes and regulations governing our employer-employee
      relationships. Subject to the discussion of risk factors below, we believe
      that
      our operations are in compliance in all material respects with applicable
      federal statutes and regulations.





We
      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


Page
          -
          6


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, high deductible funds or, if permitted by the state,
      employer high deductible. 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
      1A. RISK FACTORS**





We
      were
      incorporated in April 1998, and have been engaged in the staffing business
      since
      August 1999. 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
      Lost Money in 2006*





We
      have
      incurred net losses from operations in 2006. Our net loss for the fiscal year
      ended December 31, 2006 was $2,421,799 and as of December 31, 2006 we had an
      accumulated deficit of $3,821,016. While we expect to become profitable in
      the
      future, 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 become profitable, 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.


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          -
          7


*We
      are uncertain whether our current senior lender will agree to refinance or
      extend our senior debt facility, and if so, whether the terms of refinancing
      will be acceptable to us.*





Our
      senior debt forbearance agreement expires as of December 31, 2007 and our senior
      lender has indicated that it would prefer that the Company refinance the debt
      with alternate financing in order for the current senior lender to exit. If
      our
      existing senior lender does not refinance our senior debt and a new lender
      cannot be found or a new forbearance agreement negotiated with the current
      lender that would include terms acceptable to the Company, it would have a
      material adverse effect on our financial condition.





*We
      are Subject to Government Regulations and any Change in these Regulations,
      or
      the Possible Retroactive 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
      workers' compensation loss reserves may be inadequate to cover our ultimate
      liability for workers' compensation costs.*





We
      maintain reserves (recorded as accrued liabilities on our balance sheet) to
      cover our estimated liabilities for our high deductible workers' compensation
      program. The determination of these reserves is based upon a number of factors,
      including current and historical claims activity, claims payment patterns and
      medical cost trends and developments in existing claims. Accordingly, reserves
      do not represent an exact calculation of liability. Reserves can be affected
      by
      both internal and external events, such as adverse developments on existing
      claims or changes in medical costs, claims handling procedures, administrative
      costs, inflation, and legal trends and legislative changes. Reserves are
      adjusted from time to time to reflect new claims, claim developments, or
      systemic changes, and such adjustments are reflected in the results of the
      periods in which the reserves are changed. Because of the uncertainties that
      surround estimating workers' compensation loss reserves, we cannot be certain
      that our reserves are adequate. If our reserves are insufficient to cover our
      actual losses, we would have to increase our reserves and incur charges to
      our
      earnings that could be material.





*Adverse
      developments in the market for excess workers' compensation insurance could
      lead
      to increases in our costs.*





We
      have
      a high deductible employer workers' compensation coverage in certain
      states. To manage our financial exposure in the event of catastrophic injuries
      or fatalities, we maintain excess workers' compensation insurance through
      our insurance providers. Changes in the market for excess workers'
      compensation insurance may lead to limited availability of such coverage,
      additional increases in our insurance costs or further increases in our high
      deductible retention, any of which may have a material adverse effect on our
      financial condition.





*If
      we
      are determined not to be an "employer" under certain laws and regulations,
      our
      clients may stop using our services, and we may be subject to additional
      liabilities.*





We
      believe that we are an employer of employees provided to our PEO clients on
      a
      co-employment basis under the various laws and regulations of the Internal
      Revenue Service and the U.S. Department of Labor. If we are determined not
      to be
      an employer under such laws and regulations and are therefore unable to assume
      obligations of our clients for employment and other taxes, our clients may
      be
      held jointly and severally liable for payment of such taxes. Some clients or
      prospective clients may view such potential liability as an unacceptable risk,
      discouraging current clients from continuing a relationship with us or
      prospective clients from entering into a new relationship with us. Any
      determination that we are not an employer for purposes of ERISA could adversely
      affect our cafeteria benefits plan operated under Section 125 of the
      Internal Revenue Code and result in liabilities to us under the
      plan.





*We
      may be exposed to employment-related claims and costs and periodic litigation
      that could adversely affect our business and results of
      operations.*





We
      either
      co-employ employees in connection with our PEO arrangements or place our
      employees in our customers' workplace in connection with our staffing business.
      As such, we are subject to a number of risks inherent to our status as an
      employer, including without limitation:





**•**
            claims
                of misconduct or negligence on the part of our employees, discrimination
                or harassment claims against our employees, or claims by our employees
                of
                discrimination or harassment by our clients;**•**
            immigration-related
                claims;**•**
            claims
                relating to violations of wage, hour and other workplace
                regulations;**•**
            claims
                relating to employee benefits, entitlements to employee benefits,
                or
                errors in the calculation or administration of such benefits;
                and**•**
            possible
                claims relating to misuse of customer confidential information,
                misappropriation of assets or other similar
                claims.





If
      we
      experience significant incidents involving any of the above-described risk
      areas
      we could face substantial out-of-pocket losses, fines or negative publicity.
      In
      addition, such claims may give rise to litigation, which may be time consuming,
      distracting and costly, and could have a material adverse effect on our
      business. With respect to claims involving our co-employer relationship with
      our
      PEO clients, although our PEO services agreement provides that the client will
      indemnify us for any liability attributable to the conduct of the client or
      its
      employees, we may not be able to enforce such contractual indemnification,
      or
      the client may not have sufficient assets to satisfy its obligations to
      us.





*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.





*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 Business 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 Own a Controlling Interest in
      Our
      Voting Stock and Investors Will Not Have Voice in Our
      Management*





Our
      officers, directors and stockholders with greater than 5% holdings will, in
      the
      aggregate, beneficially own approximately 77% 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.





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
      November 6, 2007, we had 19,828,511 shares of common stock issued and
      outstanding, which includes 400,000 shares held in escrow as described in Note
      C
      to the accompanying financial statements. We also have 2,000,000 shares issuable
      upon exercise of our warrants. 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


Page
          -
          8


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.





*We
      compete with numerous larger competitors, many of which are better financed
      and
      have a stronger presence in the industry than ourselves.*





As
      many
      of these firms have significantly stronger name recognition than ourselves,
      they
      are in a position to quickly attract clients which are in need of services
      thus
      adversely impacting our potential pool of clients. Our marketing structure
      is
      not proprietary and it would not be difficult for a company to offer similar
      services. Further, entry into the marketplace by new competitors is relatively
      easy especially considering their existing presences and their greater resources
      for financing, advertising and marketing.





*Any
      significant economic downturn could result in the Company’s clients using fewer
      temporary employees, which would materially adversely affect our business.*




Because
      demand for temporary personnel services is sensitive to changes in the level
      of
      economic activity, the Company’s business may suffer during economic downturns.
      As economic activity begins to slow down, companies tend to reduce their use
      of
      temporary employees before undertaking layoffs of their regular employees,
      resulting in decreased demand for temporary personnel. Significant declines
      in
      demand, and thus in revenues, can result in expense de-leveraging, which would
      result in lower profit levels.




*The
      staffing services industry is highly competitive with limited barriers to entry,
      which could limit the Company’s ability to maintain or increase its market share
      or profitability.*




The
      staffing services market is highly competitive with limited barriers to entry,
      and in recent years has been undergoing significant consolidation. The Company
      competes in markets throughout North America with full-service and specialized
      temporary service agencies. Several of the Company’s competitors, including
      Adecco S.A., Vedior N.V., Randstad Holding N.V. and Kelly Services, Inc., have
      very substantial marketing and financial resources. Price competition in the
      staffing industry is intense and pricing pressures from competitors and
      customers are increasing. The Company expects that the level of competition
      will
      remain high in the future, which could limit its ability to maintain or increase
      its market share or 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.





*Government
      regulations may result in prohibition or restriction of certain types of
      employment services or the imposition of additional licensing or tax
      requirements that may reduce the Company’s future earnings.*




Page
          -
          9


The
      temporary employment industry is heavily regulated. Within the United States,
      wherein the Company now operates, the Company’s operations may have to adjust
      to:




•
            additional
                regulations that prohibit or restrict the types of employment services
                that The Company currently provides;•
            the
                imposition of new or additional benefit requirements;•
            requirements
                that require The Company to obtain additional licensing to provide
                staffing services; or•
            Increases
                in taxes, such as sales or value-added taxes, payable by the providers
                of
                staffing services.




Any
      future regulations may have a material adverse effect on the Company’s financial
      condition, results of operations and liquidity because they may make it more
      difficult or expensive for the Company to continue to provide staffing services.





*The
      Company’s acquisition strategy may have a material adverse effect on its
      business due to unexpected or underestimated costs.*




The
      Company has completed a series of acquisitions during 2005-2006 of smaller
      and
      less capitalized temporary staffing services competitors and its current plan
      is
      to continue with this acquisition strategy in the future although no assurance
      or guaranty can be given that the Company will make further acquisitions. The
      Company’s acquisition strategy involves significant risks, including:




•
            difficulties
                in the assimilation of the operations, services and corporate culture
                of
                acquired companies;•
            over-valuation
                by the Company of acquired companies;•
            insufficient
                indemnification from the selling parties for legal liabilities incurred
                by
                the acquired companies prior to the acquisitions; and•
            diversion
                of management’s attention from other business concerns.




These
      risks could have a material adverse effect on the Company’s business because
      they may result in substantial costs to the Company and disrupt the Company’s
      business. In addition, future acquisitions could materially adversely affect
      the
      Company’s business, financial condition, results of operations and liquidity
      because they would likely result in the incurrence of additional debt or
      dilution, contingent liabilities, an increase in interest expense and
      amortization expenses related to separately identified intangible assets.
      Possible impairment losses on goodwill and restructuring charges could also
      occur.




*Intense
      competition may limit the Company’s ability to attract, train and retain the
      qualified personnel necessary for the Company to meet its customers’ staffing
      needs.*




The
      Company depends on its ability to attract and retain qualified temporary
      personnel who possess the skills and experience necessary to meet the staffing
      requirements of its clients. The Company must continually evaluate and upgrade
      its base of available qualified personnel through recruiting and training
      programs to keep pace with changing client needs and emerging technologies.
      Competition for individuals with proven professional skills, particularly
      employees with accounting and technological skills, is intense, and the Company
      expects demand for such individuals to remain very strong for the foreseeable
      future. Qualified personnel may not be available to the Company in sufficient
      numbers and on terms of employment acceptable to the Company. Developing and
      implementing training programs require significant expenditures and may not
      result in the trainees developing effective or adequate skills. The Company
      may
      not be able to develop training programs to respond to its clients’ changing
      needs or retain employees whom it has trained. The failure to recruit, train
      and
      retain qualified temporary employees could materially adversely affect the
      Company’s business because it may result in an inability to meet its customers’
staffing needs.





*The
      Company may be exposed to employment-related claims and costs and other
      litigation that could materially adversely affect its business, financial
      condition and results of operations.*




The
      Company is in the business of employing people and placing them in the
      workplaces of other businesses. Risks relating to these activities include:




•
            claims
                of misconduct or negligence on the part of the Company’s employees;•
            claims
                by the Company’s employees of discrimination or harassment directed at
                them, including claims relating to actions of its clients;•
            claims
                related to the employment of illegal aliens or unlicensed personnel;•
            payment
                of workers’ compensation claims and other similar claims;•
            violations
                of wage and hour requirements;•
            retroactive
                entitlement to employee benefits;•
            errors
                and omissions of the Company’s temporary employees, particularly in the
                case of professionals, such as accountants; and•
            claims
                by the Company’s clients relating to its employees’ misuse of client
                proprietary information, misappropriation of funds, other criminal
                activity or torts or other similar claims.




The
      Company may incur fines and other losses or negative publicity with respect
      to
      these problems. In addition, some or all of these claims may give rise to
      litigation, which could be time-consuming to its management team and costly
      and
      could have a negative impact on its business. the Company cannot assure you
      that
      it will not experience these problems in the future or that its insurance will
      be sufficient in amount or scope to cover any of these types of liabilities.




The
      Company cannot assure you that its insurance will cover all claims that may
      be
      asserted against it. Should the ultimate judgments or settlements exceed its
      insurance coverage, they could have a material effect on the Company’s results
      of operations, financial position and cash flows. The Company also cannot assure
      you that it will be able to obtain appropriate types or levels of insurance
      in
      the future or that adequate replacement policies will be available on acceptable
      terms, if at all.




*If
      the Company loses its key personnel, then its business may suffer.*




The
      Company’s operations are dependent on the continued efforts of its officers and
      executive management. In addition, the Company is dependent on the performance
      and productivity of its local managers and field personnel. The Company’s
      ability to attract and retain business is significantly affected by local
      relationships and the quality of service rendered. The loss of those key
      officers and members of executive management who have acquired significant
      experience in operating a staffing service may cause a significant disruption
      to
      the Company’s business. Moreover, the loss of the Company’s key managers and
      field personnel may jeopardize existing client relationships with businesses
      that continue to use its staffing services based upon past relationships with
      these local managers and field personnel. The loss of such key personnel could
      materially adversely affect the Company’s operations, because it may result in
      an inability to establish and maintain client relationships and otherwise
      operate its business.




*The
      price of the Company’s common stock may fluctuate significantly, which may
      result in losses for investors.*




The
      market price for the Company’s common stock has been and may continue to be
      volatile. For example, during the fiscal year ended December 31, 2006, the
      prices of the Company’s common stock as reported on the OTCBB ranged from a high
      of $3.26 to a low of $.09. the Company’s stock price can fluctuate as a result
      of a variety of factors, including factors listed in these “Risk Factors” and
      others, many of which are beyond the Company’s control. These factors include:




•
            actual
                or anticipated variations in the Company’s quarterly operating results;•
            announcement
                of new services by the Company or the Company’s competitors;•
            announcements
                relating to strategic relationships or acquisitions;•
            changes
                in financial estimates or other statements by securities analysts;
                and•
            changes
                in general economic conditions.




Because
      of this volatility, the Company may fail to meet the expectations of its
      shareholders or the public marketplace, and its stock price could decline as
      a
      result.




*Because
      we do not intend to pay any cash dividends on our common stock, our Shareholders
      will not be able to receive a return on their shares unless they sell
      them.*





We
      intend
      to retain any future earnings to finance the development and expansion of our
      business. We do not anticipate paying any cash dividends on our Common Stock
      in
      the foreseeable future. Unless we pay dividends, our Shareholders will not
      be
      able to receive a return on their shares unless they sell them. There is no
      assurance that Shareholders will be able to sell shares when desired or that
      when they chose to do so, that they will receive a return on their investment
      in
      the Common Stock.





*As
      a
      public company, our administrative costs will be significantly higher than
      they
      are now, which will make it more difficult for us to be profitable and cash
      flow
      positive. Difficulties in complying with the Sarbanes-Oxley Act and other legal
      and accounting requirements applicable to public companies could affect our
      market value.*




As
      a
      public company, we incur significant legal, accounting and other expenses that
      we did not incur as a private company. In addition, the Sarbanes-Oxley Act
      of
      2002, as well as new rules subsequently implemented by the Commission, have
      imposed various new requirements on public companies, including requiring
      changes in corporate governance practices. Our management and other personnel
      will need to devote a substantial amount of time to these compliance
      requirements. Moreover, these rules and regulations will increase our legal
      and
      financial compliance costs and will make some activities more
      time


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          10


consuming
      and costly. Expenses as a result of our being a public company include
      additional amounts for legal and accounting services, transfer agent fees,
      additional insurance costs, printing and filing fees and fees for investor
      and
      public relations.





*The
      existence of outstanding warrants may impair our ability to obtain additional
      equity financing.*





The
      existence of outstanding warrants may adversely affect the terms at which we
      could obtain additional equity financing. The holders of these warrants have
      the
      opportunity to profit from a rise in the value or market price of our Common
      Stock and to exercise them at a time when we could obtain equity capital on
      more
      favorable terms than those contained in these securities.





*We
      may issue shares of preferred stock in the future, which could depress the
      price
      of our stock.*





Our
      corporate charter authorizes us to issue shares of “blank check” preferred
      stock. Our board of directors has the authority to fix and determine the
      relative rights and preferences of preferred shares, as well as the authority
      to
      issue such shares, without further shareholder approval. As a result, our board
      of directors could authorize the issuance of a series of preferred stock that
      would grant to holders preferred rights to our assets upon liquidation, the
      right to receive dividends before dividends are declared to holders of our
      common stock, and the right to the redemption of such preferred shares, together
      with a premium, prior to the redemption of the common stock. To the extent
      that
      we do issue such additional shares of preferred stock, the rights of the holders
      of our Common Stock and other securities could be impaired thereby, including,
      without limitation, with respect to liquidation.





*We
      may, in the future, issue additional common shares, which would reduce
      investors' percent of ownership and may dilute our share
      value.*





Our
      corporate charter authorizes the issuance of 50,000,000 shares of Common Stock.
      The future issuance of Common Stock 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 have an adverse effect on any trading market for our Common
      Stock.





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.





*The
      timing and amount of our capital requirements are not entirely within our
      control and cannot accurately be predicted and as a result, we may not be able
      to raise capital in time to satisfy our needs.*





If
      capital is required, we may require financing sooner than anticipated. We have
      no commitments for financing, and we cannot be sure that any financing would
      be
      available in a timely manner, on terms acceptable to us, or at all. Further,
      any
      equity financing could reduce ownership of existing shareholders and any
      borrowed money could involve restrictions on future capital raising activities
      and other financial and operational matters. If we were unable to obtain
      financing as needed, including the refinancing of our credit facility with
      our
      senior lender by December 31, 2007, we could become insolvent and be subject
      to
      bankruptcy proceedings.





*We
      may not be able to raise sufficient capital or generate adequate revenue to
      meet
      our obligations and fund our operating expenses.*





Failure
      to raise adequate capital and generate adequate sales revenues to meet our
      obligations and develop and sustain our operations could result in our having
      to
      curtail or cease operations. Additionally, even if we do raise sufficient
      capital and generate revenues to support our operating expenses, there can
      be no
      assurances that the revenue will be sufficient to enable us to develop business
      to a level where it will generate profits and cash flows from operations.





*Our
      Common Stock is subject to the "Penny Stock" Rules of the Commission and the
      trading market in our securities is limited, which makes transactions in our
      stock cumbersome and may reduce the value of an investment in
      ou* r
      stock.





The
      Commission has adopted Rule 15g-9 which establishes the definition of a "penny
      stock," for the purposes relevant to us, as any equity security that has a
      market price of less than $5.00 per share, subject to certain exceptions. For
      any transaction involving a penny stock, unless exempt, the rules
      require:


·
            that
                a broker or dealer approve a person's account for transactions in
                penny stocks; and·
            the
                broker or dealer receive from the investor a written agreement to the
                transaction, setting forth the identity and quantity of the penny
                stock to be purchased.


In
      order
      to approve a person's account for transactions in penny stocks, the broker
      or
      dealer must:





·
            obtain
                financial information and investment experience objectives of the
                person; and·
            make
                a reasonable determination that the transactions in penny stocks are
                suitable for that person and the person has sufficient knowledge and
                experience in financial matters to be capable of evaluating the risks
                of transactions in penny stocks.





The
      broker or dealer must also deliver, prior to any transaction in a penny stock,
      a
      disclosure schedule prescribed by the Commission relating to the penny stock
      market, which, in highlight form:





·
            sets
                forth the basis on which the broker or dealer made the suitability
                determination; and·
            that
                the broker or dealer received a signed, written agreement from the
                investor prior to the transaction.





Generally,
      brokers may be less willing to execute transactions in securities subject to
      the
      "penny stock" rules. This may make it more difficult for investors to dispose
      of
      our Common Stock and cause a decline in the market value of our
      stock.





Disclosure
      also has to be made about the risks of investing in penny stocks in both public
      offerings and in secondary trading and about the commissions payable to both
      the
      broker-dealer and the registered representative, current quotations for the
      securities and the rights and remedies available to an investor in cases of
      fraud in penny stock transactions. Finally, monthly statements have to be sent
      disclosing recent price information for the penny stock held in the account
      and
      information on the limited market in penny stocks.





*We
      require additional capital to fund our current operations and to make
      acquisitions. We may have to curtail our business if we can-not 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.





**ITEM
      1B. UNRESOLVED STAFF COMMENTS**





On
      May
      17, 2007, the U.S. Securities and Exchange Commission (“Commission”) issued
      comments to the Company in connection with the Commission’s review of the Form
      10-K filed by the Registrant on April 16, 2007, for the year ended December
      31,
      2006. Specifically, the Company’s conclusion that the accounting acquirer in the
      Combination was most appropriately determined to be ELS, and therefore a reverse
      merger was questioned by the Commission and ultimately, we decided to further
      evaluate the best means to report the Combination. Upon further consideration
      and additional interpretation of SFAS 141, as it relates to the Combination,
      we
      determined to concur with the Commission’s accounting staff and treat the
      Company as the accounting acquirer, therefore accounting for the transaction
      as
      a forward merger. Revising our reports to account for the Combination as a
      forward rather than a reverse merger requires the amendment of our Form 10-K
      for
      the period ended December 31, 2006 and our quarterly reports filed for the
      quarters ended March 31 and June 30, 2007.





We
      believe that once our periodic reports are amended and the Company responds
      to
      the comments we received from the Commission, the staff comments should be
      completed.





**ITEM
      2. PROPERTIES**





Our
      headquarters are located at 3235 Omni Drive, Cincinnati, Ohio 45245. Our
      telephone number is 800-894-4250.





In
      addition to our corporate headquarters, the Company leases facilities at
      approximately 74 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.


Page
          -
          11


We
      provide PEO and/or staffing services through all 74 of our branch offices.
      The
      following table shows the number of branch offices located in each state in
      which we operate. We also lease office space in other locations in our market
      areas which we use to recruit and place employees.





**State**
            **Number
                of**
              **Branch
                Offices**New
                York
            16Ohio
            12Florida
            10Kentucky
            7California
            4North
                Carolina
            3Illinois
            3Pennsylvania
            2Texas
            2Tennessee
            2Missouri
            2Maryland
            2South
                Carolina
            1Alabama
            1Georgia
            1Oklahoma
            1Montana
            1Arizona
            1Colorado
            1Michigan
            1Indiana
            1**Total**
            **74**





**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, with the exception of
      the
      items listed below, 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.





The
      Company is in receipt of a Determination and Assessment from the State of
      Michigan, Department of Labor & Economic Growth, Unemployment Insurance
      Agency seeking payment of amounts totaling $9,505,212. The Company and legal
      counsel believe that this assessment is baseless and without merit and intends
      to contest this assessment vigorously. As of December 31, 2006, no amount is
      accrued in the Company’s financial statements as the matter is deemed groundless
      and outside the authority of the Agency.





The
      Company has received notice letters from the State of Ohio sales tax auditors
      indicating their intention to make an assessment on employee leasing or
      co-employment sales. As of the date of filing of this amended report on Form
      10-K/A/, we have been notified that the assessed amount of Ohio sales taxes
      is
      $52,711,436.50. The Company conducts its business through written contracts
      of
      at least one year, and claims exemption from the sales tax auditor’s position.
      We continue to work with the sales tax auditors to have this matter dismissed.
      As of December 31, 2006, no amount is accrued in the Company’s financial
      statements as the Company and legal counsel believe this assessment is
      groundless.





As
      of
      December 31, 2006 the Company is in receipt of a notice from the United States
      Department of Labor asserting various violations of ERISA relating to the ELS
      Inc. group health plan. The Company is attempting to address the alleged
      violations and does not believe this matter will have a material impact on
      the
      accompanying financial statements.





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





There
      were no submissions of matters to a vote of shareholders in 2006.





*Executive
      Officers of the Registrant*


Page
          -
          12


Information
      required by this Item 4 concerning executive officers of the Company appears
      under Item 10 “Directors and Officers of the Registrant”.





**PART
      II**





**ITEM
      5. MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES**





The
      Company’s common stock is currently quoted on the OTCBB market under the symbol
“RSFF”. As of November 6, 2007, management believes there to be approximately
      400 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.





The
      OTCBB
      is maintained by the National Association of Securities Dealers, Inc. (“NASD”)
      and is a electronic medium consisting of a network of securities dealers who
      buy
      and sell stocks. The following table sets forth the high and low bid prices
      per
      share of our Common Stock for each quarterly period during the last two fiscal
      years as reported on the OTCBB. These prices may represent inter-dealer
      quotations without retail markups, markdowns, or commissions and may not
      necessarily represent actual transactions.





**Low**
            **High****Fiscal
                Year ended December 31, 2005**First
                Quarter
            $0.50
            $0.75Second
                Quarter
            $0.45
            $1.01Third
                Quarter
            $0.50
            $1.05Fourth
                Quarter
            $0.63
            $1.46**Fiscal
                Year ended December 31, 2006**First
                Quarter
            $1.38
            $2.85Second
                Quarter
            $1.60
            $2.25Third
                Quarter
            $0.90
            $1.98Fourth
                Quarter
            $1.60
            $3.26





**Recent
      Sale of Unregistered Securities**





On
      February 7, 2005, the Company 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, the Company Staffing, Inc. issued 100,000 shares to certain
      consultants as part of their compensation.





On
      August
      18, 2005, the Company 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, the Company issued 430,000 shares to various consultants
      as
      part of their compensation.





On
      September 7, 2006, the Company issued 100,000 shares as per an employment
      agreement with certain shareholders and employees of Truckers Plus.





On
      October 1, 2006, the Company issued 1,000,000 shares of common stock to certain
      investors for an aggregate investment of $1.5 million. In addition, the
      investors received two warrants for the purchase of additional shares of stock
      (one share at $2.00 and one share at $3.00). The stock issued to the investors,
      along with the shares underlying the warrants, has subsequently been registered
      pursuant to an S-1 filed with the SEC. The registration has yet to be declared
      effective as of the date of the 10-K/A filing.





On
      October 1, 2006, the Company issued 1,486,685 shares of common stock pursuant
      to
      the acquisition of ELS Inc.





On
      November 30, 2006, the Company issued 300,000 shares of common stock to certain
      consultants as part of their compensation.


Page
          -
          13


The
      Company did not purchase shares of its common stock, or declare a stock
      repurchase program, during 2006. The offers and sales of our unregistered
      securities as disclosed above, were exempt from the registration requirements
      of
§ 5 of the Securities Act of 1933, as the offers and sales were exempt from
      registration under § 4(1) and § 4(2) of the Securities Act of 1933, or in the
      alternative, were exempt under the provisions of Regulation D promulgated under
      such Act.





**ITEM
      6. SELECTED FINANCIAL DATA**





The
      following selected financial data should be read in conjunction with the
      Company’s financial statements and the accompanying notes listed in Item 15 of
      this Report.





**Statement
      of Operations Data**





**Years
                Ended December 31,****2006**
            
            
            **2005**
            
            
            **2004**
            
            
            **2003**
            
            
            **2002**Revenues
            $
            152,304,237
            
            $
            31,138,212
            
            $
            4,284,006
            
            $
            1,105,798
            
            $
            467,911Cost
                of revenues
            
            134,038,039
            
            
            25,356,038
            
            
            3,567,164
            
            
            835,550
            
            
            353,097Gross
                profit
            
            18,266,198
            
            
            5,782,174
            
            
            716,842
            
            
            270,248
            
            
            114,814Operating
                expenses
            
            19,297,192
            
            
            6,004,356
            
            
            759,586
            
            
            640,572
            
            
            440,608Loss
                from operations
            
            (1,030,994)
            
            
            (222,182)
            
            
            (42,744)
            
            
            (370,324)
            
            
            (325,794)Interest
                expense
            
            (1,390,805)
            
            
            (266,140)
            
            
            (13,160)
            
            
            (16,249)
            
            
            (12,390)Loss
                before taxes
            
            (2,421,799)
            
            
            (488,322)
            
            
            (55,904)
            
            
            (386,573)
            
            
            (338,184)Provision
                for (benefit from) income taxes
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                loss
            $
            (2,421,799)
            
            $
            (488,322)
            
            $
            (55,904)
            
            $
            (386,573)
            
            $
            (338,184)Basic
                and diluted loss per share
            $
            (0.16)
            
            $
            (0.03)
            
            $
            (0.00)
            
            $
            (0.07)
            
            $
            (0.12)Weighted
                average number of shares used in loss per share
                computation:Basic
                and diluted
            
            15,016,545
            
            
            14,540,838
            
            
            13,000,000
            
            
            5,607,969
            
            
            2,821,424





Page
          -
          14


**Balance
      Sheet Data**





**December
                31,****2006**
            
            
            **2005**
            
            
            **2004**
            
            
            **2003**
            
            
            **2002**Current
                assets
            $
            19,461,646
            
            $
            6,969,150
            
            $
            2,164,414
            
            $
            137,705
            
            $
            172,464Property
                and equipment, net
            
            1,343,773
            
            
            601,261
            
            
            149,956
            
            
            24,293
            
            
            14,367Advances
                and notes receivable - related parties
            
            681,237
            
            
            -
            
            
            -
            
            
            -
            
            
            -Other
                assets
            
            31,870,530
            
            
            6,926,662
            
            
            640,000
            
            
            -
            
            
            -Total
                assets
            $
            53,357,186
            
            $
            14,497,073
            
            $
            2,954,370
            
            $
            161,998
            
            $
            186,831Current
                liabilities
            $
            41,107,048
            
            $
            4,623,595
            
            $
            2,480,731
            
            $
            328,251
            
            $
            127,746Long
                term liabilities
            
            9,660,709
            
            
            10,083,698
            
            
            393,556
            
            
            -
            
            
            67,000Stockholders’
                equity (deficit):Stockholders’
                equity (deficit)
            
            2,589,429
            
            
            (210,220)
            
            
            80,103
            
            
            (166,253)
            
            
            (7,915)Total
                liabilities and stockholders’ equity (deficit)
            $
            53,357,186
            
            $
            14,497,073
            
            $
            2,954,390
            
            $
            161,998
            
            $
            186,831





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





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. 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.





*Overview*





We
      provide Human Resource Outsourcing (HRO) services, comprised of staffing
      services and PEO services. We generate staffing services revenues primarily
      from
      short-term staffing, contract staffing, on-site management and direct placement
      services. Our PEO service fees are generated from contractual agreements with
      our PEO clients under which we become a co-employer of our client’s workforce
      with responsibility for some or all of the client’s human resource functions. We
      recognize revenues from our staffing services for all amounts invoiced,
      including direct payroll, employer payroll-related taxes, workers’ compensation
      coverage and a service fee (equivalent to a mark-up percentage). PEO service
      fee
      revenues are recognized on a net basis in accordance with Emerging Issues Task
      Force No. 99-19, “ *Reporting
      Revenues Gross as a Principal Versus Net as an Agent* ”
(“EITF
      No. 99-19”). As such, our PEO service fee revenues represent the gross
      margin generated from our PEO services after deducting the amounts invoiced to
      PEO customers for direct payroll expenses such as salaries, wages, health
      insurance and employee out-of-pocket expenses incurred incidental to employment.
      These amounts are also excluded from cost of revenues. PEO service fees also
      include amounts invoiced to our clients for employer payroll-related taxes
      and
      workers’ compensation coverage.




Our
      cost
      of revenues is comprised of direct payroll costs for staffing services, employer
      payroll-related taxes and employee benefits and workers’ compensation. Direct
      payroll costs represent the gross payroll earned by staffing services employees
      based on salary or hourly wages. Payroll taxes and employee benefits consist
      of
      the employer’s portion of Social Security and Medicare taxes, federal
      unemployment taxes, state unemployment taxes and staffing services employee
      reimbursements for


Page
          -
          15


materials,
      supplies and other expenses, which are paid by the customer. Workers’
compensation expense consists primarily of the costs associated with our high
      deductible workers’ compensation program, such as claims reserves, claims
      administration fees, legal fees, state administrative agency fees and excess
      insurance costs for catastrophic injuries.





The
      largest portion of workers’ compensation expense is the cost of workplace injury
      claims. When an injury occurs and is reported to us, our respective independent
      insurer analyzes the details of the injury and develops a case reserve, which
      is
      the insurer’s estimate of the cost of the claim based on similar injuries and
      their professional judgment. We then record or accrue an expense and a
      corresponding liability based upon our estimate of the ultimate claim cost.
      As
      cash payments are made by our insurer against specific case reserves, the
      accrued liability is reduced by the corresponding payment amount. The insurer
      also reviews existing injury claims on an on-going basis and adjusts the case
      reserves as new or additional information for each claim becomes available.
      We
      have established an additional reserve for both future unanticipated increases
      in costs (“adverse loss development”) of the claims reserves for open claims and
      for claims incurred but not reported related to prior and current periods.
      We
      believe our operational policies and internal claims reporting system help
      to
      limit the occurrence of unreported incurred claims.





Selling,
      general and administrative expenses represent both branch office and
      corporate-level operating expenses. Branch operating expenses consist primarily
      of branch office staff payroll and personnel related costs, advertising, rent,
      office supplies, depreciation and branch incentive compensation. Corporate-level
      operating expenses consist primarily of executive and office staff payroll
      and
      personnel related costs, professional and legal fees, travel, depreciation,
      occupancy costs, information systems costs and executive and corporate staff
      incentive compensation.





Amortization
      of intangible assets consists of the amortization of software costs, and
      covenants not to compete, which are amortized using the straight-line method
      over their estimated useful lives, which range from two to ten years.





*Critical
      accounting policies*





For
      a
      discussion of recent accounting pronouncements and their potential effect on
      the
      Company’s results of operations and financial condition, refer to the Notes to
      the Consolidated Financial Statements of this Annual Report on Form 10-K/A.
      Note
      that the preparation of this Annual Report on Form 10-K/A requires management
      to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities at the date of the financial statements, and the reported amounts
      of
      revenue and expenses during the reporting period. Management bases its estimates
      on historical experience and on various other assumptions that are believed
      to
      be reasonable under the circumstances, the results of which form the basis
      for
      making judgments about the carrying values of assets and liabilities that are
      not readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions.





Revenue
      Recognition - We
      recognize PEO revenues when each periodic payroll is delivered to the client.
      Revenues are reported in accordance with the requirements of FASB Emerging
      Issues Task Force Issue No. 99-19, *“Reporting
      Revenues Gross as a Principal Versus Net as an Agent.”* (EITF
      99-19). Consistent with our revenue recognition policy, our net PEO revenues
      and
      cost of PEO revenues do not include the payroll cost of its worksite employees.
      Instead, PEO revenues and cost of PEO revenues are comprised of all other costs
      related to its worksite employees, such as payroll taxes, employee benefit
      plan
      premiums and workers’ compensation insurance. Payroll taxes consist of the
      employer’s portion of Social Security and Medicare taxes, federal unemployment
      taxes and state unemployment taxes. PEO revenues also include professional
      service fees, which are primarily computed as a percentage of client payroll
      or
      on a per check basis.





Staffing
      and managed service revenue and the related labor costs and payroll are recorded
      in the period in which services are performed. We follow EITF 99-19, in the
      presentation of staffing and managed service revenues and expenses. This
      guidance requires us to assess whether we act as a principal in the transaction
      or as an agent acting on behalf of others. In situations where we are the
      principal in the transaction and have the risks and rewards of ownership, the
      transactions are recorded gross in the consolidated statements of
      operations.





Purchase
      price allocations in the business combinations - We
      account for acquisitions of businesses in accordance with the requirements
      of
      SFAS 141, *Business
      Combinations* ("SFAS
      141"). Pursuant to SFAS 141, we utilize the purchase method in accounting for
      acquisitions whereby the total purchase price is first allocated to the assets
      acquired and liabilities assumed, and any remaining purchase price is allocated
      to goodwill. We recognize intangible assets apart from goodwill if they arise
      from contractual or other legal rights or if they are capable of being separated
      or divided from the acquired entity and sold, transferred, licensed, rented,
      or
      exchanged. Assumptions and estimates are used in determining the fair value
      of
      assets acquired and liabilities assumed in a business combination. Valuation
      of
      intangible assets acquired requires significant judgment in determining fair
      value and whether such intangibles are amortizable or non-amortizable and,
      if
      amortizable, the period and method by which the intangible asset will be
      amortized. Changes in the initial assumptions could lead to changes
      in


Page
          -
          16


amortization
      charges recorded in our financial statements. Additionally, estimates for
      purchase price allocations may change as subsequent information becomes
      available.





Allowance
      for Doubtful Accounts - We
      are
      required to make estimates of the collectibility of accounts receivables.
      Management analyzes historical bad debts, customer concentrations, customer
      creditworthiness, current economic trends and changes in the customers' payment
      tendencies when evaluating the adequacy of the allowance for doubtful accounts.
      If the financial condition of our customers deteriorates, resulting in an
      impairment of their ability to make payments, additional allowances may be
      required. The allowance for bad debts is recorded monthly as a percent of sales,
      and quarterly all accounts are reviewed for collectablity and the balance is
      reviewed and adjusted accordingly.





Workers'
      Compensation Reserves - We
      are
      high deductible for workers' compensation coverage in certain states. The
      estimated reserve for unsettled workers' compensation claims represents our
      best
      estimate of total plan liability, which includes an evaluation of information
      provided by our carrier   for workers' compensation claims and, in
      part, an annual actuarial analysis from an independent actuary. Included in
      the
      claims liabilities are case reserve estimates for reported losses, plus
      additional amounts based on projections for incurred but not reported claims,
      anticipated increases in case reserve estimates and additional claims
      administration expenses. These estimates are continually reviewed and
      adjustments to liabilities are reflected in current operating results as they
      become known. We believe that the difference between amounts recorded for our
      estimated liabilities and the possible range of costs to settle related claims
      is not material to results of operations; nevertheless, it is reasonably
      possible that adjustments required in future periods may be material to results
      of operations.





Management
      uses estimates in its high deductible workers compensation policy liability
      and
      allowance for bad debt reserves. Based on quarterly calculations of workers
      compensation policy ultimate loss versus paid and reserved losses, the Company
      reviews whether current policy reserves for incurred but not reported claims
      are
      adequate and adjusted accordingly.





Intangible
      Assets and Goodwill - We
      assess
      the recoverability of intangible assets and goodwill annually and whenever
      events or changes in circumstances indicate that the carrying value might be
      impaired. Factors that are considered include significant underperformance
      relative to expected historical or projected future operating results,
      significant negative industry trends and significant change in the manner of
      use
      of the acquired assets. Management's current assessment of the carrying value
      of
      intangible assets and goodwill indicates there was no impairment as of
      December 31, 2006. If these estimates or their related assumptions change
      in the future, we may be required to record impairment charges for these assets,
      as of the date of our annual assessment during the fourth quarter of our fiscal
      year.


*Forward-looking
      information*





Statements
      in this Item or in Item 1 of this report which are not historical in nature,
      including discussion of economic conditions in the Company’s market areas and
      effect on revenue growth, the potential for and effect of past and future
      acquisitions, the effect of changes in the Company’s mix of services on gross
      margin, the adequacy of the Company’s workers’ compensation reserves and
      allowance for doubtful accounts, the effectiveness of the Company’s management
      information systems, and the availability of financing and working capital
      to
      meet the Company’s funding requirements, are forward-looking statements within
      the meaning of the Private Securities Litigation Reform Act of 1995.





Such
      forward-looking statements involve known and unknown risks, uncertainties and
      other factors that may cause the actual results, performance or achievements
      of
      the Company or industry to be materially different from any future results,
      performance or achievements expressed or implied by such forward-looking
      statements.





Such
      factors with respect to the Company include difficulties associated with
      integrating acquired businesses and clients into the Company’s operations,
      economic trends in the Company’s service areas, material deviations from
      expected future workers’ compensation claims experience, the effect of changes
      in the workers’ compensation regulatory environment in one or more of the
      Company’s primary markets, collectibility of accounts receivable, the carrying
      values of deferred income tax assets and goodwill, which may be affected by
      the
      Company’s future operating results, and the availability of capital or letters
      of credit necessary to meet state-mandated surety deposit requirements for
      maintaining the Company’s status as a qualified high deductible employer for
      workers’ compensation coverage, among others.





The
      Company disclaims any obligation to update any such factors or to publicly
      announce the result of any revisions to any of the forward-looking statements
      contained herein to reflect future events or developments.





*Fluctuations
      in Quarterly Operating Results*





We
      have
      historically experienced significant fluctuations in our quarterly operating
      results and expect such fluctuations to continue in the future. Our operating
      results may fluctuate due to a number of factors such as wage limits on
      statutory payroll taxes, claims experience for workers’ compensation, demand for
      our services and competition. Payroll taxes, as a component


Page
          -
          17


of
      cost
      of revenues, generally decline throughout a calendar year as the applicable
      statutory wage bases for federal and state unemployment taxes and Social
      Security taxes are exceeded on a per employee basis. Our revenue levels in
      the
      fourth quarter may be affected by many customers’ practice of operating on
      holiday-shortened schedules. Workers’ compensation expense varies with both the
      frequency and severity of workplace injury claims reported during a quarter
      and
      the estimated future costs of such claims. In addition, adverse loss development
      of prior period claims during a subsequent quarter may also contribute to the
      volatility in the Company’s estimated workers’ compensation expense.





Total
      business increased significantly due to two large acquisitions, ELS Inc. and
      Power Personnel. Please refer to the Pro Forma table below for more detailed
      breakdown of the business components. The addition of ELS Inc. improved
      Resolve's cash flow. A PEO collects its revenue at roughly the same time it
      disburses expenses. The lack of carrying accounts receivable enhances cash
      flow
      by making days sales outstanding a one day requirement. Power Personnel was
      purchased and retained its operating lines of credit. It should need little
      or
      no funding from its parent. The funding of the Power Personnel purchase to
      the
      former owner as described in Note G is the only cash flow
      requirement.





*Results
      of Operations*





We
      report
      PEO revenues in accordance with the requirements of EITF No. 99-19 which
      requires us to report such revenues on a net basis because we are not the
      primary obligor for the services provided by our PEO clients to their customers
      pursuant to our PEO contracts. We present for comparison purposes the Pro forma
      non-GAAP gross revenues and pro forma non-GAAP cost of revenues information
      for
      the years ended December 31, 2006 and 2005 set forth in the table below.
      Although not in accordance with generally accepted accounting principles in
      the
      United States (“GAAP”), management believes this information is more informative
      as to the level of our business activity and more illustrative of how we manage
      our operations, including the preparation of our internal operating forecasts,
      because it presents our PEO services on a basis comparable to our staffing
      services.





Management
      uses non-GAAP revenue as a measure for business velocity. The PEO business
      collects significantly more cash than GAAP reporting under the EITF. The cash
      must be used prudently and affects working capital decisions, even though it
      is
      netted for GAAP purposes. A reconciliation of pro forma non-GAAP gross revenues
      to pro forma net revenues is reflected in the table below:


**Pro
      Forma Non-GAAP**


**Year
                Ended December 31,****2006**
            **2005**Revenues:Staffing
                services
            $139,821,391
            $31,138,212Professional
                employer services
            294,385,052
            210,698,722Total
                revenues
            434,206,443
            241,836,934Total
                cost of revenues
            406,512,132
            216,699,415Gross
                margin
            $27,694,311
            $25,137,519




A
      reconciliation of pro forma non-GAAP gross revenues to pro forma net revenues
      is
      as follows for the years ended December 31, 2006 and 2005:





**Pro
      Forma Non-GAAP**


**Gross
                Revenue**
              **Reporting
                Method**
            **Reclassification**
            **Net
                Revenue**
              **Reporting
                Method****2006**
            **2005**
            **2006**
            **2005**
            **2006**
            **2005**Revenues:Staffing
                services
            $
                139,821,391
            $  31,138,212
            $                  -
            $                 
                 -
            $
                139,821,391
            $ 31,138,212Professional
                employer services
            294,385,052
            210,698,722
            (243,719,404)
            (167,449,561)
            50,665,648
            43,249,161Total
                revenues
            434,206,443
            241,836,934
            (243,719,404)
            (167,449,561)
            190,487,039
            74,387,373Total
                cost of revenues
            406,512,132
            216,699,415
            (243,719,404)
            (167,449,561)
            162,792,728
            49,249,854Gross
                margin
            $
                27,694,311
            $25,137,519
            $                 
                 -
            $                 
                 -
            $27,694,311
            $25,137,519





*Comparison
      of consolidated operations for year ended December 31, 2006 to year ended
      December 31, 2005*


.


In
      the
      fourth quarter, the Company purchased the PEO operations of ELS Inc. ELS Inc.
      was a national PEO, and added new segment revenue by expanding the Company’s
      product line. Also, in the quarter, the Company purchased Power Personnel in
      New
      York. This added seven offices to the Company's New York region.





Revenues
      for the year ended December 31, 2005 compared to 2006 increased from $31,138,212
      to $152,304,237, a 389% increase, reflecting an increase in organic growth
      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
      revenues increased from $25,356,038 in 2005 to $134,038,039, in 2006, an
      increase of 429% from the prior year. This increase is attributable to our
      aggressive sales growth, diversified service offering, and acquisitions. Our
      gross profit decreased, as a percent of revenues, from approximately 18% to
      approximately 12%. This decrease is attributable to a number of factors
      including a change in our service mix as a result of our aggressive acquisition
      efforts (we now offer a variety of HRO Services including Staffing, PEO, Payroll
      Services, Benefits Administration, etc.).





We
      expect
      our gross profit margins to increase, as a percent of revenues, in the future
      as
      we continue to grow our business in higher margin areas and as one time
      adjustments (attributable to the merger with ELS Inc.) decrease.





Operating
      expenses have increased from $6,004,356 in 2005 to $19,297,192 in 2006. This
      increase is attributable to our aggressive growth through acquisitions and
      our
      organic growth. The Company has grown into a national provider of HRO services
      with approximately 74 offices. This increase in operating expenses includes
      marketing, salaries, rents, and various other expenses associated with these
      locations. These costs have decreased from approximately 19% to 13% as a percent
      of revenues.




Interest
      expense increased from $266,140 in 2005 to $1,390,805 in 2006. The increase
      is
      attributable to increased debt obligations related to our increased credit
      lines, aggressive acquisition strategy and the recent merger with ELS Inc.
      A
      major portion of our debt is through affiliated parties, including Ron Heineman.
      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 $2,421,799 for the year ended December
      31,
      2006 as a result of the matters discussed above. Losses to date may be used
      to
      offset future taxable income, assuming the Company becomes
      profitable.





*Comparison
      of consolidated operations for year ended December 31, 2005 to year ended
      December 31, 2004*





R evenues
      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
      revenues 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
      revenues, from approximately 17% to approximately 19%. We expect our gross
      profit margins to increase, as a percent of revenues, in the future as we
      continue to grow our business in higher margin areas such as the truck driver
      and medical staffing market niches.





Operating
      expenses have increased from $759,586 in 2004 to $6,004,356 in 2005. This
      increase is attributable to our aggressive growth through acquisitions. The
      Company has grown into a national provider of staffing services with
      approximately 52 offices. This increase in operating 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 revenues. 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
          -
          18





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 deficit of $21,645,402 and a stockholder’s equity of $2,589,429,
      as of December 31, 2006.





For
      the
      year ended December 31, 2006 we incurred a net loss of $2,421,799. Of this
      loss,
      $1,256,156 did not represent the use of cash. Non-cash expenditures consisted
      of
      depreciation of $311,918, increase in allowance for doubtful accounts of
      $365,442, and amortization of non-compete agreements of $578,796. 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 $4,217,093.





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 its 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.





Net
      cash
      used in investing activities totaled $3,601,512 for 2006, compared to net cash
      used in investing activities of $2,113,997 for 2005. For 2006, the principal
      uses of cash for investing activities were for acquisitions totaling an
      aggregate value of $2,790,820 and the acquisition of property and equipment
      totaling $351,286.




Net
      cash
      provided by financing activities for 2006 was $7,818,605 compared to net cash
      used by financing activities of $5,729,751 for 2005. For 2006, the principal
      source of cash from financing activities was from lines of credit and a capital
      raise.




The
      Company’s business strategy continues to focus on growth through the expansion
      of operations at existing offices, together with the selective acquisition
      of
      additional personnel-related business, both in its existing markets and other
      strategic geographic markets. The Company periodically evaluates proposals
      for
      various acquisition opportunities, but there can be no assurance that any
      additional transactions will be consummated.





During
      March 2007 the Company finalized its renewal of its various lines of credit
      described in Note G. The lines of credit were increased to $29,150,000, call
      for
      interest payable monthly at the prime interest rate, include certain financial
      covenants and mature September 30, 2007 and January 31, 2008. These lines of
      credit are guaranteed by certain shareholders and affiliated entities. During
      May 2007, the Company received a notice of default under the terms of these
      various lines of credit. During September 2007, the Company and the Bank entered
      into a Forbearance and Reaffirmation Agreement whereby the Bank agreed to
      forbear from exercising its rights and remedies against the Company and the
      Subsidiaries with respect to the defaults existing as of September 28, 2007
      until the earlier to occur of (i) December 31, 2007 or (ii) the occurrence
      of a
“Forbearance Default”.





*Off
      Balance Sheet Arrangements*





Depending
      on certain goals and performances being met, the Company has the following
      off
      balance sheet arrangements which are the result of the various acquisitions
      described previously.


Page
          -
          19





·
            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 $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, 2007.





·
            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, 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.





·
            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, 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.





·
            KFT,
                Inc. dba Power Personnel - Based on pre- tax profit targets the prior
                owners may receive contingent performance payments of up to approximately
                $50,000 through October 10, 2008 and October, 10 2009.·
            Steadystaff,
                LLC - January 1, 2007 to December 31, 2007 and January 1, 2008 to
                December
                31, 2008, based on pre-tax profit targets the prior owners may receive
                contingent performance payouts up to approximately $10,000 per
                year.





***Contractual
      Obligations***





The
      Company’s contractual obligations as of December 31, 2006, including long-term
      debt and commitments for future payments under non-cancelable lease
      arrangements, are summarized below:





Payments
                Due by PeriodContractual
                Obligations
            Total
            Less
                than 1 year
            1-3
                years
            4-5
                years
            After
                5 yearsOperating
                leases
            $
                2,737,143
            $
                1,035,826
            $
                1,582,348
            $
                118,969
            $
                -Long-term
                debt
            32,058,833
            22,398,124
            5,000,260
            2,367,564
            2,292,885Interest
            2,404,411
            1,679,859
            375,019
            177,567
            171,966Total
                contractual obligations
            34,795,976
            23,433,950
            6,582,608
            2,486,533
            2,292,885Total
                With Interest
            $37,200,387
            $25,113,809
            $6,957,627
            $2,664,100
            $2,464,851





*Inflation*





Inflation
      generally has not been a significant factor in the Company’s operations during
      the periods discussed above. The Company has taken into account the impact
      of
      escalating medical and other costs in establishing reserves for future expenses
      for high deductible workers’ compensation claims.





**ITEM
      7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





We
      are
      primarily exposed to market risks from fluctuations in interest rates and the
      effects of those fluctuations on the market values of our cash and cash
      equivalents, and our long-term debt. The cash and cash equivalents consist
      primarily of tax-exempt money market funds and overnight investments which
      are
      not significantly exposed to interest rate risk, except to the extent that
      changes in interest rates will ultimately affect the amount of interest income
      earned on these investments.





**ITEM
      8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**





The
      financial statements and notes thereto required by this item begin on page
      F-1
      of this report, as listed in Item 15.


Page
          -
          20





**ITEM
      9. 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
      9A. CONTROLS AND PROCEDURES**





Evaluation
      of disclosure controls and procedures





The
      Company’s disclosure controls and procedures are designed to ensure that
      information the Company must disclose in its reports filed or submitted under
      the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is
      recorded, processed, summarized, and reported on a timely basis. The Company’s
      management has evaluated, with the participation and under the supervision
      of
      our chief executive officer (“CEO”) and chief financial officer (“CFO”), the
      effectiveness of our disclosure controls and procedures (as defined in Rules
      13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered
      by this report. Based on this evaluation, our CEO and CFO have concluded that,
      as of such date, the Company’s disclosure controls and procedures are effective
      in ensuring that information relating to the Company required to be disclosed
      in
      reports that it files under the Exchange Act is recorded, processed, summarized
      and reported within the time periods specified in the SEC’s rules and forms, and
      is communicated to our management, including our CEO and CFO, as appropriate
      to
      allow timely decisions regarding required disclosures.





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.





**ITEM
      9B. OTHER INFORMATION**





None.





**PART
      III**


**ITEM
      10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**


Page
          -
          21


Additional
      information required by this Item 10 concerning directors and executive officers
      of the Company appears under the heading “Executive Officers of the Registrant”
in this report.




Presently,
      The Company has a total of eight officers and directors. The following table
      identifies, as of November 6, 2007, each executive officer and director of
      the
      Company.





**Name**
            **Age**
            **Position**Ronald
                Heineman
            49
            Chief
                Executive Officer, Chief Financial Officer, President,
                DirectorScott
                Horne
            45
            VP
                of Franchise DevelopmentSteve
                Ludders
            54
            Chief
                Operating OfficerTom
                Lawry
            45
            Controller,
                TreasurerSteve
                Roux
            39
            Executive
                Vice PresidentWilliam
                Walton
            71
            DirectorWilliam
                A. Brown
            48
            DirectorDonald
                Quarterman, Jr.
            38
            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.** Mr.
      Heineman is our President and Chief Executive Officer and our Chief Financial
      Officer. He is also the President and Chief Executive Officer and Chief
      Financial Officer of ELS Inc., Human Resource Solutions. ELS Inc. 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
      Quarterman, Jr.** 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 the Company on September 22, 2004. He remains with the Company
      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 the Company, 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 the Company on September 22,
      2004. He remains as a Director.





**William
      Walton.** Mr.
      Walton joined the Company Staffing as a member of the Board of Directors after
      the acquisition of ELS Inc.’s 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 Inc. and helped to grow it into a
      company generating in excess of $200 million in total receipts. Mr. Walton
      brings a diverse experience base to the Company and is expected to play a key
      role as the Company strives to become a Total Human Resource Outsourcing
      Company.





**Steve
      Ludders.** Mr.
      Ludders was promoted to Chief Operating Officer and Executive Vice-President
      on
      January 4, 2006. Mr. Ludders was Regional Director and in charge of business
      development since joining the Company. Prior to joining the Company, Mr.
      Ludders' was a former vice-president of Strategic Planning with Interim
      Personnel, a $2 billion public staffing firm, for over five years. Mr. Ludders
      is an MBA Thunderbird Graduate.


Page
          -
          22


**Scott
      Horne.** Mr.
      Horne became Chief Financial Officer and Executive Vice-President on January
      4,
      2006. Mr. Horne was in charge of accounting since joining the Company. Mr.
      Horne
      has extensive experience in finance and accounting for Human Resource
      Outsourcing companies, including being chief financial officer of ELS Inc.,
      a
      national PEO, for over five years. Mr. Horne graduated from Xavier University
      with an MBA in Finance. Mr. Scott Horne resigned as Chief Financial Officer
      of
      the Company Staffing, Inc. by letter dated May 17, 2007. Mr. Horne will remain
      with the Company as VP of Franchise Development.




**Steve
      Roux.** Mr. Roux
      is Chief Operating Officer and Executive Vice President of Resolve Staffing's
      PEO subsidiary companies. He has extensive background in the PEO industry with
      over 10 years of experience in executive positions.





**Tom
      Lawry** .
      Mr.
      Lawry became Controller and Treasurer on January 4, 2006. Mr. Lawry has
      extensive accounting experience in the staffing and PEO markets, spending over
      five years with ELS, Inc.





**ITEM
      11. EXECUTIVE COMPENSATION**




*Executive
      Compensation*





The
      following Summary Compensation Table sets forth certain information regarding
      the compensation of our officers as of December 31, 2006.





**Summary
      Compensation Table**





**Annual
                Compensation**
            **Long
                Term Compensation Awards****Year**
            **Salary**
            **Bonus**
            **Securities
                Underlying Options**
            **All
                Other Compensation**
            **Total
                Compensation**Ronald
                Heineman, CEO
            2004
            -
            -
            -
            -
            -2005
            -
            -
            -
            -
            -2006
            41,383
            -
            -
            -
            41,383Steve
                Ludders, COO
            2004
            -
            -
            -
            -
            -2005
            -
            -
            -
            70,200
            70,2002006
            123,846
            18,846
            -
            -
            142,692Scott
                Horne, CFO
            2004
            -
            -
            -
            -
            -2005
            -
            -
            -
            43,200
            43,2002006
            36,923
            -
            -
            -
            36,923Tom
                Lawry, Controller
            2004
            -
            -
            -
            -
            -2005
            -
            -
            -
            -
            -2006
            21,154
            -
            -
            -
            21,154Steve
                Roux
            2004
            -
            -
            -
            -
            -2005
            -
            -
            -
            -
            -2006
            37,692
            -
            -
            -
            37,692





*Option
      Grants During Last Fiscal Year*





No
      options, warrants or similar rights to purchase our Common Stock have been
      granted to any officers or directors.





*Employment
      Agreements*





On
      October 1, 2006, we entered into an executive employment agreement with Ronald
      E. Heineman pursuant to which Mr. Heineman was employed as our chief executive
      officer. The agreement has an initial term of five years, and will
      be


Page
          -
          23


automatically
      renewed for additional five year terms unless either the company or Mr. Heineman
      provides written notice of an intent not to renew. Under the agreement, Mr.
      Heineman is entitled to receive; (1) a base salary of $12,535 per month, subject
      to annual increases as determined by the Board of Directors; and (2) annual
      bonus based on the achievement of specific goals as determined by the Board
      of
      Directors. We will pay severance to Mr. Heineman if his employment is terminated
      by us without cause or by Mr. Heineman for cause. The severance payment is
      equal
      to: (1) his then-current base salary per month for a period of three years;
      (2)
      all unused vacation accrued as of the termination date; (3) if Mr. Heineman
      makes timely election of COBRA continuation coverage, the full premium on his
      behalf; and (4) up to $30,000 in outplacement fees as selected by Mr. Heineman
      up through a specified date. In the event of a change in control, as defined,
      Mr. Heineman may elect for a five year extension of the then current Employment
      Agreement or a payment as defined in the Employment Agreement and agreed to
      by
      the Company and Mr. Heineman. During 2007, the term of this agreement was
      extended to a seven year term.





On
      October 1, 2006, we entered into an executive employment agreement with Scott
      D.
      Horne pursuant to which Mr. Horne was employed as our executive vice president
      and chief financial officer. The agreement has an initial term of three years,
      and will be automatically renewed for additional three year terms unless either
      the company or Mr. Horne provides written notice of an intent not to renew.
      Under the agreement, Mr. Horne is entitled to receive; (1) a base salary of
      $12,100 per month, subject to annual increases as determined by the company’s
      CEO; and (2) annual bonus based on the achievement of specific goals as
      determined by the company’s CEO. We will pay severance to Mr. Horne if his
      employment is terminated by us without cause. The severance payment is equal
      to:
      (1) his then-current base salary per month for a period of one year; (2) all
      unused vacation accrued as of the termination date; (3) if Mr. Horne makes
      timely election of COBRA continuation coverage, the full premium on his behalf;
      and (4) up to $20,000 in outplacement fees as selected by Mr. Horne up through
      a
      specified date. The severance amounts payable for termination without cause
      will
      be paid upon the execution and delivery of a complete release of all employment
      related claims Mr. Horne may then have against the company. In the event of
      a
      change in control, as defined, Mr. Horne may elect for a two year extension
      of
      the then current Employment Agreement or payment of Mr. Horne’s salary and
      benefits, as defined, for a period of two years. Subsequent to the period
      covered by this report, Mr. Horne resigned in his capacity as chief financial
      officer of the Company and his executive employment agreement is no longer
      in
      force, effective May 17, 2007. Mr. Horne has remained employed by the Company
      in
      his current capacity of executive vice-president of franchise
      development.





On
      October 1, 2006, we entered into an executive employment agreement with Stephen
      R. Roux pursuant to which Mr. Roux was employed and will perform duties as
      assigned to him. The agreement has an initial term of three years, and will
      be
      automatically renewed for additional three year terms unless either the company
      or Mr. Roux provides written notice of an intent not to renew. Under the
      agreement, Mr. Roux is entitled to receive; (1) a base salary of $12,100 per
      month, subject to annual increases as determined by the company’s CEO; and (2)
      annual bonus based on the achievement of specific goals as determined by the
      company’s CEO. We will pay severance to Mr. Roux if his employment is terminated
      by us without cause. The severance payment is equal to: (1) his then-current
      base salary per month for a period of one year; (2) all unused vacation accrued
      as of the termination date; (3) if Mr. Roux makes timely election of COBRA
      continuation coverage, the full premium on his behalf; and (4) up to $20,000
      in
      outplacement fees as selected by Mr. Roux up through a specified date. The
      severance amounts payable for termination without cause will be paid upon the
      execution and delivery of a complete release of all employment related claims
      Mr. Roux may then have against the company. In the event of a change in control,
      as defined, Mr. Roux may elect for a two year extension of the then current
      Employment Agreement or payment of Mr. Roux’s salary and benefits, as defined,
      for a period of two years.





*Compensation
      of Directors*





We
      pay
      our directors $3,000 per quarter in connection with their role as members of
      our
      board. Our directors are also reimbursed for travel and out-of-pocket expenses
      in connection with attendance at board meetings. The following table summarizes
      compensation that our directors earned during 2006 for services as members
      of
      our Board of Directors.





**Year**
            **Fees
                Earned or**
              **Paid
                in Cash**
            **Options
                Awarded**
            **All
                Other Compensation**
            **Total**Ronald
                Heineman
            2004
            $
                -
            $
                -
            $
                -
            $
                -2005
            -
            -
            -
            -2006
            12,000
            -
            -
            12,000-William
                Walton
            2004
            -
            -
            -
            -2005
            -
            -
            -
            -2006
            12,000
            -
            -
            12,000-William
                A. Brown
            2004
            -
            -
            -
            -2005
            -
            -
            -
            -2006
            12,000
            -
            -
            12,000-Donald
                Quarterman, Jr.
            2004
            -
            -
            -
            -2005
            -
            -
            -
            -2006
            12,000
            -
            -
            12,000





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





As
      of
      November 13, 2007, there were 19,428,511 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 November 13, 2007:





·
            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.





**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
            8,194,215
            41.38%Common
                Stock
            Scott
                Horne
              c/o
                Resolve Staffing, Inc.
              3235
                Omni Drive
              Cincinnati,
                OH 45245
            310,000
            1.60%Common
                Stock
            Steve
                Ludders
              c/o
                Resolve Staffing, Inc.
              3235
                Omni Drive
              Cincinnati,
                OH 45245
            50,000
            0.26%Common
                Stock
            Bill
                Brown (2)
              c/o
                Resolve Staffing, Inc.
              3235
                Omni Drive
              Cincinnati,
                OH 45245
            2,377,639
            12.24%Common
                Stock
            Bill
                Walton
              c/o
                Resolve Staffing, Inc.
              3235
                Omni Drive
              Cincinnati,
                OH 45245
            4,025,000
            20.72%Common
                Stock
            Steve
                Roux
              c/o
                Resolve Staffing, Inc.
              3235
                Omni Drive
              Cincinnati,
                OH 45245
            310,000
            1.60%Common
                Stock
            Don
                Quarterman
              c/o
                Resolve Staffing, Inc.
              3235
                Omni Drive
              Cincinnati,
                OH 45245
            0
            0.00%Common
                Stock
            Tom
                Lawry
              c/o
                Resolve Staffing, Inc.
              3235
                Omni Drive
              Cincinnati,
                OH 45245
            0
            0.00%Common
                Stock
            All
                Officers and Directors as a Group
            15,266,854
            77.00%





(1)
      Includes 400,000 shares pledged to Ron Heineman to secure a line of
      credit.





(2)
      Includes 2,106,921 shares owned by the William A. Brown Family Trust, of which
      Mr. Brown is trustee, 400 shares owned by his wife, Christina Brown and 270,318
      shares owned by Work Holdings LLC, of which Mr. Brown is the majority
      owner.








**STOCK
      OPTION AND INCENTIVE PLANS**





During
      the year ended December 31, 2001, the Company adopted a 2001 Equity Incentive
      Plan ("Incentive Plan") for the benefit of key employees (including officers
      and
      employee directors) and consultants of the Company and its affiliates. The
      Incentive Plan is intended to provide those persons who have substantial
      responsibility for the management and growth of the Company with additional
      incentives and an opportunity to obtain or increase their proprietary interest
      in the Company, encouraging them to continue in the employ of the
      Company.





On
      May
      28, 2002, the Company’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.





**COMPLIANCE
      WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934**







Section 16(a)
      of the Securities Exchange Act of 1934, as amended, requires our directors
      and
      executive officers, and persons who own more than 10 percent of our common
      stock, to file with the Commission initial reports of ownership and reports
      of
      changes in ownership of our common stock. Officers, directors and greater than
      10 percent shareholders are required by the rules and regulations of the
      Commission to furnish to us copies of all Section 16(a) forms they file.







To
      management’s knowledge, based solely on review of the copies of these reports
      furnished and representations that no other reports were required, during the
      fiscal year ended December 31, 2006, all Section 16(a) filing requirements
      applicable to the Company’s officers, directors and greater than 10 percent
      beneficial owners were in compliance. The Company is aware that Steve
      Ludders, our Chief Operating Officer, was delayed in filing a Form 4 following
      his sale of 10,000 shares on February 16, 2007.







**ITEM
      13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE**





Note
      Payable





On
      December 8, 2003, ELS Inc. entered into a non-interest bearing short-term credit
      agreement with the Company that provides for borrowings up to $200,000. At
      that
      time Ronald Heineman was the Chief Executive Officer and director of both
      companies. 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. Balances due under the credit agreement were originally
      due
      May 8, 2004.





During
      March 2006, the agreement was amended to allow unlimited maximum borrowings
      with
      a maturity date of March 31, 2007. The note bears interest at 3 percent per
      annum and is payable monthly. As of December 31, 2006 amounts owed were
      eliminated on consolidation. As of December 31, 2005 $5,873,936 was outstanding
      under this note.





Loan
      Guarantees





The
      lines
      of credit described in Note G are secured by substantially all assets of the
      Company and guaranteed by Ron Heineman, with second mortgage guarantees by
      Restaurant Management Group, LLC and W.H. 2, LLC (“WH2”). Prior to
      the


Page
          -
          24


Combination,
      the lines of credit with ELS Inc. were also guaranteed by the Company. The
      Company has two lines of credit providing for maximum borrowings of $17,150,000
      and $12,000,000 with a bank that were guaranteed by ELS Inc. Borrowings under
      the Company’s lines of credit were $11,735,029 and $2,906,471, respectively, at
      December 31, 2006, and $3,341,927and $-, respectively at December 31, 2005.




Related
      Party Lease





The
      Company leases its Cincinnati facility from WH2, a limited liability company
      owned by stockholders of the company under an operating lease expiring during
      September 30, 2011. Rent expense under this lease was $21,600, $- and $-, for
      the years ended December 31, 2006, 2005 and 2004, respectively. Future minimum
      annual rentals under this operating lease are presented in Note H.




Management
      Fees





Company
      personnel perform various management functions on behalf of the above mentioned
      related parties and other limited liability companies either wholly or partially
      owned by certain stockholders of the Company. Certain administrative costs
      are
      allocated to related parties under common management at the discretion of
      management. The Company was allocated $55,269, $264,566 and $331,532 of
      administrative costs for the years ended December 31, 2006, 2005 and 2004,
      respectively. Fees are no longer allocated due to the Combination that took
      place on October 1, 2006.





Advances
      Receivable





Advances
      receivable from related parties at December 31, 2006 and 2005 were $681,237
      and
      $-, respectively.





During
      the year ended December 31, 2002, the Company borrowed $67,000 from William
      A.
      Brown, executive vice-president and major shareholder of the Company. As of
      December 31, 2006 and 2005, 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.





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





The
      following are the fees billed us by our auditors, PKF, Certified Public
      Accountants, A Professional Corporation, (PKF) respectively, for services
      rendered thereby during 2006, 2005 and 2004:





**2006**
            **2005**
            **2004**Audit
                Fees
            176,136
            76,570
            29,876All
                Other Fees
            9,206
            -
            -





The
      fees
      billed by PKF represent those fees billed to the Company during each period
      presented.





The
      increase in fees was due to the acquisition of Employee Leasing Services, Inc.
      on October 1, 2006 as well as the required filing and additional work performed
      for the cut-off financial information at the time of the merger. The acquisition
      of Employee Leasing Services, Inc. added additional complexities and
      consolidation issues to the Company's reporting requirements.





*Audit
      Fees* consist
      of the aggregate fees billed for professional services rendered for the audit
      of
      our annual financial statements and the reviews of the financial statements
      included in our Forms 10-QSB and for any other services that were normally
      provided in connection with our statutory and regulatory filings or
      engagements.





*Audit
      Related Fees* consist
      of the aggregate fees billed for professional services rendered for assurance
      and related services that were reasonably related to the performance of the
      audit or review of our financial statements and were not otherwise included
      in
      Audit Fees. The 2006 fees in this category related to specific research of
      accounting treatment under new FASB rules as well as capital
      raises.





*Tax
      Fees* consist
      of the aggregate fees billed for professional services rendered for tax
      compliance, tax advice and tax planning. Included in such Tax Fees were fees
      for
      preparation of our tax returns and consultancy and advice on other tax planning
      matters.


Page
          -
          25


*All
      Other Fees* consist
      of the aggregate fees billed for products and services provided by PKF not
      otherwise included in Audit Fees, Audit Related Fees or Tax Fees. Included
      in
      such Other Fees were fees for services rendered by PKF in connection with our
      private offering conducted during such periods.





Our
      Board
      of Directors has considered whether the provision of the non-audit services
      described above is compatible with maintaining PKF's independence and determined
      that such services are appropriate.





Before
      the auditors are engaged to provide us audit or non-audit services, such
      engagement is (without exception, required to be) approved by our Board of
      Directors.





**PART
      IV**





**ITEM
      15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**





**Exhibits**





Exhibits
      are listed in the Exhibit Index that follows the signature page of this report.





**Financial
      Statements and Schedules**





The
      Financial Statements, together with the reports thereon of our auditors are
      included on the pages indicated below





Page
          -
          26


**INDEX
      TO FINANCIAL STATEMENTS**





Report
                of PKF, Independent Registered Public Accounting Firm for Years Ended
                December 31, 2006, 2005 and 2004
            F-1Consolidated
                Balance Sheets as of December 31, 2006 and 2005
            F-2Consolidated
                Statements of Operations for the Years Ended December 31, 2006, 2005,
                and
                2004
            F-3Consolidated
                Statements of Stockholders’ Equity (Deficit) for the Years Ended December
                31, 2006, 2005 and 2004
            F-4Consolidated
                Statements of Cash Flows for the Years Ended December 31, 2006, 2005
                and
                2004
            F-5Notes
                to Consolidated Financial Statements
            F-6Schedule
                I
            F-26
























Page
          -
          27








**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**











Board
      of
      Directors and Stockholders


Resolve
      Staffing, Inc.


Cincinnati,
      Ohio








We
      have
      audited the accompanying consolidated balance sheets of Resolve Staffing, Inc.
      and Subsidiaries (the “Company”) as of December 31, 2006 and 2005, and the
      related consolidated statements of operations, stockholder’s equity (deficit),
      cash flows and financial statement schedule for the years ended December 31,
      2006, 2005 and 2004. These consolidated financial statements are the
      responsibility of the Company's management. Our responsibility is to express
      an
      opinion on these consolidated financial statements based on our
      audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audits to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement. An audit
      includes examining, on a test basis, evidence supporting the amounts and
      disclosures in the consolidated financial statements. An audit also includes
      assessing the accounting principles used and significant estimates made by
      management, as well as evaluating the overall financial statement presentation.
      We believe that our audits provide a reasonable basis for our
      opinion.





In
      our
      opinion, the consolidated financial statements and schedule referred to above
      present fairly, in all material respects, the consolidated financial position
      of
      Resolve Staffing, Inc. and Subsidiaries as of December 31, 2006 and 2005, and
      the consolidated results of its operations, cash flows and the financial
      statement schedule for the years ended December 31, 2006, 2005 and 2004, in
      conformity with accounting principles generally accepted in the United States
      of
      America.





/s/
      PKF


November
                13, 2007
            PKFSan
                Diego, California
            Certified
                Public AccountantsA
                Professional Corporation











































Page
          F -
          1


**RESOLVE
      STAFFING, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


**DECEMBER
      31, 2006 AND 2005**





**ASSETS**
            **2006**
            **2005****Current
                assets:**Cash
            $
                -
            $
                -Accounts
                receivable - trade, net
            18,155,656
            6,638,782Prepaid
                expenses
            1,158,640
            330,368Worker’s
                compensation insurance refunds receivable
            147,350
            -Total
                current assets
            19,461,646
            6,969,150**Property
                and equipment, net**
            1,343,773
            601,261**Advances
                and notes receivable - related parties**
            681,237
            -**Other
                assets:**Worker’s
                compensation insurance deposits
            1,319,931
            -Other
                assets
            393,456
            -Goodwill
            29,724,511
            6,695,579Covenants
                not to compete
            432,632
            231,083Total
                other assets
            31,870,530
            6,926,662Total
                assets
            $
                53,357,186
            $
                14,497,073**Current
                liabilities:**Bank
                overdraft
            $
                1,255,405
            $
                205,551Accounts
                payable and accrued liabilities
            7,253,878
            1,011,903Accounts
                payables - related parties
            -
            825,921Accrued
                salaries and payroll taxes
            6,323,928
            639,474Accrued
                workers' compensation insurance
            2,239,400
            -Lines
                of credit
            15,702,621
            91,927Notes
                payable
            6,604,003
            1,757,319Notes
                payable - related parties
            91,500
            91,500Workers'
                compensation insurance policy reserves
            1,636,313
            -Total
                current liabilities
            41,107,048
            4,623,595**Long
                term liabilities:**Notes
                payable - related parties
            -
            5,873,936Line
                of credit and notes payable, less current portion
            9,660,709
            4,209,762Total
                long term liabilities
            9,660,709
            10,083,698**Stockholders’
                equity (deficit):**Common
                stock, $0.0001 par value; 50,000,000 shares authorized, issued and
                outstanding 2006: 18,642,740 shares; 2005: 15,219,101 shares
            1,864
            1,522Paid-in
                capital
            6,408,581
            1,187,475Accumulated
                deficit
            (3,821,016)
            (1,399,217)Total
                stockholders’ equity (deficit)
            2,589,429
            (210,220)Total
                liabilities and stockholders’ equity (deficit)
            $
                53,357,186
            $
                14,497,073


See
      accompanying notes to consolidated financial statements.





Page
          F -
          2


**RESOLVE
      STAFFING, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**FOR
      THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**





**2006**
            **2005**
            **2004**Revenues
            $
                152,304,237
            $
                31,138,212
            $
                4,284,006Cost
                of revenues
            134,038,039
            25,356,038
            3,567,164Gross
                profit
            18,266,198
            5,782,174
            716,842Operating
                expenses
            19,297,192
            6,004,356
            759,586Loss
                from operations
            (1,030,994)
            (222,182)
            (42,744)Interest
                expense
            (1,390,805)
            (266,140)
            (13,160)Loss
                before taxes
            (2,421,799)
            (488,322)
            (55,904)Provision
                for (benefit from) income taxes
            -
            -
            -Net
                loss
            $
                (2,421,799)
            $
                (488,322)
            $
                (55,904)Basic
                and diluted loss per share
            $
                (0.16)
            $
                (
                0.03)
            $
                (0.00)Weighted
                average number of shares used in loss per share
                computation:Basic
                and diluted
            15,016,545
            14,540,838
            13,000,000








See
      accompanying notes to consolidated financial statements.





Page
          F -
          3


**RESOLVE
      STAFFING, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)**


**FOR
      THE YEARS ENDED DECEMBER 31, 2006 , 2005 AND 2004**





**Common
                Shares**
            **Stock**
              **Amount**
            **Paid
                in**
              **Capital**
            **Accumulated
                Deficit**
            **Total****Balance
                at December 31, 2003**
            13,000,000
            $1,300
            $989,698
            $(854,991)
            $136,007Net
                Loss
            
            
            
            (55,904)
            (55,904)**Balance
                at 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
                at December 31, 2005**
            15,219,101
            1,522
            1,187,475
            (1,399,217)
            (210,220)Options
                granted shares subscribed with note payable
            4,000,000
            
            6,000,000
            (6,000,000)
            -Stock
                compensation expense
            
            
            119,749
            
            119,749Shares
                purchased
            
            400
            (400)
            
            -Shares
                cancelled
            (3,466,667)
            (347)
            347
            
            -Note
                receivable cancelled
            
            
            (5,200,000)
            5,200,000
            -Note
                receivable paid (offsets note payable to ELS Inc.)
            
            
            
            800,000
            800,000Contingent
                shares issued for acquisition of subsidiary
            100,000
            10
            199,990
            -
            200,000Warrants
                exercised
            3,621
            -
            -
            -
            -Issuance
                of common stock for services
            300,000
            30
            (30)
            -
            -Issuance
                of common stock
            1,000,000
            100
            1,499,900
            -
            1,500,000ELS
                Inc. acquisition
            1,486,685
            149
            2,601,550
            -
            2,601,699Net
                loss
            
            
            
            (2,421,799)
            (2,421,799)**Balance
                at December 31, 2006**
            18,642,740
            $
                1,864
            $
                6,408,581
            $
                (3,821,016)
            $
                2,589,429








See
      accompanying notes to consolidated financial statements.








Page
          F -
          4


**RESOLVE
      STAFFING, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**FOR
      THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**





**2006**
            
            **2005**
            **2004****Cash
                Flows From Operating Activities:**Net
                loss
            $
                (2,421,799)
            
            $
                (488,322)
            $
                (55,904)Adjustments
                to reconcile net loss to net cash flows used in operating
                activities:Stock-based
                compensation
            -
            
            58,000
            -Depreciation
            311,918
            
            71,586
            10,120Change
                in allowance for doubtful accounts
            365,442
            
            78,022
            -Amortization
                of non-compete agreements
            578,796
            
            106,917
            -Changes
                in operating assets and liabilities:Accounts
                receivable-trade
            (9,689,435)
            
            (5,404,372)
            (830,296)Worker’s
                compensation insurance policy refunds
            (147,350)
            
            -
            -Prepaid
                and other assets
            (601,682)
            
            269,854
            (239,322)Worker’s
                compensation insurance policy deposit
            (1,319,931)
            
            -
            -Accounts
                payable and accrued liabilities
            2,494,918
            
            547,078
            265,307Payables
                to related parties
            (825,921)
            
            825,921
            -Accrued
                salaries and payroll taxes
            3,162,238
            
            244,206
            58,081Worker’s
                compensation insurance
            2,239,400
            
            -
            -Worker’s
                compensation insurance policy reserves
            1,636,313
            
            -
            -Net
                cash flows used in operating activities
            (4,217,093)
            
            (3,691,110)
            (792,014)**Cash
                Flows From Investing Activities:**Purchases
                of property and equipment
            (351,286)
            
            (172,517)
            -Goodwill
                on non-compete agreements
            (85,244)
            
            -
            -Loans
                to related parties
            (374,162)
            
            -
            -****Acquisition
                of net assets of subsidiaries
            (2,790,820)
            
            (1,941,480)
            -****Net
                cash flows used in investing activities
            (3,601,512)
            
            (2,113,997)
            -**Cash
                Flows From Financing Activities:**Bank
                overdraft****
            (926,244)
            
            167,680
            21,734Net
                borrowings on lines of credit
            9,958,244
            
            (400,000)
            400,000Proceeds
                from notes payable
            351,910
            
            3,914,919
            519,177Paydowns
                on notes payable
            (4,800,257)
            
            (1,164,107)
            -Borrowings
                from related parties
            5,821,571
            
            6,713,463
            -Additional
                paid in capital
            2,419,749
            
            -
            -Paydowns
                on related party debt
            (5,006,368)
            
            (3,502,204)
            (73,541)****Net
                cash provided by financing activities
            7,818,605
            
            5,729,751
            867,370**Net
                Increase (decrease) in Cash**
            -
            
            (75,356)
            75,356**Cash,
                Beginning of the Year**
            -
            
            75,356
            -**Cash,
                End of the Year**
            $
                -
            
            $
                -
            $
                75,356





See
      accompanying notes to consolidated financial statements.





Page
          F -
          5


**RESOLVE
      STAFFING, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE YEARS ENDED DECEMBER 31, 2006, 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. The Company is a national provider of
      outsourced human resource services with over 74 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.





Through the acquisition of the companies known as Employee Leasing Services,
      Inc. (“ELS Inc.”), the Company is also a professional employer organization
      (“PEO”) providing a variety of personnel management services, including human
      resources, payroll, employer payroll taxes and benefits administration as well
      as health and workers’ compensation insurance programs. Services are provided to
      a diversified group of customers throughout the United States. As of December
      31, 2006, the Company served approximately 560 clients located in 43 states
      with
      approximately 10,000 active PEO client employees and approximately 4,000
      temporary staffing employees.





Approximately
      55% of PEO revenues are derived from clients within the state of Ohio. The
      Company’s PEO operations are headquartered in Cincinnati, Ohio with its main
      processing center located in Shelby Township, Michigan.




On
      February 7, 2005, Resolve Staffing, Inc., entered into an equity purchase
      agreement (“Agreement”), to purchase ELS Personnel Services (“ELS”) (the
“Reverse 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 Reverse Combination on February 7, 2005, ELS was deemed
      to
      be the acquiring company for accounting purposes and the Reverse 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
      October 1, 2006, Resolve Staffing, Inc., entered into an equity purchase
      agreement (“Agreement”), to purchase Employee Leasing Services, Inc. (the
“Combination”), a privately-held group of companies located in Cincinnati, Ohio.
      The Company’s Chief Executive Officer and Director, Ronald Heineman, is a
      principal shareholder, officer and director of ELS Inc. Pursuant to the equity
      purchase agreement, Resolve acquired the ownership interest in the group of
      companies which comprised ELS Inc.




In
      connection with the Combination on October 1, 2006, Resolve was deemed to be
      the
      acquiring company for accounting purposes and the Combination was accounted
      for
      as an acquisition under the purchase method of accounting for business
      combinations in accordance with accounting principles generally accepted in
      the
      United States of America. The financial information for 2006, 2005 and 2004
      includes the consolidated balances as of December 31, 2006 and 2005 and the
      consolidated results of operations of the individual entities which comprise
      Resolve for the years ended December 31, 2006, 2005 and 2004. The consolidated
      results of operations for the acquired entities include the activities of each
      entity from the date of acquisition to the end of the period.


Page
          F -
          6


Principles
      of Consolidation





The
      consolidated financial statements for 2006, 2005 and 2004 include the accounts
      of the Company and its subsidiaries. All significant inter-company accounts
      and
      transactions have been eliminated in preparing the accompanying consolidated
      financial statements.





Nature
      of Business





The
      Company provides its PEO services by entering into a co-employment relationship
      with its clients, under which the Company and its clients each take
      responsibility for certain portions of the employer-employee relationship.
      The
      Company and its clients designate each party’s responsibilities through its
      client services agreements, under which the Company becomes the employer of
      its
      worksite employees for most administrative and regulatory purposes. As a
      co-employer of its worksite employees, the Company assumes most of the rights
      and obligations associated with being an employer. The Company enters into
      an
      employment agreement with each worksite employee, thereby maintaining a variety
      of employer rights, including the right to hire or terminate employees, the
      right to evaluate employee qualifications or performance and the right to
      establish employee compensation levels. Typically, the Company only exercises
      these rights in consultation with its clients or when necessary to ensure
      regulatory compliance. The responsibilities associated with the Company’s role
      as employer include the following obligations with regard to its worksite
      employees: (1) to compensate its worksite employees through wages and salaries,
      (2) to pay the employer portion of payroll-related taxes, (3) to withhold and
      remit (where applicable) the employee portion of payroll-related taxes, (4)
      to
      provide employee benefit programs, and (5) to provide workers’ compensation
      insurance coverage.





In
      addition to its assumption of employer status for its worksite employees, the
      Company’s services also include other human resource functions for its
      clients.





The
      Company plans to continue to grow the business through the acquisition of
      private companies in the staffing industry that would provide types of staffing
      and/or related services with which it’s familiar. The Company may seek private
      staffing companies for acquisitions or strategic alliances both in and out
      of
      its current markets. By acquiring existing staffing companies the Company
      believes it will enable it to:





·
            recruit
                well-trained, high-quality professionals;·
            expand
                its service offerings;·
            gain
                additional industry expertise;·
            broaden
                its client base; and·
            expand
                its geographic presence.




On
      various dates during 2006 and 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 62 temporary employee
      staffing locations from the newly acquired entities.





Acquisition
      of Entity from Related Party





In
      connection with the Combination on October 1, 2006, described above, Resolve
      was
      deemed to be the acquiring company for accounting purposes and the Combination
      was accounted for as an 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 1,486,685 shares of restricted common stock valued at $2,601,699
      (See Note M) and a note payable in the amount of $11,977,641 (originally
      $18,641,498, See Notes C, G and N) in exchange for 100% of the ownership of
      ELS
      Inc. In accordance with the accounting for an acquisition the fair value of
      the
      assets and liabilities assumed, on the date of acquisition were deemed to be
      those of ELS Inc. (the acquired entity) and were as follows:








Accounts
                Receivable
            $
                465,423Prepaid
                and Other Assets
            181,560Property
                and Equipment
            454,123Goodwill
            14,898,181Related
                Party Receivable
            6,996,214Deposits
                and Other Assets
            389,996Accounts
                Payable and Accrued Liabilities
            (5,761,842)Bank
                overdraft
            (1,894,315)Notes
                Payable
            (1,150,000)Total
            $
                14,579,340





Acquisition
      of Entities from Related Parties





In
      connection with the Reverse Combination on February 7, 2005, described 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
      Reverse 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





Acquisition
      of Entities from Unrelated Parties





During
      2006 and 2005, Resolve Staffing, Inc., entered into purchase agreements
      (“Agreements”), to acquire all of the assets and/or ownership of various
      privately-held entities owned and operated by unrelated parties. Pursuant to
      the
      acquisition agreements, Resolve acquired the temporary employee staffing
      locations from the newly acquired entities.





Resolve
      agreed a total purchase price for the acquisition of the entities from unrelated
      parties of $8,941,355, $6,030,000 and $-, for the years ended December 31,
      2006,
      2005 and 2004, respectively. The Company paid cash, issued notes payable, issued
      common stock and accrued contingent expenses in exchange for the assets acquired
      and liabilities assumed of the above acquired entities as described below.
      The
      following table summarizes the estimated fair value of the net assets acquired
      on the date of acquisition:





**2006**
            **2005**Cash
            
            $
                415,585
            $
                -Accounts
                Receivable
            1,727,458
            227,455Prepaid
                and Other Assets
            48,490
            77,376Property
                and Equipment
            249,021
            335,095Goodwill
            
            8,130,751
            4,029,083Non-compete
                Agreements
            695,101
            338,000Accounts
                Payable and Accrued Liabilities
            (589,214)
            (355,607)Line
                of credit
            (1,252,450)
            -Notes
                Payable
            (6,018,337)
            (231,521)Net
                Assets Acquired:
            $
                3,406,405
            $
                4,419,881





The
      financial results of these acquired entities are included in the consolidated
      financial statements from the date of acquisition.


Page
          F -
          7


In
      conjunction with the previous purchase agreements described in Note J, the
      Company capitalized $381,684 and $167,923 in goodwill during 2006 and 2005,
      respectively.





In
      conjunction with the acquisitions from all unrelated parties during 2006 and
      2005, approximately $23,029,000 and $6,056,000, respectively, has been assigned
      to goodwill. All of the goodwill is expected to be deductible for tax
      purposes.





Basis
      of Presentation





Because
      the owners of ELS held approximately 90% of the Company’s outstanding common
      stock after the Reverse 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 the year ended December 31,
      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 Reverse 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.





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.





Revenue
      Recognition





The
      Company recognizes PEO revenues when each periodic payroll is delivered to
      the
      client. Revenues are reported in accordance with the requirements of FASB
      Emerging Issues Task Force Issue No. 99-19, *“Reporting
      Revenues Gross as a Principal Versus Net as an Agent.”* (EITF
      99-19). Consistent with its revenue recognition policy, the Company’s net PEO
      revenues and cost of PEO revenues do not include the payroll cost of its
      worksite employees. Instead, PEO revenues and cost of PEO revenues are comprised
      of all other costs related to its worksite employees, such as payroll taxes,
      employee benefit plan premiums and workers’ compensation insurance. Payroll
      taxes consist of the employer’s portion of Social Security and Medicare taxes,
      federal unemployment taxes and state unemployment taxes. PEO revenues also
      include professional service fees, which are primarily computed as a percentage
      of client payroll or on a per check basis.





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 EITF 99-19,
      in the presentation of staffing and managed service 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.





Stock
      Based Employee Compensation





The
      Company adopted SFAS 123(R) to account for its stock-based compensation
      beginning January 1, 2006. Previously, the Company elected to account for its
      stock-based compensation plans under 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


Page
          F -
          8


Standards
      No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure
      (“SFAS 148”). During 2006, the Company did not grant any stock options which
      would require a calculation as prescribed by SFAS 123(R).





There
      are
      no differences between the historical and pro-forma stock based compensation
      value.





Accounts
      Receivable





The
      PEO
      segment does not typically extend credit to its customers. In certain
      situations, however, credit is extended on a secured basis. Accounts receivable
      are carried at original invoice amount less an estimate made for doubtful
      receivables. Management determines the allowance for doubtful accounts by
      regularly evaluating individual customer receivables and considering a
      customer’s financial condition, credit history, and current economic conditions.
      Accounts receivable are written off when deemed uncollectible Recoveries of
      accounts receivable previously written off are recorded when
      received.





Resolve's
      trade accounts receivable result from the sale of its services to customers,
      and
      customers consist primarily of private companies. Resolve uses the allowance
      method to account for uncollectible accounts. Bad debt expense for the years
      ended December 31, 2006 and 2005 was $819,656 and $88,483, 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. An allowance for doubtful accounts in the amounts of $472,428,
      $96,986 and $10,700 was recorded at December 31, 2006, 2005 and 2004,
      respectively.





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, 2006, 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, 2006. As of December 31, 2005, no
      customers accounted for 10% or more of gross accounts receivable and no
      customers accounted for 10% or more of the net revenues for the year ended
      December 31, 2005.





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.





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.





Financial
      Instruments





Resolve
      estimates that the fair value of all financial instruments at December 31,
      2006
      and 2005 do not differ materially from the aggregate carrying value of its
      financial instruments recorded in the accompanying consolidated balance
      sheets.





Liquidity
      and Management’s Plans





As
      reflected in the accompanying consolidated financial statements, the Company
      has
      a net working capital deficit of $21,645,402 and stockholder’s equity of
      $2,589,429, as of December 31, 2006. During 2006, the Company incurred losses
      and has been dependent upon the financial support of stockholders, management
      and other related parties.





For
      the
      year ended December 31, 2006 the Company incurred a net loss of $2,421,799.
      Of
      this loss, $1,256,156 did not represent the use of cash. Non-cash expenditures
      consisted of depreciation of $311,918, increase in allowance for
      doubtful


Page
          F -
          9


accounts
      of $365,442, and amortization of non compete agreements of $578,796. Changes
      in
      accounts receivable, prepaid and other assets, along with increases in accounts
      payable, payroll, salary, and other accruals brought the total cash used in
      operations to $4,217,093. Additionally the Company used $3,601,512 to purchase
      computer equipment, software and office equipment and the acquisition of
      subsidiaries during 2006.





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. Our senior debt forbearance
      agreement expires as of December 31, 2007 and our senior lender has indicated
      that it would prefer that the Company refinance the debt with alternate
      financing in order for the current senior lender to exit. If our existing senior
      lender does not refinance our senior debt and a new lender cannot be found
      or a
      new forbearance agreement negotiated with the current lender that would include
      terms acceptable to the Company, it would have a material adverse effect on
      our
      financial condition. There can be no assurance that management will be
      successful in continuing operations without additional financing efforts. The
      consolidated financial statements do not reflect any adjustments that may arise
      as a result of this uncertainty.





Property
      and Equipment





Property
      and equipment are stated at cost. The cost of significant additions and
      betterments is capitalized; maintenance and repairs are charged to expense
      as
      incurred. Depreciation is provided on property and equipment using both
      straight-line and accelerated methods over the estimated useful lives of the
      respective assets as follows:




Office
      equipment 5 - 7 years


Computer
      hardware and software 3 - 5
      years


Leasehold
      improvements - lesser of estimated life or term of leases


Vehicles
      3 years





When
      property and equipment are retired or otherwise disposed, the cost and related
      accumulated depreciation are removed and any resulting gain or loss is reflected
      in the statement of income for the period.





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, 2006, 2005 and 2004. Total advertising
      costs
      for the years ended December 31, 2006, 2005 and 2004 were $882,641, $311,376
      and
      $24,533, respectively.





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 for 2006, 2005 and 2004 excludes 2,843,820, 851,320
      and
      851,320 common stock equivalents, respectively, representing warrants, since
      the
      effect of including them would be anti-dilutive.





Recent
      Accounting Pronouncements





In
      February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
      Financial Instruments" ("SFAS 155"), which amends SFAS No. 133, "Accounting
      for
      Derivative Instruments and Hedging Activities" ("SFAS 133") and SFAS No. 140,
      "Accounting for Transfers and Servicing of Financial Assets and Extinguishments
      of Liabilities" ("SFAS 140"). SFAS 155 simplifies the accounting for certain
      derivatives embedded in other financial instruments by allowing them to be
      accounted for as a whole if the holder elects to account for the whole
      instrument on a fair value basis. SFAS 155 also clarifies and amends certain
      other provisions of SFAS 133 and SFAS 140. SFAS 155 is effective for all
      financial instruments acquired, issued or


Page
          F -
          10


subject
      to a re-measurement event occurring in fiscal years beginning after September
      15, 2006. The Company adopted SFAS 155 on January 1, 2007 which does not have
      a
      material effect on the Company’s consolidated financial statements.




In
      June
      2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty
      in
      Income Taxes" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in
      income taxes recognized in the Company’s financial statements in accordance with
      FASB Statement No. 109, "Accounting for Income Taxes". The provisions of FIN
      48
      are effective for the Company’s fiscal year beginning January 1, 2007. The
      Company believes that the adoption will not have a material effect on the its
      consolidated financial statements.




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
      157”). SFAS 157 defines fair value, establishes a framework for measuring fair
      value in GAAP, and expands disclosures about fair value measurements. SFAS
      157
      is effective for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years. The
      Company will be required to adopt SFAS 157 in the first quarter of 2008. The
      Company’s management is currently evaluating the requirements of SFAS 157 and
      has not yet determined the impact on its consolidated financial statements.




In
      September 2006, the Securities and Exchange Commission Staff issued Staff
      Accounting Bulletin No. 108, “Considering the Effects of Prior Year
      Misstatements when Quantifying Misstatements in the Current Year Financial
      Statements” (“SAB No. 108”). SAB No. 108 requires the use of two alternative
      approaches in quantitatively evaluating materiality of misstatements. If the
      misstatement as quantified under either approach is material to the current
      year
      financial statements, the misstatement must be corrected. If the effect of
      correcting the prior year misstatements, if any, in the current year income
      statement is material, the prior year financial statements should be corrected.
      In the year of adoption (fiscal years ending after November 15, 2006, or
      calendar year 2006 for us), the misstatements may be corrected as an accounting
      change by adjusting opening retained earnings rather than including the
      adjustment in the current year statement of operations. Upon completing its
      evaluation of the requirements of SAB No. 108, the Company determined it did
      not
      affect its consolidated financial statements.





Reportable
      Segments





As
      of the
      date of Combination, the Company operates in two reportable segments under
      Statement of Financial Accounting Standards Board (FASB) Statement No. 131,
      “ *Disclosure
      about Segments of Enterprise and Related Information* .”





Presented
      below is the reconciliation of segment information to the consolidated statement
      of operations for 2006. Prior to 2006 the Company operated in one segment.





Total
            Staffing
            PEORevenue
            $
                152,304,237
            $
                139,821,391
            $
                12,482,846Cost
                of revenues
            134,038,039
            122,503,186
            11,534,853Gross
                profit
            18,266,198
            17,318,205
            947,993Operating
                expenses
            19,297,192
            17,485,357
            1,811,835Loss
                from operations
            (1,030,994)
            (167,152)
            (863,842)Interest
                expense
            (1,390,805)
            (1,311,683)
            (79,122)Net
                loss
            $
                (2,421,799)
            $
                (1,478,835)
            $
                (942,964)





Workers’
      Compensation Insurance





Worksite
      employees in the state of Ohio are part of the state sponsored workers’
compensation insurance program. Accruals for Ohio workers’ compensation expense
      are recorded based on actual rates provided by the state.




The
      Company maintains high deductible workers’ compensation coverage for most other
      work site employees in states other than Ohio. Accruals for high deductible
      workers’ compensation expense are made based upon the Company’s claims
      experience and analysis by the Company’s third party administrator, utilizing
      the Company’s historic loss information. As such, a majority of the Company’s
      recorded expense for workers’ compensation is management’s best estimate.
      Management believes that the amount accrued is adequate to cover all known
      and
      unreported claims at each balance sheet date. However, if the actual costs
      of
      such claims and related expenses exceed the amount estimated, additional
      reserves may be required, which could have a material negative effect on
      operating results.








Page
          F -
          11


Goodwill





As
      discussed in Note E, the Company has acquired businesses from related and
      un-related parties since 2005. The acquisitions were accounted for using the
      purchase method of accounting in accordance with FASB Statement No. 141, *Business
      Combinations* .
      The
      cost in excess of net assets purchased was recorded as an asset (entitled
“Goodwill”). The Company does not amortize the goodwill balance, but reviews
      annually (or more frequently if impairment indicators arise) for impairment
      under a two-step impairment test in accordance with FASB Statement No. 142, *Accounting
      for Goodwill and Other Intangible Assets* .
      The
      first step is to compare the carrying amount of the reporting unit’s assets to
      the fair value of the reporting unit. If the carrying amount exceeds the fair
      value, then the second step is required to be completed, which involves the
      fair
      value of the reporting unit being allocated to each asset and liability with
      the
      excess being implied goodwill. The impairment loss is the amount by which the
      recorded goodwill exceeds the implied goodwill. No impairment loss was
      recognized for the years ended December 31, 2006, 2005 and 2004.





Health
      Benefits





Claims
      incurred under health benefit plans are expensed as incurred according to the
      terms of the contract. Liability reserves are established for the benefit claims
      reported but not yet paid and claims that have been incurred but not yet
      reported.





**NOTE
      B - PROPERTY AND EQUIPMENT, NET**





Property
      and equipment as of December 31, 2006 and 2005 is summarized as
      follows:





2006
            
            2005Office
                equipment
            $
                746,832
            
            $383,677Computer
                hardware and software
            872,230
            
            431,632Leasehold
                improvements
            260,307
            
            50,887Vehicles
            8,139
            
            -Total
                property and equipment
            1,887,508
            
            866,196Less,
                accumulated depreciation
            (543,735)
            
            (264,935)Net
                property and equipment
            $
                1,343,773
            
            $
                601,261





Depreciation
      expense for the years ended December 31, 2006, 2005 and 2004 was $311,918,
      $71,586 and $10,120, respectively.





**NOTE
      C - RELATED PARTY TRANSACTIONS**




Note
      Receivable





On
      December 8, 2003, ELS Inc. entered into a non-interest bearing short-term credit
      agreement with Resolve Staffing, Inc. that provides for borrowings up to
      $200,000. At that time Ronald Heineman was the Chief Executive Officer and
      Director of both companies. 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. Balances due under the credit agreement were
      originally due May 8, 2004.





During
      March 2006, the agreement was amended to allow unlimited maximum borrowings
      with
      a maturity date of March 31, 2007. The note bears interest at 3 percent per
      annum and is payable monthly. As of December 31, 2006 amounts owed were
      eliminated in consolidation. As of December 31, 2005 $5,873,936 was outstanding
      under this note. At December 31, 2006 this note is eliminated in consolidation.





Note
      payable to related party relates to 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.


Page
          F -
          12


Notes
      payable to related parties of $18,641,498 were issued in conjunction with the
      Combination. On May 1, 2007, the holders of these notes and the Company agreed
      to amend the original note and reduce the amounts by $6,663,857. The outstanding
      amount of the notes, after the reduction, as of December 31, 2006 is
      $10,280,343. See Notes A, G and N.





Related
      Party Lease





The
      Company leases its Cincinnati facility from W.H. 2, LLC (WH2), a limited
      liability company owned by stockholders of the Company under an operating lease
      expiring during September 2011. Future minimum annual rentals under this
      operating lease are presented in Note H.





Advances
      Receivable





Advances
      receivable from related parties as of December 31, 2006 and 2005 were $681,237
      and $-, respectively.





**NOTE
      D - WORKERS’ COMPENSATION INSURANCE**




The
      Company maintains a high deductible insurance policy with respect to workers’
compensation coverage for its worksite employees who are not employed in the
      State of Ohio. The Company had provided a total of $1,636,313 at December 31,
      2006, as the estimated liability for unsettled workers’ compensation claims. The
      Company did not accrue for estimated unsettled worker’s compensation claims at
      December 2005. The estimated liability for unsettled workers’ compensation
      claims represents management’s best estimate, which includes, in part, an
      evaluation of information provided by the Company’s third-party administrators
      for workers’ compensation claims to estimate the total future costs of all
      claims, including potential future adverse loss development. Included in this
      claim liability are case reserve estimates for reported losses, plus additional
      amounts based on projections for incurred but not reported claims, anticipated
      increases in case reserve estimates and additional claim related administration
      expenses. These estimates are continually reviewed and adjustments to
      liabilities are reflected in current operating results as they become known.
      The
      Company believes that the difference between amounts recorded for its estimated
      liabilities and the possible range of costs to settle related claims is not
      material to results of operations; nevertheless, it is reasonably possible
      that
      adjustments required in future periods may be material to the results of
      operations.





During
      2006, the Company’s primary high deductible workers’ compensation insurance
      policy was provided by Providence Property and Casualty Insurance Company of
      Frisco, Texas. Under this policy, the Company’s deductible in most cases equals
      $500,000 per occurrence and covers most of its worksite employees who are not
      employed in the state of Ohio (except California which are not covered under
      the
      policy.) The Company regularly evaluates the financial capacity of its insurers
      to assess the recoverability of any potential insurance receivables.





**NOTE
      E - 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:





**2006**
            **2005**Covenants
                not to compete
            
            $     
                613,547
            $
                338,000Less
                amortization
            
            (
                180,915)
            (106,917)$
                432,632
            $
                231,083Goodwill
            
            $
                29,724,511
            $
                6,695,579





**NOTE
      F - EMPLOYEE BENEFIT PLAN**


Page
          F -
          13


The
      Company and many of its clients’ employees participate in a multi-employer
      401(k) retirement savings plan covering substantially all employees who have
      completed one year of service and are at least 21 years of age. Participants
      may
      defer up to 50% of their annual base compensation up to the limits prescribed
      by
      the Internal Revenue Code (IRC).




The
      Company and its clients are required to match employee contributions at the
      rate
      of $1.00 for every $1.00 contributed by the employee, up to a maximum of 3%
      and
      $0.50 for every $1.00 contributed for the next 2% of the employee’s base
      compensation in accordance with the IRC safe harbor rules. The Company and
      its
      clients may also make discretionary matching and profit sharing contributions
      to
      the plan.




Total
      Company contributions and plan expenses paid by the Company were $36,896, $-
      and
      $-,, for the years ended December 31, 2006, 2005 and 2004, respectively.





**NOTE
      G - LONG TERM DEBT AND LINES OF CREDIT**





Notes
      payable and lines of credit as of December 31, 2006 and 2005 are as
      follows:





**2006**
            
            **2005**Working
                capital line of credit to one bank, interest payable monthly at 7.75%
                per
                annum, maturing December 31, 2007, maximum of $12,000,000 in borrowings.
                Borrowings are not to exceed 80% of accounts receivable.
            
            $11,735,029
            
            $-Over-line
                facility line of credit to one bank, interest payable monthly at
                11.25%
                per annum, maturing December 31, 2007, maximum of
                $17,150,000.
            
            2,906,471
            
            3,341,927Revolving
                line of credit with a financial institution that provides for maximum
                borrowings of $1,700,000 through November 2007. Borrowings are not
                to
                exceed 85% of accounts receivable. Interest accrues at 9.25% per
                annum.
            
            986,956
            
            -Line
                of credit with a bank that provides for maximum borrowings of $100,000.
                Interest accrues at the bank's prime rate of 9.25% per annum. Maturity
                date is on demand.
            
            74,165
            
            -Note
                payable to a bank, interest payable monthly at a rate of 6.6% per
                annum,
                maturing September 1, 2009.
            
            303,746
            
            398,100Note
                payable to a financial institution, interest payable at annual percentage
                rate of 8.25% per annum. Monthly payments of $47,049 through July
                2007.
            
            351,910
            
            -Notes
                payable to two individuals for the Combination, interest payable
                at a rate
                of 5% per annum.. Note principal and interest payments are due the
                first
                day of each month through December 31, 2017; however, no interest
                shall be
                accrued until January 1, 2008. See notes A, C and N.
            
            10,280,343
            
            -Note
                payable to individual for the stock purchase of Power Personnel.
                The note
                will be paid in monthly installments of $125,637 through October
                2008.
                Interest is payable at 8.3% per annum.
            
            2,555,931
            
            -Two
                notes payable to financial institutions due June 2007 and November
                2007.
                Interest accruing between 3.5% and 9.25% per annum.
            
            37,866
            
            -Note
                payable to ELS, Inc., accruing interest at 3% per annum, due March
                2007.
                As of December 31, 2006 amounts owed were eliminated on
                consolidation
            
            -
            
            5,873,936Notes
                payable to various individuals for the acquisition of various staffing
                entities during 2005 and 2006. 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. Shown net of discount of
                $103,300.
            
            2,734,916
            
            2,278,981Note
                payable to an individual accruing interest at 5% to 12% per annum,
                maturity date is being extended verbally on a month to month basis.
            
            91,500
            
            131,500Total
                long term debt and lines of credit
            
            32,058,833
            
            12,024,444Current
                portion of long term debt and lines of credit
            
            (22,398,124)
            
            (1,940,746)Long
                term portion of long term debt and lines of credit
            
            $
                9,660,709
            
            $
                10,083,698





See
      Note
      C—Related Party Balances and Transactions, for information about the Credit
      Agreement with Ron Heineman.


Page
          F -
          14


See
      Note
      C -- Related Party Balances and Transactions, for information about the Note
      Payable to William Brown.





Maturities
      of long term debt and lines of credit are as follows:





Year
                ending December 31,2007
            
            $22,398,1242008
            
            2,565,2302009
            
            1,251,2482010
            
            1,183,7822011
            
            1,183,782Thereafter
            
            3,476,667Total
            
            $32,058,833





**NOTE
      H - OPERATING LEASES**




The
      Company rents various office spaces for each of its locations across the United
      States, under lease terms ranging from month-to-month expiring September, 2011.
      Monthly payments due under these leases range from $210 to $4,970. The Company
      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 Company also leases various office and computer equipment
      under operating leases that require quarterly payments between $3,641 and $4,988
      through March 2007. The Company also leases office space from a related party
      at
      $4,100 a month through July 2009. This lease was amended and renewed on October
      1, 2006 to $10,800 a month through September 30, 2011.




Future
      minimum annual rentals under all operating lease agreements are as
      follows:





**Year
                Ended December 31,**
            **Total**
            **Related
                Party**
            **Other**2007
            $
                1,035,826
            $
                129,600
            $
                906,2262008
            767,854
            129,600
            638,2542009
            518,270
            129,600
            388,6702010
            296,224
            129,600
            166,6242011
            118,969
            108,000
            10,969$
                2,737,143
            $
                626,400
            $
                2,110,743





Total
      rent expense for all operating leases was $1,041,195, $385,831 and $50,425
      for
      the years ended December 31, 2006, 2005 and 2004, respectively.








**NOTE
      I - MAJOR VENDOR**





Workers’
      compensation paid to the State of Ohio Bureau of Workers’ Compensation
      constitute approximate 60% of workers’ compensation insurance cost of revenues
      for the PEO segment. This is considered a major vendor relationship. Because
      the
      State of Ohio is a monopolistic state with regard to workers’ compensation
      insurance, there are no alternative sources for workers’ compensation insurance
      within the state. The Company believes that, by nature of rules afforded PEOs
      within the state, the risk from this relationship is primarily related to rates.
      The standard client agreement provides that the Company may, at its discretion,
      adjust the amount billed to clients to reflect changes in the Company’s direct
      costs. Also, the Company maintains the ability to remove clients from their
      policy and, due to having PEO status, the removal of the client from the policy
      will remove that client’s claims history from the Company policy. Any such rate
      changes or removals require a 30 day notice to the client. Regardless of the
      Company’s assertion, there is no assurance that the Company will be able to
      successfully pass through rate increases or successfully manage claims in the
      future.





**NOTE
      J - COMMITMENTS AND CONTINGENCIES**





The
      Company is a defendant in various lawsuits and claims arising in the normal
      course of business. Management believes it has valid defenses in these cases
      and
      is defending them vigorously. While the results of litigation cannot be
      predicted with certainty, management believes the final outcome of such
      litigation will not have a material adverse effect on the Company’s financial
      position or results of operations.


Page
          F -
          15





The
      Company maintains letters of credit of approximately $4,375,000 at December
      31,
      2006 to secure workers’ compensation policies in lieu of providing deposits.
      There were no draws on the letters of credit for the year ended December 31,
      2006.




In
      accordance with the high deductible workers’ compensation policy, the Company is
      required to purchase $490,000 of the insurance company’s non-voting stock during
      the year ended December 31, 2007. There are no additional deposits to be made
      during the year ending December 31, 2007 as all deposits were made in
      2006.





The
      Company is in receipt of a Determination and Assessment from the State of
      Michigan, Department of Labor & Economic Growth, Unemployment Insurance
      Agency seeking payment of amounts totaling $9,505,212. The Company and legal
      counsel believe that this assessment is baseless and without merit and intends
      to contest this assessment vigorously. As of December 31, 2006, no amount is
      accrued in the Company’s consolidated financial statements as the matter is
      deemed groundless and outside the authority of the Agency.





The
      Company has received notice letters from the State of Ohio sales tax auditors
      indicating their intention to make an assessment on employee leasing or
      co-employment sales. As of the date of filing of this amended report on Form
      10-K/A/, we have been notified that the assessed amount of Ohio sales taxes
      is
      $52,711,436.50. The Company conducts its business through written contracts
      of
      at least one year, and claims exemption from the sales tax auditor’s position.
      The Company continues to work with the sales tax auditors to have this matter
      dismissed. As of December 31, 2006, no amount is accrued in the Company’s
      consolidated financial statements as the Company and legal counsel believe
      this
      assessment is groundless.





As
      of
      December 31, 2006 the Company is in receipt of a notice from the United States
      Department of Labor asserting various violations of ERISA relating to the ELS
      Inc. group health plan. The Company is attempting to address the alleged
      violations and does not believe this matter will have a material impact on
      the
      accompanying consolidated financial statements.





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. 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 $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, 2007.





·
            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, 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.





·
            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, 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.





·
            KFT,
                Inc. dba Power Personnel - Based on pre- tax profit targets the prior
                owners may receive contingent performance payments of up to approximately
                $ 50,000 through October 10, 2008 and October, 10 2009.·
            Steadystaff,
                LLC - January 1, 2007 to December 31, 2007 and January 1, 2008 to
                December
                31, 2008, based on pre-tax profit targets the prior owners may receive
                contingent performance payouts up to approximately $10,000 per
                year.





**NOTE
      K - INCOME TAXES**





At
      December 31, 2006, the Company had federal and state tax net operating loss
      carryforwards (“NOL”) of approximately $2,004,000. The federal and state tax
      loss carry forwards will begin to expire in 2025 and 2015, respectively, unless
      previously utilized.


Page
          F -
          16


Pursuant
      to Internal Revenue Code Sections 382 and 383, the Company’s use of its net
      operating loss and credit carryforwards may be limited as a result of cumulative
      changes in ownership of more than 50% over a three-year period. Management
      is
      currently in the process of calculating these limitations.





The
      Company also recorded a valuation allowance of approximately $404,000 related
      to
      federal and state loss and tax credit carryforwards and other temporary
      differences of Resolve. The tax benefit of these carryforwards, if and when
      realized, will first reduce the existing value of goodwill up to a total of
      $404,000, then, if applicable, remaining amounts will be applied first to other
      intangible assets with any excess amount recognized as an income tax
      benefit.





Significant
      components of the Company's deferred tax assets are shown below. A valuation
      allowance has been established to offset the deferred tax assets, as realization
      of such assets has not met the more likely than not threshold required under
      SFAS No. 109.





***December
                31,***
            **2006**
            **2005**Deferred
                tax assets:Net
                operating loss carry forwards
            $
                779,400
            $
                156,300Allowance
                and Accruals
            183,800
            -Bad
                Debt Allowance
            11,400
            -Other
            -
            700Gross
                deferred tax assets
            974,600
            157,000Fixed
                Assets and Intangibles
            (95,100)
            -879,500Valuation
                allowance
            (879,500)
            (157,000)$
                -
            $
                -





Significant
      components of the provision for income taxes for the years ended December 31,
      2006, 2005 and 2004 are as follows:





**2006**
            **2005**
            **2004**CurrentFederal
            $
                -
            $
                -
            $
                -State
            -
            -
            -DeferredFederal
            -
            -
            -State
            -
            -
            -Income
                tax expense
            $
                -
            $
                -
            $
                -





Reconciliation
      of the statutory federal income tax benefit to the Company's effective tax
      benefit:





**Years
                Ended December 31,**
            **2006**
            **2005**
            **2004**Statutory
                U.S. federal rate
            35.00%
            34%
            34%State
                income taxes - net of federal benefit
            3.03%
            0%
            0%Permanent
                differences
            -7.79%
            6%
            6%True
                up of prior year tax provision
            1.63%
            0%
            0%Other
            -0.92%
            0%
            0%Change
                in valuation allowance
            -30.95%
            -40%
            -40%Provision
                for income taxes
            0.00%
            0.00%
            0.00%





**NOTE
      L - CASH FLOW SUPPLEMENTAL INFORMATION**





Cash
      paid
      for interest during the years ended December 31, 2006, 2005 and 2004 amounted
      to
      $1,154,054, $238,454 and $13,160, respectively.





Non-cash
      investing and financing activities


Page
          F -
          17





During
      2006 the Company issued 300,000 shares of common stock for services related
      to
      the raising of funds. The shares were valued at approximately $410,000 and
      have
      been recorded as an increase and decrease in paid in capital (See Note
      M).





Acquisition
      of Entity from Related Party





In
      connection with the Combination on October 1, 2006, described in Note A, Resolve
      was deemed to be the acquiring company for accounting purposes and the
      Combination was accounted for as an 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 1,486,685 shares of restricted common stock valued
      at $2,601,699 (See Note M) and notes payable in the amount of $11,977,641
      (originally $18,641,498, See Note C) in exchange for 100% of the ownership
      of
      ELS Inc. See Note A for the fair value of the assets and liabilities assumed
      on
      the date of acquisition.





In
      conjunction with the Reverse Combination on February 7, 2005, described 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
      Reverse 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





During
      2006 and 2005, Resolve Staffing, Inc., entered into purchase agreements
      (“Agreements”), to acquire all of the assets and/or ownership of multiple
      privately-held entities owned and operated by unrelated parties. Pursuant to
      the
      acquisition agreements, Resolve acquired the temporary employee staffing
      locations from the newly acquired entities.





Resolve
      issued notes payable, issued common stock and accrued contingent expenses in
      the
      amount of $6,218,337 and $2,492,416, as of December 31, 2006 and 2005,
      respectively; 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:





2006
            2005Accounts
                Receivable
            $
                1,327,064
            $
                135,252Prepaid
                & Other Assets
            48,490
            21,815Property
                & Equipment
            20,000
            104,489Goodwill
            
            6,664,447
            2,659,971Non-Compete
                Agreements
            -
            144,000Accounts
                Payable & Accrued Liabilities
            (589,214)
            (355,608)Line
                of credit
            (1,252,450)
            -Notes
                Payable
            (6,018,337)
            (217,503)Total
                Assets Acquired:
            $
                200,000
            $
                2,492,416





The
      Company had no non-cash investing or financing activities during
      2004.





**NOTE
      M - STOCKHOLDERS’ (DEFICIT) EQUITY**


Page
          F -
          18





Issuance
      of Common Stock





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
      March
      31, 2006, Resolve agreed to issue a Note Receivable to Mr. Seifer, and related
      parties, for the purchase of shares underlying the options mentioned above.
      A
      note was issued in the aggregate amount of $6 million. Prior to June 30, 2006
      $800,000 was paid on this note. The agreement was terminated on June 30, 2006
      and the remaining balance of 3,466,666 shares was canceled.





On
      September 7, 2006 the Board of Directors agreed to issue 100,000 shares of
      common stock as compensation to the former owners of Truckers Plus, as called
      for in the purchase agreement.





On
      October 1, 2006, as part of the consideration, Resolve issued shares of its
      common stock to the selling shareholders of ELS Inc. Additionally, Resolve
      agreed to issue notes payable totaling approximately $12 million (originally
      $18.6 million, See Note C) and pay certain other settlement amounts described
      in
      the ELS Inc. purchase agreement.




In
      accordance with acquisition accounting, the shares of common stock issued by
      Resolve to the former owners of ELS Inc., described in Note A, have been shown
      as outstanding from the date of acquisition. The value of these shares,
      $2,601,699, has been presented in the consolidated statement of stockholders’
equity (deficit).





Effective
      October 1, 2006, the Company agreed to issue 1,000,000 shares of restricted
      common stock to certain accredited investors, for an aggregate consideration
      of
      $1,500,000. In addition, the investors received a warrant to purchase additional
      shares of common stock at $2.00 and a warrant to purchase additional shares
      of
      common stock at $3.00. The shares of common stock acquired by these investors,
      including the warrant shares, have registration rights associated with them,
      whereby the Company has committed to use its best efforts to prepare and file
      a
      registration statement with the Commission registering the shares for resale,
      within 30 days from the date of acquisition of the shares. This registration
      statement was filed during February 2007.





During
      October, 2006 the Company issued 300,000 shares of common stock to individuals
      as compensation for services provided relating to the sale of the 1,000,000
      shares of common stock described above. The shares issued to these individuals
      have been valued at approximately $410,000, based on management’s estimate of
      fair value, and have been recorded as an increase and a reduction in paid in
      capital in the accompanying consolidated statement of stockholders’ equity
      (deficit) as these shares were issued in conjunction with the capital raise
      discussed above.





On
      February 7, 2005, the Company entered into the Reverse Combination described
      above. In conjunction with the Reverse 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.


Page
          F -
          19


On
      November 22, 2005, Resolve issued 430,000 shares to various consultants as
      part
      of their compensation.







Common
      Stock Warrants





On
      April
      18, 2006, the Board of Directors of Resolve Staffing, Inc. declared a dividend
      distribution of one stock right for each outstanding share of the Company's
      Common Stock, $.0001 par value per share (“Common Stock”), to stockholders of
      record at the close of business on May 26, 2006 (the “Record Date”). The Board
      of Directors of the Company also authorized the issuance of one Right for each
      share of Common Stock issued after the Record Date. Additional details are
      provided on an 8-K filed on April 21, 2006.





During
      2006, warrants covering 7,500 were exercised and converted into 3,621 shares
      of
      common stock.





As
      of
      December 31, 2006 there were 2,843,820 warrants outstanding. 843,820 warrants
      were due to expire on June 30, 2007 and each warrant has an exercise price
      of
      $.75 per share price (See Note N). The additional 2,000,000 warrants were issued
      on October 1, 2006 as part of the Company’s offering and sale of units
      consisting of one share of common stock and two common stock purchase warrants,
      50% of which were initially exercisable at a price of $2.00 and the remaining
      50% exercisable at a price of $3.00 per share, up to and including September
      30,
      2008. None of the 2,000,000 common stock purchase warrants have yet been
      exercised. By subsequent modifications to the warrant agreements, the Company
      and all of the purchasers of the common stock purchase warrants sold to private
      placement investors on October 1, 2006, were adjusted. The adjusted common
      stock
      purchase warrants now have an exercise price of $1.25 and $1.75, respectively
      and are exercisable for a term that expires September 30, 2009.








Employee
      Agreements





The
      employment agreement with Mr. Heineman dated October 1, 2006, (for a 5 year
      term) sets forth the terms of his continued employment with the Company as
      chief
      executive officer and provides for, among other matters: a base salary, bonuses
      based on the achievement of specific goals as determined by the agreement and
      a
      severance package as specified in the agreement. Subsequent to year end the
      term
      of this agreement was extended to seven years.





The
      employment agreement with Mr. Horne dated October 1, 2006, (for a 3 year term)
      sets forth the terms of his continued employment with the Company as executive
      vice president and chief financial officer and provides for, among other
      matters: a base salary, bonuses based on the achievement of specific goals
      as
      determined by the agreement and a severance package as specified in the
      agreement. Subsequent to the period covered by this report, Mr. Horne resigned
      in his capacity as chief financial officer of the Company and his executive
      employment agreement is no longer in force, effective May 17, 2007. Mr. Horne
      has remained employed by the Company in his current capacity of executive
      vice-president of franchise development.





The
      employment agreement with Mr. Roux dated October 1, 2006, (for a 3 year term)
      sets forth the terms of his continued employment with the Company and provides
      for, among other matters: a base salary, bonuses based on the achievement of
      specific goals as determined by the agreement and a severance package as
      specified in the agreement.





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.





**NOTE
      N - SUBSEQUENT EVENTS**





On
      January 3, 2007 the Company issued 150,000 shares of common stock for the
      acquisition of one unrelated party. The shares issued for the acquisition have
      been valued at approximately $457,500 and have been recorded as an increase
      in
      paid in capital.





On
      January 20, 2007 certain individuals converted outstanding warrants into shares
      of common stock. A total of 714,360 warrants were converted into 535,770 shares
      of common stock.


Page
          F -
          20





On
      January 26, 2007 the Board of Directors elected to purchase 129,460 warrants
      (with a strike price of $.75) for an aggregate of $6,473 pursuant to the warrant
      agreement.





On
      February 20, 2007 the Company issued 100,000 shares of common stock for the
      acquisition of one unrelated party. The shares issued for the acquisition have
      been valued at approximately $280,000 and have been recorded as an increase
      in
      paid in capital.





During
      March 2007 the Company finalized its renewal of its various lines of credit
      described in Note G. The lines of credit were increased to $29,150,000, call
      for
      interest payable monthly at the prime interest rate, include certain financial
      covenants and mature September 30, 2007 and January 31, 2008. These lines of
      credit are guaranteed by certain shareholders and affiliated entities. During
      May 2007, the Company received a notice of default under the terms of these
      various lines of credit. During September 2007, the Company and the Bank entered
      into a Forbearance and Reaffirmation Agreement whereby the Bank agreed to
      forbear from exercising its rights and remedies against the Company and the
      Subsidiaries with respect to the defaults existing as of September 28, 2007
      until the earlier to occur of (i) December 31, 2007 or (ii) the occurrence
      of a
“Forbearance Default”.





On
      May 1,
      2007 the original price and the corresponding outstanding balance of the notes
      payable, related to the acquisition of ELS Inc. and described in Notes A, C
      and
      G, to the shareholders Ron Heineman and William Walton were reduced by
      $6,663,857. Additionally the interest rate was reduced from 8.25% per annum
      to a
      fixed 5% annual rate and no interest will be accrued until January 1, 2008
      on
      the entire outstanding balance and no interest will accrue on a portion of
      the
      amount for the life of the loan.





Mr.
      Scott
      Horne resigned as Chief Financial Officer of Resolve Staffing, Inc. by letter
      dated May 17, 2007. Mr. Horne will remain with the Company as VP of Franchise
      Development.





Subsequent
      to year end certain subsidiaries of the Company received assessments from the
      Internal Revenue Service ("IRS") in a combined amount of approximately $884,000.
      As of December 31, 2006 no amount has been accrued in the Company's consolidated
      financial statements as the Company's management believes all required
      documentation will be provided to the IRS and expects the assessments to be
      fully abated.








**NOTE
      O - PROFORMA INFORMATION**





The
      consolidated financial statements are presented in accordance with accounting
      principles generally accepted in the United States of America (GAAP), which
      requires that the financial results of acquired entities are included in the
      consolidated financial statements from the date of acquisition. As a result,
      the
      consolidated statement of operations does not include the activity of the
      acquired companies for the period from January 1 to the date of acquisition.
      Below is the pro forma information for the significant acquisitions entered
      into
      during 2006, including the acquisition of Star Personnel (and Direct Staffing),
      the acquisition of ELS Inc. by Resolve Staffing, Inc. on October 1, 2006, the
      acquisition of Power Personnel, on October 11, 2006, Allstaff on November 6,
      2006 and Voyager on November 20, 2006.





Presented
      below is the unaudited pro forma condensed combined consolidated statement
      of
      operations for the year ended December 31, 2006 as if the acquisition of Star
      Personnel, Power Personnel, Allstaff, Voyager and ELS Inc. had been completed
      January 1, 2006.





**Actual**
            **Star
                Personnel, Inc.**
            **Power
                Personnel, Inc.**
            **ELS
                Inc. (Pre Combination)**
            **Pro-forma
                adjustments**
            **Pro-forma**Service
                Revenues
            $
                152,304,237
            $
                6,665,403
            $
                7,679,844
            $
                40,202,590
            (a)
                (55,269)
            $
                206,796,805Cost
                of Services
            134,038,039
            4,614,832
            6,190,000
            34,430,645
            (a)
                (55,269)
            179,218,247Gross
                Margin
            18,266,198
            2,050,571
            1,489,844
            5,771,945
            -
            27,578,558Operating
                Expenses
            19,297,192
            2,073,399
            1,414,420
            5,594,102
            -
            28,379,113Income
                (Loss) From Operations
            (1,030,994)
            (22,828)
            75,424
            177,843
            -
            (800,555)Interest
                expense
            (1,390,805)
            (93)
            (107,848)
            2,511
            (
                b) (527,985)
            (2,024,220)Net
                (Loss) Income
            $
                (2,421,799)
            $(22,921)
            $(32,424)
            $
                180,354
            $
                (527,985)
            $
                (2,824,775)





Pro-forma
                earnings per share information for the year ended December 31,
                2006:Basic
                weighted average shares outstanding:
            
            
            19,158,613Pro
                forma basic net loss per common share:
            
            
            $
                (0.14)





**NOTES
      TO THE UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF
      OPERATIONS**





a)
            Elimination
                of Management Fees allocated to Resolve by ELS Inc. for the period
                January
                1, 2006 through September 30, 2006.b)
            Interest
                expense related to Bill Walton and Ron Heineman notes payable issued
                for
                the ELS Inc./Resolve combination. Interest computed as if the notes
                were
                issued January 1, 2006.








**SCHEDULE
                I—VALUATION AND QUALIFYING ACCOUNTS****YEARS
                ENDED DECEMBER 31, 2004, 2005 and 2006**Allowances
                are deducted from the assets to which they apply.**Balance
                at**
            **Charged
                to**
            **Charged
                to**
            
            
            **Balance****Beginning**
            **Costs
                and**
            **Other**
            
            
            **at
                End****of
                Period**
            **Expenses**
            **Accounts**
            **Deductions**
            
            **of
                Period**Year ended December 31, 2004:Allowance for:Uncollectible
                accounts
            $
            8,264
            $
            3,764
            $
            -
            $
            (1,328)
            
            $
            10,700Year ended December 31, 2005:Allowance for:Uncollectible
                accounts
            $
            10,700
            $
            88,483
            $
            -
            $
            (2,197)
            
            $
            96,986Year ended December 31, 2006:Allowance for:Uncollectible
                accounts
            $
            96,986
            $
            819,656
            $
            -
            $
            (444,214)
            
            $
            472,428





Page
          F -
          21


**SIGNATURES**





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





Resolve
      Staffing, Inc., a Nevada Corporation





Dated
                November 14, 2007
            By:*/s/
                Ronald Heineman*Ronald
                Heineman, Chief Executive Officer





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





**Signature**
            **Title**
            **Date***/s/
                Ronald Heineman*
            
            November
                14, 2007Ronald
                Heineman
            Chief
                Executive Officer and Director*/s/
                Ron Heineman*
            
            November
                14, 2007Ron
                Heineman
            Chief
                Financial Officer*/s/
                Donald Quarterman, Jr.*
            
            November
                14, 2007Donald
                Quarterman, Jr.
            Director*/s/
                William Brown*
            
            November
                14, 2007William
                Brown
            Director*/s/
                William Walton*
            
            November
                14, 2007William
                Walton
            Director





Page
          -
          49





**EXHIBIT
      INDEX**





**Exhibit
                No.**
            **Description**3.1
            Articles
                of Incorporation of the Company (1)3.2
            Bylaws
                of the Company (2)10.1
            Form
                of Securities Subscription Agreement dated September 26, 2006.
                (3)10.2
            Form
                of Warrant Agreement dated September 26, 2006. (4)21.1
            List
                of Subsidiaries (5)31.1
            Certification
                of Chief Executive Officer pursuant to Rule 13a-14(a).31.2
            Certification
                of Chief Financial Officer pursuant to Rule 13a-14(a).32.1
            Certification
                pursuant to 18 U.S.C. Section 1350.(1) incorporated
                by reference to Exhibit 3.1 on Form SB-2/A, as filed with the SEC
                on July
                24, 2003(2)
                incorporated by reference to Exhibit 3.2 on Form SB-2/A, as filed
                with the
                SEC on July 24, 2003(3)
                incorporated by reference to Exhibit 10.1 on Form S-1, as filed with
                the
                SEC on February 7, 2007(4)
                incorporated by reference to Exhibit 10.15 on Form S-1, as filed
                with the
                SEC on February 7, 2007(5)
                incorporated by reference to Exhibit 21.1 on Form S-1, as filed with
                the
                SEC on February 7, 2007