10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT

For the transition period from _________ to _________

Commission File No. 000-29895

SMART-TEK SOLUTIONS INC.
(Exact name of registrant as specified in its charter)

Nevada	90-0749326
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1100 Quail Street, Newport Beach, CA 92660
(Address of principal executive offices) (zip code)

(858) 798-1644
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]     No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [   ]     No [   ]

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

Large accelerated filer [   ]	Accelerated filer                   [   ]
Non-accelerated filer   [   ]	Smaller reporting company [X]
(Do not check if a smaller reporting company)

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after distribution of securities under a plan confirmed by a court.
Yes [   ]     No [   ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity as of the latest practicable date:
As of October 31, 2012, there were 49,212,123 shares of common stock, par value $0.001, outstanding.

Smart-Tek Solutions Inc.

Period Ended September 30, 2012 and 2011

PART I -- FINANCIAL INFORMATION

CONTENTS	PAGES
FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets	2
Condensed Consolidated Statements of Operations and Comprehensive Income	3
Condensed Consolidated Statements of Cash Flows	4
Notes to the Condensed Consolidated Financial Statements	5-12

Smart-Tek Solutions Inc.
Condensed Consolidated Balance Sheets
As of September 30, 2012 and December 31, 2011
(Unaudited)

		September 30,			December 31,
		2012			2011
		(unaudited)
Assets
Current assets
Cash and cash equivalents	$	-		$	132,492
Accounts receivable, net		1,343,247			1,626,583
Due from related parties		1,685,285			2,739,220
Prepaid expense and deposits		7,055			52,152
Total current assets		3,035,587			4,550,447
Equipment, net of accumulated depreciation		38,271			55,007
Prepaid workers compensation		4,656,667			3,440,000
Goodwill		476,356			476,356
Total assets	$	8,206,881		$	8,521,810
Liabilities
Current liabilities
Bank overdraft	$	316,308		$	-
Accounts payable and accrued liabilities		400,742			441,435
Assigned receivables liability		719,285			826,943
Accrued payroll taxes		16,488,599			11,958,012
Accrued workers compensation		1,318,493			1,055,980
Payable to related parties		863,114			609,022
Note payable to related party		500,000			500,000
Total current liabilities		20,606,541			15,391,392
Other long-term liabilities		-			35,000
Total liabilities		20,606,541			15,426,392
Commitments and contingencies		-			-
Stockholders’ deficit
Preferred stock: $0.001 par value, 5,000,000 shares           authorized, zero shares of Class A preferred           issued and outstanding at September 30, 2012           and December 31, 2011		-			-
Common stock: $0.001 par value, 500,000,000 shares           authorized, 49,212,123 issued and outstanding           at September 30, 2012 and December 31, 2011		49,212			49,212
Additional paid in capital		7,271,945			7,271,945
Accumulated deficit		(19,720,817	)		(14,225,739	)
Total stockholders’ deficit		(12,399,660	)		(6,904,582	)
	$	8,206,881		$	8,521,810

See accompanying notes to the consolidated financial statements.
2

Smart-Tek Solutions Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
For the Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)

		Three Months			Three Months			Nine Months			Nine Months
		Ended			Ended			Ended			Ended
		September 30,			September 30,			September 30,			September 30,
		2012			2011			2012			2011
Revenue
(For the three months ending September 30, 2012 and September           30, 2011 gross billings of $23.259 and $28.834 million, less           worksite employee payroll cost of $17.154 and $24.206           million respectively)	$	6,104,919		$	4,628,141		$	18,719,513		$	15,251,133
(For the nine months ending September 30, 2012 and September           30, 2011 gross billings of $73.607 and $65.371 million, less           worksite employee payroll cost of $54.888 and $50.120           million, respectively)
Cost of revenue and service delivery		(6,312,692	)		(4,783,318	)		(17,619,577	)		(12,448,612	)
Gross profit (loss)		(207,773	)		(155,177	)		1,099,936			2,802,521
Selling, general and administrative expenses		(1,591,920	)		(1,997,439	)		(6,051,656	)		(5,167,062	)
Operating loss		(1,799,693	)		(2,152,616	)		(4,951,720	)		(2,364,541	)
Other Income
Other Income		315			-			342			-
Interest		-			(811,236	)		(16,314	)		(835,118	)
Tax penalties		(85,644	)		-			(527,386	)		-
Net loss from continuing operations		(1,885,022	)		(2,963,852	)		(5,495,078			(3,199,659	)
Comprehensive loss for the period	$	(1,885,022	)	$	(2,963,852	)	$	(5,495,078	)	$	(3,199,659	)
Loss per share, basic and diluted	$	(0.04	)	$	(0.06	)	$	(0.11	)	$	(0.09	)
Weighted average shares outstanding basic and diluted		49,212,123			49,212,123			49,212,123			34,531,977

See accompanying notes to the consolidated financial statements.
3

Smart-Tek Solutions Inc.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2012 and 2011
(Unaudited)

		Nine Months Ended September 30,
		2012			2011
Operating Activities
Net loss	$	(5,495,078	)	$	(3,199,659	)
Adjustments to reconcile net loss to cash used by operating activities
Depreciation and amortization		16,734			17,010
Changes in operating assets and liabilities
Accounts receivable		283,336			553,878
Due from related party		1,053,935			-
Prepaid expenses and deposits		45,097			(2,230,876	)
Prepaid workers compensation		(1,216,666	)		-
Accrued workers compensation		262,513			-
Accrued payroll taxes		4,530,587			-
Accounts payable and accrued liabilities		275,615			4,225,121
Net cash used by operating activities		(243,927	)		(634,526	)
Investing activities
Purchase of equipment		-			(46,125	)
Net cash used in investing activities		-			(46,125	)
Financing activities
Assignment of accounts receivable		(107,658	)		-
Payments to related party		254,093			(275,000	)
Payments of long-term payable		(35,000	)		-
Issuance of shares		-			443,979
Net cash provided by financing activities		111,435			168,979
Net decrease in cash from continuing operations		(132,492	)		(511,672	)
Cash and cash equivalents, beginning of period		132,492			781,720
Cash and cash equivalents end of period	$	0		$	270,048
Supplemental cash flow information
Interest paid	$	16,314		$	835,118
Income taxes payable	$	-		$	-

See accompanying notes to the consolidated financial statements.
4

Smart-Tek Solutions Inc.

Notes to the Consolidated Financial Statements

September 30, 2012

1.           INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

Basis of Presentation

These interim condensed consolidated financial statements are unaudited but reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly the financial position of Smart-Tek Solutions, Inc. and its subsidiaries (“STS” or the “Company”) as of September 30, 2012, its consolidated results of operations for the three and nine months ended September 30, 2012 and September 30, 2011, and the consolidated cash flows for the nine months ended September 30, 2012 and September 30, 2011. The Company owns 100% of the outstanding stock in its subsidiaries. Certain information and footnote disclosures normally included in the audited consolidated financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Because all the disclosures required by accounting principles generally accepted in the United States are not included, these interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2011. The results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2012, or any other period. The year-end condensed consolidated balance sheet data as of December 31, 2011 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

Going Concern – The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated insufficient revenues from operations and has incurred substantial and recurring losses to date. Additionally, the Company has minimal to no cash, negative working capital, and a stockholders’ deficit as of September 30, 2012. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company incurred a net operating loss of $1.8 million and $5.0 million respectively for the three and nine months ended September 30, 2012 and a net operating loss of approximately $8.1 million for the year ended December 31, 2011, and has incurred accumulated losses totaling approximately $19.7 million through September 30, 2012. Because of these conditions, the Company will require additional working capital to continue operations and develop its business. The Company intends to raise additional working capital either through private placements, public offerings and/or bank financing, and continues to strive to increase its revenues each year.

There are no assurances that the Company will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or obtain additional financing through private placements, public offerings and/or bank financing necessary to support the Company’s working capital requirements. To the extent that funds generated from any private placements, public offerings and/or bank financing are insufficient the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not continue its operations or execute its business plan.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Nature of operations

Smart-Tek Solutions Inc. was incorporated in the State of Nevada on March 22, 1995.

In July 2005, the Company changed its name from Royce Biomedical Inc. to Smart-Tek Solutions Inc. to better reflect its new business activities.

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Smart-Tek Solutions Inc.

Notes to the Consolidated Financial Statements

September 30, 2012

In March 2005, the Company entered into a Letter of Intent to acquire Smart-Tek Communications, Inc. (“SCI”) a British Columbia based security design and installation contractor. Pursuant to a Share Exchange Agreement executed in April 2005, SCI became a wholly-owned subsidiary of the Company.

On July 1, 2010, the Company completed the disposition of the Company’s wholly-owned subsidiary SCI to its president and founder Perry Law.

On February 11, 2009, Smart-Tek Automated Services Inc., a wholly-owned subsidiary of the Company, was incorporated in the State of Nevada. On June 17, 2009, Brian Bonar was contracted to use his expertise and contacts in the professional employer organization (“PEO”) area for the benefit of Smart-Tek Automated Services, Inc. Smart-Tek Automated Services Inc. provides integrated and cost- effective management solutions for human resource functions for public and private companies. Though Smart-Tek Automated Services Inc., provides PEO services, it is equipped to provide temporary staffing services as well. In a PEO co-employment contract, the Company becomes the employer of record for client company employees’ for tax and insurance purposes. The client company continues to direct the employees’ day-to-day activities, and charges a service fee for providing services. 100% of Smart-Tek Automated Services Inc.’s operations are in the United States.

On October 1, 2011 Smart-Tek Solutions, Inc. purchased the assets and brand name of Solvis Medical from American Marine LLC dba AMS Outsourcing a Montana limited liability corporation. Solvis Medical provides medical staffing services to hospitals, medical clinics, surgical centers, skilled nursing facilities, and nursing care to patients in their homes.

2.           Summary of significant accounting policies

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the following significant accounting policies:

Liquidity and Management Plans

At September 30, 2012, the Company had cash and cash equivalents of $0, a working capital deficit of approximately $17.57 million and an accumulated deficit of $19.7 million. The Company also has substantial unpaid tax liabilities as of September 30, 2012. Due to these circumstances, the Company’s management monitors and attempts to minimize, to the extent possible, all cash expenditures. The Company plans to seek additional funds, equity or debt, to support its operations. The Company’s management believes it will generate sufficient additional revenues to meet its working capital needs in future periods.

Principles of consolidation

The consolidated financial statements include the accounts of Smart-Tek Solutions Inc. and its wholly-owned subsidiary Smart-Tek Automated Services Inc. Significant inter-company transactions have been eliminated in consolidation.

Use of estimates

The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures. Specific areas, among others, requiring the application of management’s estimates and judgment includes assumptions pertaining to creditworthiness of customers, interest rates, useful lives of assets, future cost trends, tax strategies, and other external market and economic conditions. Actual results could differ from estimates and assumptions made.

6

Smart-Tek Solutions Inc.

Notes to the Consolidated Financial Statements

September 30, 2012

2.           Summary of significant accounting policies, continued Accounts Receivable

Accounts receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. The Company uses the allowance method to account for uncollectible accounts receivable balances. Under the allowance method, if needed, an estimate of uncollectible customer balances is made based upon specific account balances that are considered uncollectible. Factors used to establish an allowance include the credit quality and payment history of the customer. The allowance for doubtful accounts was $232,823 and zero as of September 30, 2012 and 2011, respectively.

The Company regularly discounts selected trade accounts receivable from clients to a commercial factoring company. Under the terms of the factoring agreement, the factor remits the invoiced amounts to the Company less a portion for reserves. When paid in full, the factor remits the reserve amount less a portion for processing fees and interest. Accounts are factored with recourse as to credit losses. The Company reflects a liability to the factoring company in its Balance Sheet for the amounts that remain uncollected until the factored invoices have been paid in full. At September 30, 2012 the company had $719,285 in assigned accounts receivable.

Workers compensation insurance

The Company maintains reserves in the form of prepaid cash deposits for known workers' compensation claims which are made up of estimated collateral required to pay claims and estimated expenses to settle the claims. The collateral amounts are determined by the insurance carrier and are not recoverable by the Company until all claims related to a policy period are settled.

The prepaid cash deposits will not be recoverable in the near term and accordingly, they are classified as a long term asset. The Company reserves prepaid cash deposits for case reserves at a rate of 150%. Case reserves, included in accrued workers compensation, are an estimate for the costs of claims, administrative costs as well as legal costs. These estimates are continually reviewed and adjustments to liabilities are reflected in current operating results as they become known.

Concentration of credit risk

Credit risk arises from the potential that a counterpart will fail to perform its obligations. The Company is exposed to credit risk related to its accounts receivable. The Company’s receivables are comprised of a number of debtors which minimizes the concentration of credit risk.

Revenue recognition

The Company recognizes PEO revenues when each periodic payroll is delivered. 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.

PEO revenues also include professional service fees, which are primarily computed as a percentage of client payroll or on a per check basis. Revenues related to the Solvis Medical business are recognized when the services are invoiced to the client.

In determining the pricing of the markup component of its billings, the Company takes into consideration its estimates of the costs directly associated with its worksite employees, including payroll taxes, benefits and workers’ compensation costs, plus an acceptable gross profit margin. As a result, the Company’s operating results are significantly impacted by the Company’s ability to accurately estimate, control and manage its direct costs relative to the revenues derived from the markup component of the Company’s gross billings.

7

Smart-Tek Solutions Inc.

Notes to the Consolidated Financial Statements

September 30, 2012

2.           Summary of significant accounting policies, continued Goodwill

The Company’s goodwill was derived from the acquisition of Solvis Medical assets. Goodwill is the excess of cost over the fair market value of net tangible assets acquired. Goodwill is not amortized but tested for impairment on an annual basis or if certain circumstances indicate a possible impairment may exist.

Share-based compensation

The Company measures the cost of employee services received in exchange for equity awards based on the grant date fair-value of the awards. Fair value is typically the market price of the shares on the date of issuance. Costs are recognized as compensation expense over the vesting period of the awards.

Loss per share

The Basic net loss per common share is computed by dividing the net loss available to common stock outstanding during the period. Net loss per share on a diluted basis is computed by dividing the net loss for the period by the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Due to the Company incurring a loss for the three and nine months ending September 30, 2012 and 2011, all potential dilutive securities were considered to be anti-dilutive.

Fair Value of Financial Instruments

Fair value is determined to be the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company follows a fair value hierarchy that prioritizes the inputs used in measuring fair value into three broad levels as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.

Level 3—Unobservable inputs based on the Company's assumptions.

The Company is required to use observable market data if such data is available without undue cost and effort.

At September 30, 2012 and 2011, the carrying amounts of financial instruments, including cash, accounts and other receivables, accounts payable and accrued liabilities, and accounts payable to related parties approximate fair value because of their short maturity.

8

Smart-Tek Solutions Inc.

Notes to the Consolidated Financial Statements

September 30, 2012

2.           Summary of significant accounting policies, continued Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

The Company has reviewed accounting pronouncements and interpretations thereof that have effective dates during the periods reported and in future periods. The Company believes that the following impending standards may have an impact on its future filings. The applicability of any standard will be evaluated by the Company and is still subject to review by the Company.

The Company has adopted FASB ASC 220 “Comprehensive Income”, which establishes standards for reporting and display of comprehensive income (loss), its components and accumulated balances. The Company had no components of comprehensive income (loss) for the periods presented.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles—Goodwill and Other (Topic 350) Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”). ASU 2012-02 is intended to reduce the cost and complexity of the annual indefinite-lived intangible assets impairment testing by providing entities an option to perform a “qualitative” assessment to determine whether further impairment testing is necessary. As such, there is the possibility that quantitative assessments would not need to be performed if it is more likely than not that no impairment exists. This new update is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The Company will adopt ASU 2012-02 as of December 31, 2012 for its annual impairment testing. The Company does not expect it to significantly affect its testing.

We do not believe any other recent accounting pronouncements issued by the FASB, the AICPA, or the SEC have a material impact on the Company's present or future consolidated financial statements.

3.           Equipment

						September 30,						December 31,
						2012						2011
				Accumulated		Net Book				Accumulated		Net Book
		Cost		Depreciation		Value		Cost		Depreciation		Value
Computer equipment & software	$	55,008	$	27,142	$	27,866	$	55,008	$	20,574	$	34,434
Office furniture & equipment		19,334		11,754		7,580		19,334		7,397		11,937
Automobile		23,242		20,417		2,825		23,242		14,606		8,636
	$	97,584	$	59,313	$	38,271	$	97,584	$	42,577	$	55,007

Depreciation and amortization of property and equipment was $5,578 and $4,702 for the three months ended September 30, 2012 and 2011 respectively and $16,734 and $17,010 for the nine months ended September 30, 2012 and 2011, respectively.

9

Smart-Tek Solutions Inc.

Notes to the Consolidated Financial Statements

September 30, 2012

4.           Equity

At September 30, 2012, the Company is authorized to issue shares as follows:

Common Stock

At September 30, 2012, there are 49,212,123 shares of common stock outstanding.

On June 16, 2011 the Board of Directors approved the Smart-Tek Solutions 2011 Stock Compensation Plan (“2011 Plan”) authorizing the sale or award of up to an additional 10,000,000 shares and/or options of the Company's Common Stock. The Stock Option Plan expires in August 20, 2013. On June 13, 2011, the company issued 21,897,999 shares to the Company’s CEO pursuant to a Strategic Marketing Agreement. The cost of these shares was measured at the market value of $.01 per share or $218,980 and expensed at the time of issuance. On June 16, 2011 3,000,000 shares were issued to a consultant as compensation for services rendered. The cost of these shares was measured at the market value of $.075 per share or $225,000 and expensed at the time of issuance. The value in excess of Par Value was recognized as Additional Paid in Capital. 7,000,000 shares and/or options of the Company’s common stock are available for issuance under the 2011 Plan as of September 30, 2012.

Preferred Shares

There are no preferred shares issued or outstanding.

5.           Loss per share

		Three Months			Three Months
		Ended			Ended
		September 30,			September 30,
		2012			2011
Net income (loss)	$	(1,885,022	)	$	(2,963,852	)
Weighted number of shares outstanding		49,212,123			49,212,123
Loss per share	$	(0.04	)	$	(0.06	)

		Nine Months			Nine Months
		Ended			Ended
		September 30, 2012			September 30, 2011
Net loss	$	(5,495,078	)	$	(3,199,659	)
Weighted number of shares outstanding		49,212,123			34,531,977
Loss per share	$	(0.11	)	$	(0.09	)

10

Smart-Tek Solutions Inc.

Notes to the Consolidated Financial Statements

September 30, 2012

6.           Acquisitions

On October 1, 2011, Smart-Tek Solutions, Inc. acquired the assets and the brand name of Solvis Medical from American Marine LLC dba AMS Outsourcing, a Montana limited liability corporation.

The purchase price was $535,000 consisting of a $35,000 cash payment at closing plus a $500,000 promissory note that matures on September 30, 2013 and bears a 6% simple interest rate. The purchase price will be revalued at the one and two year time periods based on performance as follows:

• Year 2012 – At December 31, 2012, the acquired net assets will be revalued at four (4) times pretax earnings. A one year promissory note at 6% interest will be issued for the net change between the original value and the 2012 revalue.

• Year 2013 – At December 31, 2013, the acquired net assets will be revalued at four (4) times pretax earnings. A one year promissory note at 6% interest will be issued for the net change between the revalue as of December 31, 2012 and the revalue at December 31, 2013

The Company recorded the purchase price as follows:

Prepaid expenses	$	52,303
Furniture & fixtures	$	6,341
Goodwill	$	476,356
Total	$	535,000

Management does not believe that the calculation of 4 times earnings will exceed the purchase price of $535,000.

7.           Note Payable to Related Party

At September 30, 2012, the Company has an outstanding note payable in the amount of $500,000 payable to an affiliated company relating to the acquisition of Solvis Medical assets. The loan is unsecured, bears a simple 6% interest and matures at September 30, 2013.

8.           Related Party Transactions

During the three month period ended September 30, 2012, Smart-Tek Automated Services Inc. (a wholly-owned subsidiary) paid $358,943 in management salaries to its Chief Executive Officer and Chief Operating Officer which included commissions of $70,000 and benefits of $100,481. Such costs have been reflected in the accompanying statement of operations.

During the nine months ended September 30, 2012, Smart-Tek Automated Services Inc. (a wholly-owned subsidiary) paid $1,017,032 in management salaries to its Chief Executive Officer and Chief Operating Officer which included commissions of $279,078 and benefits of $179,878. Such costs have been reflected in the accompanying statement of operations.

From time to time, Smart-Tek Automated Services Inc. purchases additional services from related parties to take advantage of economies of scale as opposed to maintaining full time staff and resources within its own operations. Likewise, Smart-Tek Automated services shares its own resources with these same related parties again to leverage economies of scale.

During the three and nine months ended September 30, 2012, Smart-Tek Automated Services Inc. (a wholly-owned subsidiary) paid consulting fees of $61,000 and $383,500, respectively, to a company controlled by an officer of the Company for Financial, HR and Legal Services. Such costs have been reflected in the accompanying statement of operations.

11

Smart-Tek Solutions Inc.

Notes to the Consolidated Financial Statements

September 30, 2012

8.           Related Party Transactions, continued

Smart-Tek additionally pays certain fees to another related party for the sharing of office space and utilities. These expenses are included in the accompanying statement of operations and were based upon actual usage or allocations agreed to by management personnel.

Amounts due from/to related companies

Mr. Brian Bonar, the Company’s Chief Executive Officer and Chairman, has a 40% direct and a 50% indirect ownership interest in American Marine LLC (“AMS”), American Transportation Administrative Services, Corp is owned by AMS. Mr. Bonar is the CEO and director of Dalrada Management, and is a minority shareholder. The amounts due from or to related companies are interest-free, unsecured and payable on demand.

Following is a summary of the balances both due to and from these related parties as of September 30, 2012 which in some cases is an accumulation over several years of activity:

		Due From		Due To
Allegiant Professional Business Services Inc.	$	425,996	$	604,248
American Marine LLC		884,214		156,600
Dalrada Management Consulting Corp.		341,791		62,484
American Transportation Administrative Services Corp.		33,284		-
Other		2,515		39,782
Total Due from Related Parties	$	1,687,800	$	863,114

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

OPERATIONS

Certain statements in this quarterly report on Form 10-Q that are not historical in fact constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). The PSLRA provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this annual report on Form 10-Q are made pursuant to the PSLRA. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors based on the Company’s estimates and expectations concerning future events that may cause the actual results of the Company to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These risks and uncertainties, as well as the Company’s critical accounting policies, are discussed in more detail under “Management’s Discussion and Analysis—Critical Accounting Policies” and in periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

You should read the following discussion of our financial condition and results of operations together with the audited financial statements and the notes to the audited financial statements included in this annual report. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.

Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Overview

Through our wholly owned subsidiary Smart-Tek Automated Services, Inc. (“Smart-Tek Automated”), we provide integrated and cost-effective management solutions in the area of human resources services to small and medium-size businesses, relieving our clients from many of the day-to-day tasks that negatively impact their core business operations, such as payroll processing, human resources support, workers' compensation insurance, safety programs, employee benefits, and other administrative and aftermarket services predominantly related to staffing - staff leasing, temporary staffing and co-employment.

Through our Solvis Medical business line we provides medical staffing services to hospitals, medical clinics, surgical centers, skilled nursing facilities, and nursing care to patients in their homes.

Plan of Operation

Short Term

Smart-Tek Automated Services Inc.: Continue to concentrate on signing up new brokers who have a large book of business that we can service. Grow the new nurse staffing business line.

Long Term

Smart-Tek Automated Services Inc.: Our current strategy is to expand our service business, including staff - and nurse staffing leasing, PEO services, and value added products and services to small and medium-size businesses.

PLAN OF OPERATION AND FUNDING

Our cash reserves are not sufficient to meet our obligations for the next twelve month period. As a result, we will need to seek additional funding in the near future. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of shares of our common stock or issuance of convertible debentures. We may also seek to obtain short-term loans from our directors or unrelated parties, although no such arrangements have been made. We do not have any arrangements in place for any future equity financing.

PEO Business Environment

We provide professional employer organization outsourcing (PEO) and human resources services to small and medium-size businesses. These services allow our customers to outsource many human resources tasks, including payroll processing, workers' compensation insurance, employee benefits administration, risk management and human resource administration. These services relieve existing and potential customers of the burdens associated with personnel management and control.

As a human resource department and strategic business partner for our clients, our service offerings allow our clients to:

• comply with ever evolving complex employment related regulatory and tax issues;
• increase productivity by improving employee satisfaction and retention;
• reduce payroll expenses with lower workers' compensation costs; and
• focus on core business activities instead of human resource matters.

Our main business, a co-employment or PEO contract arrangement, we become a co-employer of the client's existing workforce and assume some or all of the client's human resource management responsibilities.

Our business continues to experience some liquidity problems. Accordingly, year-to-year comparisons may be of limited usefulness as our business continues to seek growth.

Our current strategy is to expand our service business, including staff leasing, PEO services, and value added products and services to small and medium-size businesses.

PEO Market Overview

The burdens placed on small and medium-sized employers by the complex legal and regulatory issues related to human resources management caused our industry segment to grow beginning in the 1980's. While various service providers have been available to assist these businesses with specific tasks, companies like ours emerged as providers of a more comprehensive range of services relating to the employer/employee relationship. We assume broad aspects of the employer/employee relationship for our clients. Because we provide employee-related services to a large number of employees, we provide economies of scale that provide our clients employment-related functions more efficiently, provide a greater variety of employee benefits, and devote more attention to human resources management.

We believe that the demand for our services is driven by (1) the trend by small and medium-sized businesses toward outsourcing management tasks outside of core competencies; (2) the difficulty of providing competitive health care and related benefits to attract and retain employees; (3) the increasing costs of health and workers' compensation insurance coverage and workplace safety programs; and (4) complex regulation of labor and employment issues and the related costs of compliance.

Medical Staffing

Provides medical staffing services to hospitals, medical clinics, surgical centers, skilled nursing facilities, and nursing care to patients in their homes.

RESULTS OF OPERATIONS

Three and nine months ending September 30, 2012 and 2011

Revenue

For the three months ending September 30, 2012 and 2011, revenues were $6,104,919 and $4,628,141 respectively, for an increase of $1,476,778 (32%) over the same period in 2011. The increase was attributable to a net increase in our payroll and staffing business through Smart-Tek Automated Services. The Solvis Medical nurse staffing business line contributed $1,038,217 during the quarter.

For the nine months ending September 30, 2012 and 2011, revenues were $18,719,513 and $15,251,133 respectively, for an increase of $3,468,380 (23%) over the same period in 2011. The increase was attributable to a net increase in our payroll and staffing business through Smart-Tek Automated Services. The Solvis Medical nurse staffing business line contributed $3,113,042 in 2012.

Gross Profit

Gross profit (loss) for the three months ending September 30, 2012 and 2011 were $(207,773) and $(155,177) respectively, for an increase loss of $52,596 (34%) over the same period in 2011. The increase in loss was attributed to increased workers compensation expense.

Gross profit for the nine months ending September 30, 2012 and 2011 were $1,099,936 and $2,802,521 respectively, for a decrease of $1,702,585 (64%) over the same period in 2011. The decrease in gross profit was directly a result of increased workers compensation expense. Solvis Medical nurse staffing business line contributed $415,341 to the decrease in 2012.

Expenses

Our expenses for the nine months ended September 30, 2012 and 2011 are outlined in the table below:

		Nine months		Nine months
		ended		ended	Percentage
		September 30,		September 30,	Increase/
		2012		2011	(Decrease)
Cost of Revenue	$	17,619,577	$	12,448,612	41.5%
Selling, General and Administrative expenses		6,051,656		5,167,062	17.1%
Interest Expense and Tax Penalties		543,700		835,118	(34.9%	)
Total Expenses	$	24,214,933	$	18,450,792	31.2%

Cost of revenue

Cost of revenue of $6,312,692 for the three months ended September 30, 2012 increased by $1,529374 or 32% over the same period prior year amount of $4,783,318. The increase was attributable to an increase in worker’s compensation claims and premium expense. Solvis Medical contributed $855,469 to the cost of revenue during the quarter.

Cost of revenue of $17,619,577 for the nine months ended September 30, 2012 increased by $5,170,965 or 41.5% over the same period prior year amount of $12,448,612. The increase was attributable to an increase in worker’s compensation claims and premium expense. Solvis Medical contributed $2,697,701 to the cost of revenue in 2012.

Administrative

Selling, general and administrative expenses of $1,591,920 for the three months ended September 30, 2012 decreased by $405,519 or 20.3% over the same period prior year amount of $1,997,439. The decrease was mainly attributable to reduced legal fees in the second quarter.

Selling, general and administrative expenses of $6,051,656 for the nine months ended September 30, 2012 increased by $884,594 or 17.1% over the same period prior year amount of $5,167,062. The increase was mainly attributable to legal fees in 2012.

Interest and tax penalties

Interest expense and tax penalties for the three months ended September 30, 2012 was $85,644, a decrease of $725,592or 847.2% over the same period prior year amount of $811,236.

Interest expense and tax penalties for the nine months ended September 30, 2012 was $543,670, a decrease of $291,448 or 34.9% over the same period prior year amount of $835,118.

Liquidity and Capital Resources

Working Capital
							Percentage
		September 30,			December 31,		Increase/
		2012			2011		(Decrease)
Current Assets	$	3,035,587		$	4,550,447		(33.3%	)
Current Liabilities		20,606,541			15,391,392		33.9%
Working Capital (Deficiency)	$	(17,570,954	)	$	(10,840,945	)	62.1%

Cash Flows
	Nine Months			Nine Months		Percentage
	September			September 30,		Increase/
	30, 2012			2011		(Decrease)
Cash used in Operating Activities	(560,235	)	$	(634,526	)	(11.7%	)
Cash used in Investing Activities	-			(46,125	)	-
Cash from Financing Activities	111,435			168,979		(34.1%	)
Net Decrease in Cash	(448,800	)		(511,672	)	(12.3%	)

We had cash on hand of $(316,308) and working capital deficit of $17,570,954 as of September 30, 2012 compared to cash on hand of $132,492 and working capital deficit of $10,840,945 for the year ended December 31, 2011. We anticipate that we will incur approximately $730,000 a month for operating expenses, including professional, legal and accounting expenses associated with our reporting requirements under the Exchange Act during the next twelve months.

Cash Used In Operating Activities

Cash flow used in operations for the nine months ending September 30, 2012 amounted to $243,927 which mainly consisted of the following: 1) the net loss for the period of $5,495,078 and 2) increase in prepaid workers compensation of $1,216,666, 3) payroll taxes payable of $4,530,587 and 4) workers compensation expense of $262,513 offset by 1) depreciation expense of $16,734, 2) due from related party of $1,053,935; 3) accounts receivable of 283,336; 4) prepaid expenses of $45,097 and 5) accounts payable of $275,615.

Cash Used In Financing Activities

We used cash in financing activities that amounted to $111,435 consisting of 1) assigned accounts receivable of $107,658, 2) decrease in proceeds from related party of $254,093, and 3) payment of long-term payable of $35,000.

Future Cash Flows

STTN’s future capital requirements will depend on numerous factors, including the control of workers compensation claims, the establishment of reasonable workers compensation premiums, and growing the business with business that employee more favorable worker compensation class types. We cannot for certain claim that our current operations along with financing from outside will be sufficient to meet our ongoing operating needs. We will need to seek outside capital in order to continue as a going concern. In addition, we cannot predict when and if any additional capital contributions may be needed and we may need to seek one or more substantial new investors. New investors could cause substantial dilution to existing stockholders.

Going Concern

As shown in the accompanying financial statements, the Company has incurred a large loss from operations, and as of September 30, 2012, its total liabilities exceeded its total assets by $12,399,660. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management has hired a consultant to put controls in the cash management area and will institute more efficient management techniques in the finance department. All areas of operations will be reviewed to look for savings. However, the Company has a need for additional capital investment. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable.

Item 4T. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports, such as this report, that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our principal executive officer and our principal financial officer concluded that as of September 30, 2012, our disclosure controls and procedures were not effective due to a material weakness related to a lack of accounting personnel with sufficient experience in maintaining books and records and preparing financial statements in accordance with U.S. GAAP. We identified and disclosed this material weakness in our 2011annual report filed on Form 10-K with the SEC.

IDENTIFIED MATERIAL WEAKNESS

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.

Management identified the following material weakness in internal control during its assessment of internal controls over financial reporting as of September 30, 2012:

• Our organization structure is not properly set up to manage the flow of cash and the efficient payment of taxes.

• We lack the expertise to properly manage the finance and treasury function.

MANAGEMENT'S REMEDIATION INITIATIVES

We are undertaking the remedial measures to establish an effective disclosure controls and procedures and internal control over the cash management / treasury functions, including consolidating finance and treasury into one department reporting to one manager and improving the supervision and training of our accounting staff to understand and implement accounting requirements, policies and procedures for the Treasury department. We have hired a qualified consultant who can work with the Company’s Chief Financial Officer to identify cash issues and help evaluate and address such issues to prevent and fix any present problems in managing cash as well as establishing a procedure to prevent future failures to manage cash properly.

In light of the identified material weaknesses, management, performed (1) significant additional substantive review of those areas described above, and (2) performed additional analyses, including but not limited to a detailed balance sheet and statement of operations analytical review that compared changes from the prior period's financial statements and analyzed all significant differences. These procedures were completed so management could gain assurance that the financial statements and schedules included in this Form 10-Q fairly present in all material respects the Company's financial position, results of operations and cash flows for the periods presented.

Changes in Internal Controls

There has been no additional change except for what is discussed above in our internal control over financial reporting during this fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 1A. RISK FACTORS.

Not Applicable.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION.

None.

Exhibit Number	Description
3.1	Articles of Incorporation as amended(1)
3.2	Bylaws(1)
3.3	Certificate of Amendment to Certificate of Incorporation (2)
4.1	Incentive Stock Option Plan (1)
4.2	Non-Qualified Incentive Stock Option Plan (1)
4.3	Stock Bonus Plan (1)
4.4	2005 Incentive Stock Plan (2)
10.1	Letter of Intent between Smart-Tek Communications and Smart-Tek (3)
10.2	Share Exchange Agreement between Registrant and Smart-Tek Communication, Inc. dated April 15, 2005 (4)
10.3	Employment Agreement with Perry Law dated April 23, 2005 (5)
10.4	Employment Agreement with Stephen Platt dated April 23, 2005 (5)
10.5	Stock Option Grant to Perry Law dated April 23, 2005 (6)
10.6	Stock Option Grant to Stephen Platt dated April 23, 2005 (6)
10.7	Amendment to Employment Agreement between Smart-Tek Communications Inc. and Perry Law dated July 31, 2009
10.8	Form of Debt Settlement and Subscription Agreement dated September 30, 2009
10.9	Strategic Marketing Partner Agreement between Smart-Tek Automated Services Inc. and ACEO Inc. dated August 1, 2009
10.10	Marketing Partner Agreement dated June 17, 2009
10.11	Amended Marketing Partner Agreement dated December 9, 2010 with Smart-Tek Automated Services, Inc. and Brian Bonar
10.12	General Release of Claims Agreement Entered into between Richardson Patel LLC and Smart-Tek Solutions, Inc.
14.1	Amended and Restated Code of Ethics
21.1	Subsidiaries
31.1*	CEO and CFO Section 302 Certification under Sarbanes-Oxley Act of 2002
32.1*	CEO and CFO Section 906 Certifications under Sarbanes-Oxley Act of 2002

*Filed herewith

(1)	Incorporated by reference to our Registration Statement on Form 10-SB, filed September 28, 1995.
(2)	Incorporated by reference to our Annual Report on Form 10-KSB, filed October 26, 1995.
(3)	Incorporated by reference to our Current Report on Form 8-K, filed March 8, 2005.
(4)	Incorporated by reference to our Current Report on Form 8-K, filed April 19, 2005.
(5)	Incorporated by reference to our Current Report on Form8-K, filed April 27, 2005.
(6)	Incorporated by reference to our Current Report on Form 8-K, filed on August 22, 2005.
(7)	Incorporated by reference to our Current Report on Form 8-K, filed on June 27, 2008.
(8)	Incorporated by reference to our Form 10-Q for the period ended December 31, 2008, filed on February 23, 2009.
(9)	Incorporated by reference to our Current Report on Form 8-K, filed on June 24, 2009.
(10)	Incorporated by reference to our Annual Report on Form 10-K, filed October 15, 2008.
(11)	Incorporated by reference to our Annual Report on Form 10-K, filed October 13, 2009.
(12)	Incorporated by reference to our Current Report on Form 8-K, filed on March 17, 2010.
(13)	Incorporated by reference to our Current Report on Form 8-K, filed on December 10, 2010

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

By	/s/ Brian Bonar
	Brian Bonar
	President
	/s/ Brian Bonar
Date:	November 20, 201

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	/s/ Brian Bonar
	Brian Bonar
	Chief Executive Officer, Chief Financial Officer and Director (Principal Executive Officer, Principal Accounting Officer and Principal Financial Officer)
Date:	November 20, 201
	/s/ Owen Naccarato
	Owen Naccarato
	Director
Date:	November 20, 201

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Brian Bonar, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Smart-Tek Solutions Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 20, 201

/s/ Brian Bonar                       
Brian Bonar
Chief Executive Officer and Chief Financial
(Principal Executive Officer, Principal
Accounting Officer and Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Smart-Tek Solutions Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Chief Executive Officer and Chief Financial Officer hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 20, 201

/s/ Brian Bonar                                                    
Brian Bonar
Chief Executive Officer and Chief Financial Officer

XML

Note Payable to Related Party (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Note Payable To Related Party 1	$ 500,000
Note Payable To Related Party 2	6.00%

XML

Equipment

9 Months Ended

Sep. 30, 2012

Equipment [Text Block]

3.           Equipment

						September 30,						December 31,
						2012						2011
				Accumulated		Net Book				Accumulated		Net Book
		Cost		Depreciation		Value		Cost		Depreciation		Value
Computer equipment & software	$	55,008	$	27,142	$	27,866	$	55,008	$	20,574	$	34,434
Office furniture & equipment		19,334		11,754		7,580		19,334		7,397		11,937
Automobile		23,242		20,417		2,825		23,242		14,606		8,636
	$	97,584	$	59,313	$	38,271	$	97,584	$	42,577	$	55,007

Depreciation and amortization of property and equipment was $5,578 and $4,702 for the three months ended September 30, 2012 and 2011 respectively and $16,734 and $17,010 for the nine months ended September 30, 2012 and 2011, respectively.

XML

Schedule of Business Acquistion Assets Acquired (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Acquisitions Schedule Of Business Acquistion Assets Acquired 1	$ 52,303
Acquisitions Schedule Of Business Acquistion Assets Acquired 2	6,341
Acquisitions Schedule Of Business Acquistion Assets Acquired 3	476,356
Acquisitions Schedule Of Business Acquistion Assets Acquired 4	$ 535,000

XML

Schedule of Earnings Per Share Reconciliation (Details) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012
Loss Per Share Schedule Of Earnings Per Share Reconciliation 1	$ (1,885,022)
Loss Per Share Schedule Of Earnings Per Share Reconciliation 2	(2,963,852)
Loss Per Share Schedule Of Earnings Per Share Reconciliation 3	49,212,123
Loss Per Share Schedule Of Earnings Per Share Reconciliation 4	49,212,123
Loss Per Share Schedule Of Earnings Per Share Reconciliation 5	(0.04)
Loss Per Share Schedule Of Earnings Per Share Reconciliation 6	(0.06)
Loss Per Share Schedule Of Earnings Per Share Reconciliation 1		(5,495,078)
Loss Per Share Schedule Of Earnings Per Share Reconciliation 2		(3,199,659)
Loss Per Share Schedule Of Earnings Per Share Reconciliation 3		49,212,123
Loss Per Share Schedule Of Earnings Per Share Reconciliation 4		$ 34,531,977
Loss Per Share Schedule Of Earnings Per Share Reconciliation 5		(0.11)
Loss Per Share Schedule Of Earnings Per Share Reconciliation 6		(0.09)

XML

Schedule of Related Party Transactions (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Related Party Transactions Schedule Of Related Party Transactions 1	$ 425,996
Related Party Transactions Schedule Of Related Party Transactions 2	604,248
Related Party Transactions Schedule Of Related Party Transactions 3	884,214
Related Party Transactions Schedule Of Related Party Transactions 4	156,600
Related Party Transactions Schedule Of Related Party Transactions 5	341,791
Related Party Transactions Schedule Of Related Party Transactions 6	62,484
Related Party Transactions Schedule Of Related Party Transactions 7	33,284
Related Party Transactions Schedule Of Related Party Transactions 8	0
Related Party Transactions Schedule Of Related Party Transactions 9	2,515
Related Party Transactions Schedule Of Related Party Transactions 10	39,782
Related Party Transactions Schedule Of Related Party Transactions 11	1,687,800
Related Party Transactions Schedule Of Related Party Transactions 12	$ 863,114

XML

Summary of significant accounting policies

9 Months Ended

Sep. 30, 2012

Summary of significant accounting policies [Text Block]

2.           Summary of significant accounting policies

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the following significant accounting policies:

Liquidity and Management Plans

At September 30, 2012, the Company had cash and cash equivalents of $0, a working capital deficit of approximately $17.57 million and an accumulated deficit of $19.7 million. The Company also has substantial unpaid tax liabilities as of September 30, 2012. Due to these circumstances, the Company’s management monitors and attempts to minimize, to the extent possible, all cash expenditures. The Company plans to seek additional funds, equity or debt, to support its operations. The Company’s management believes it will generate sufficient additional revenues to meet its working capital needs in future periods.

Principles of consolidation

The consolidated financial statements include the accounts of Smart-Tek Solutions Inc. and its wholly-owned subsidiary Smart-Tek Automated Services Inc. Significant inter-company transactions have been eliminated in consolidation.

Use of estimates

The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures. Specific areas, among others, requiring the application of management’s estimates and judgment includes assumptions pertaining to creditworthiness of customers, interest rates, useful lives of assets, future cost trends, tax strategies, and other external market and economic conditions. Actual results could differ from estimates and assumptions made.

Accounts Receivable

Accounts receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. The Company uses the allowance method to account for uncollectible accounts receivable balances. Under the allowance method, if needed, an estimate of uncollectible customer balances is made based upon specific account balances that are considered uncollectible. Factors used to establish an allowance include the credit quality and payment history of the customer. The allowance for doubtful accounts was $232,823 and zero as of September 30, 2012 and 2011, respectively.

The Company regularly discounts selected trade accounts receivable from clients to a commercial factoring company. Under the terms of the factoring agreement, the factor remits the invoiced amounts to the Company less a portion for reserves. When paid in full, the factor remits the reserve amount less a portion for processing fees and interest. Accounts are factored with recourse as to credit losses. The Company reflects a liability to the factoring company in its Balance Sheet for the amounts that remain uncollected until the factored invoices have been paid in full. At September 30, 2012 the company had $719,285 in assigned accounts receivable.

Workers compensation insurance

The Company maintains reserves in the form of prepaid cash deposits for known workers' compensation claims which are made up of estimated collateral required to pay claims and estimated expenses to settle the claims. The collateral amounts are determined by the insurance carrier and are not recoverable by the Company until all claims related to a policy period are settled.

The prepaid cash deposits will not be recoverable in the near term and accordingly, they are classified as a long term asset. The Company reserves prepaid cash deposits for case reserves at a rate of 150%. Case reserves, included in accrued workers compensation, are an estimate for the costs of claims, administrative costs as well as legal costs. These estimates are continually reviewed and adjustments to liabilities are reflected in current operating results as they become known.

Concentration of credit risk

Credit risk arises from the potential that a counterpart will fail to perform its obligations. The Company is exposed to credit risk related to its accounts receivable. The Company’s receivables are comprised of a number of debtors which minimizes the concentration of credit risk.

Revenue recognition

The Company recognizes PEO revenues when each periodic payroll is delivered. 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.

PEO revenues also include professional service fees, which are primarily computed as a percentage of client payroll or on a per check basis. Revenues related to the Solvis Medical business are recognized when the services are invoiced to the client.

In determining the pricing of the markup component of its billings, the Company takes into consideration its estimates of the costs directly associated with its worksite employees, including payroll taxes, benefits and workers’ compensation costs, plus an acceptable gross profit margin. As a result, the Company’s operating results are significantly impacted by the Company’s ability to accurately estimate, control and manage its direct costs relative to the revenues derived from the markup component of the Company’s gross billings.

Goodwill

The Company’s goodwill was derived from the acquisition of Solvis Medical assets. Goodwill is the excess of cost over the fair market value of net tangible assets acquired. Goodwill is not amortized but tested for impairment on an annual basis or if certain circumstances indicate a possible impairment may exist.

Share-based compensation

The Company measures the cost of employee services received in exchange for equity awards based on the grant date fair-value of the awards. Fair value is typically the market price of the shares on the date of issuance. Costs are recognized as compensation expense over the vesting period of the awards.

Loss per share

The Basic net loss per common share is computed by dividing the net loss available to common stock outstanding during the period. Net loss per share on a diluted basis is computed by dividing the net loss for the period by the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Due to the Company incurring a loss for the three and nine months ending September 30, 2012 and 2011, all potential dilutive securities were considered to be anti-dilutive.

Fair Value of Financial Instruments

Fair value is determined to be the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company follows a fair value hierarchy that prioritizes the inputs used in measuring fair value into three broad levels as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.

Level 3—Unobservable inputs based on the Company's assumptions.

The Company is required to use observable market data if such data is available without undue cost and effort.

At September 30, 2012 and 2011, the carrying amounts of financial instruments, including cash, accounts and other receivables, accounts payable and accrued liabilities, and accounts payable to related parties approximate fair value because of their short maturity.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

The Company has reviewed accounting pronouncements and interpretations thereof that have effective dates during the periods reported and in future periods. The Company believes that the following impending standards may have an impact on its future filings. The applicability of any standard will be evaluated by the Company and is still subject to review by the Company.

The Company has adopted FASB ASC 220 “Comprehensive Income”, which establishes standards for reporting and display of comprehensive income (loss), its components and accumulated balances. The Company had no components of comprehensive income (loss) for the periods presented.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles—Goodwill and Other (Topic 350) Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”). ASU 2012-02 is intended to reduce the cost and complexity of the annual indefinite-lived intangible assets impairment testing by providing entities an option to perform a “qualitative” assessment to determine whether further impairment testing is necessary. As such, there is the possibility that quantitative assessments would not need to be performed if it is more likely than not that no impairment exists. This new update is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The Company will adopt ASU 2012-02 as of December 31, 2012 for its annual impairment testing. The Company does not expect it to significantly affect its testing.

We do not believe any other recent accounting pronouncements issued by the FASB, the AICPA, or the SEC have a material impact on the Company's present or future consolidated financial statements.

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Statement of Financial Position (USD $)	Sep. 30, 2012	Dec. 31, 2011
Current assets
Cash and cash equivalents	$ 0	$ 132,492
Accounts receivable, net	1,343,247	1,626,583
Due from related parties	1,685,285	2,739,220
Prepaid expense and deposits	7,055	52,152
Total current assets	3,035,587	4,550,447
Equipment, net of accumulated depreciation	38,271	55,007
Prepaid workers compensation	4,656,667	3,440,000
Goodwill	476,356	476,356
Total assets	8,206,881	8,521,810
Current liabilities
Bank overdraft	316,308	0
Accounts payable and accrued liabilities	400,742	441,435
Assigned receivables liability	719,285	826,943
Accrued payroll taxes	16,488,599	11,958,012
Accrued workers compensation	1,318,493	1,055,980
Payable to related parties	863,114	609,022
Note payable to related party	500,000	500,000
Total current liabilities	20,606,541	15,391,392
Other long-term liabilities	0	35,000
Total liabilities	20,606,541	15,426,392
Stockholders' deficit
Preferred stock: $0.001 par value, 5,000,000 shares authorized, zero shares of Class A preferred issued and outstanding at September 30, 2012 and December 31, 2011	0	0
Common stock: $0.001 par value, 500,000,000 shares authorized, 49,212,123 issued and outstanding at September 30, 2012 and December 31, 2011	49,212	49,212
Additional paid in capital	7,271,945	7,271,945
Accumulated deficit	(19,720,817)	(14,225,739)
Total stockholders' deficit	(12,399,660)	(6,904,582)
Total liabilities and stockholders' equity	$ 8,206,881	$ 8,521,810

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Statement of Cash Flows (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating Activities
Net loss	$ (5,495,078)	$ (3,199,659)
Adjustments to reconcile net loss to cash used by operating activities
Depreciation and amortization	16,734	17,010
Changes in operating assets and liabilities
Accounts receivable	283,336	553,878
Due from related party	1,053,935	0
Prepaid expenses and deposits	45,097	(2,230,876)
Prepaid workers compensation	(1,216,666)	0
Accrued workers compensation	262,513	0
Accrued payroll taxes	4,530,587	0
Accounts payable and accrued liabilities	275,615	4,225,121
Net cash used by operating activities	(243,927)	(634,526)
Investing activities
Purchase of equipment	0	(46,125)
Net cash used in investing activities	0	(46,125)
Financing activities
Payments to related party	254,093	(275,000)
Payments of long-term payable	(35,000)	0
Issuance of shares	0	443,979
Net cash provided by financing activities	111,435	168,979
Assignment of accounts receivable	(107,658)	0
Net decrease in cash from continuing operations	(132,492)	(511,672)
Cash and cash equivalents, beginning of period	132,492	781,720
Cash and cash equivalents end of period	0	270,048
Supplemental cash flow information
Interest paid	16,314	835,118
Income taxes payable	$ 0	$ 0

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Equipment (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Equipment 1	$ 5,578
Equipment 2	4,702
Equipment 3	16,734
Equipment 4	$ 17,010

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Acquisitions (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Acquisitions 1	$ 535,000
Acquisitions 2	35,000
Acquisitions 3	500,000
Acquisitions 4	6.00%
Acquisitions 5	6.00%
Acquisitions 6	6.00%
Acquisitions 7	4
Acquisitions 8	$ 535,000

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INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9 Months Ended

Sep. 30, 2012

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS [Text Block]

1.            INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

Basis of Presentation

These interim condensed consolidated financial statements are unaudited but reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly the financial position of Smart-Tek Solutions, Inc. and its subsidiaries (“STS” or the “Company”) as of September 30, 2012, its consolidated results of operations for the three and nine months ended September 30, 2012 and September 30, 2011, and the consolidated cash flows for the nine months ended September 30, 2012 and September 30, 2011. The Company owns 100% of the outstanding stock in its subsidiaries. Certain information and footnote disclosures normally included in the audited consolidated financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Because all the disclosures required by accounting principles generally accepted in the United States are not included, these interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2011. The results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2012, or any other period. The year-end condensed consolidated balance sheet data as of December 31, 2011 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

Going Concern – The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated insufficient revenues from operations and has incurred substantial and recurring losses to date. Additionally, the Company has minimal to no cash, negative working capital, and a stockholders’ deficit as of September 30, 2012. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company incurred a net operating loss of $1.8 million and $5.0 million respectively for the three and nine months ended September 30, 2012 and a net operating loss of approximately $8.1 million for the year ended December 31, 2011, and has incurred accumulated losses totaling approximately $19.7 million through September 30, 2012. Because of these conditions, the Company will require additional working capital to continue operations and develop its business. The Company intends to raise additional working capital either through private placements, public offerings and/or bank financing, and continues to strive to increase its revenues each year.

There are no assurances that the Company will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or obtain additional financing through private placements, public offerings and/or bank financing necessary to support the Company’s working capital requirements. To the extent that funds generated from any private placements, public offerings and/or bank financing are insufficient the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not continue its operations or execute its business plan.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Nature of operations

Smart-Tek Solutions Inc. was incorporated in the State of Nevada on March 22, 1995.

In July 2005, the Company changed its name from Royce Biomedical Inc. to Smart-Tek Solutions Inc. to better reflect its new business activities.

In March 2005, the Company entered into a Letter of Intent to acquire Smart-Tek Communications, Inc. (“SCI”) a British Columbia based security design and installation contractor. Pursuant to a Share Exchange Agreement executed in April 2005, SCI became a wholly-owned subsidiary of the Company.

On July 1, 2010, the Company completed the disposition of the Company’s wholly-owned subsidiary SCI to its president and founder Perry Law.

On February 11, 2009, Smart-Tek Automated Services Inc., a wholly-owned subsidiary of the Company, was incorporated in the State of Nevada. On June 17, 2009, Brian Bonar was contracted to use his expertise and contacts in the professional employer organization (“PEO”) area for the benefit of Smart-Tek Automated Services, Inc. Smart-Tek Automated Services Inc. provides integrated and cost- effective management solutions for human resource functions for public and private companies. Though Smart-Tek Automated Services Inc., provides PEO services, it is equipped to provide temporary staffing services as well. In a PEO co-employment contract, the Company becomes the employer of record for client company employees’ for tax and insurance purposes. The client company continues to direct the employees’ day-to-day activities, and charges a service fee for providing services. 100% of Smart-Tek Automated Services Inc.’s operations are in the United States.

On October 1, 2011 Smart-Tek Solutions, Inc. purchased the assets and brand name of Solvis Medical from American Marine LLC dba AMS Outsourcing a Montana limited liability corporation. Solvis Medical provides medical staffing services to hospitals, medical clinics, surgical centers, skilled nursing facilities, and nursing care to patients in their homes.

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Statement of Financial Position (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Preferred Stock, Par Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	500,000,000	500,000,000
Common Stock, Shares, Issued	49,212,123	49,212,123
Common Stock, Shares, Outstanding	49,212,123	49,212,123

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Loss per share (Tables)

3 Months Ended

9 Months Ended

Sep. 30, 2012

Sep. 30, 2012

Schedule of Earnings Per Share Reconciliation [Table Text Block]

		Three Months		Three Months
		Ended		Ended
		September 30,		September 30,
		2012		2011
Net income (loss)	$	(1,885,022)	$	(2,963,852)
Weighted number of shares outstanding		49,212,123		49,212,123
Loss per share	$	(0.04)	$	(0.06)

		Nine Months		Nine Months
		Ended		Ended
		September 30, 2012		September 30, 2011
Net loss	$	(5,495,078)	$	(3,199,659)
Weighted number of shares outstanding		49,212,123		34,531,977
Loss per share	$	(0.11)	$	(0.09)

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 31, 2012
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Trading Symbol	sttk
Entity Registrant Name	Smart-tek Solutions Inc.
Entity Central Index Key	0000947011
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		49,212,123
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well Known Seasoned Issuer	No
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Business Acquistion Assets Acquired [Table Text Block]

Prepaid expenses	$	52,303
Furniture & fixtures	$	6,341
Goodwill	$	476,356
Total	$	535,000

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Statement of Operations (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenue (For the three months ending September 30, 2012 and September 30, 2011 gross billings of $23.259 and $28.834 million, less worksite employee payroll cost of $17.154 and $24.206 million respectively) (For the nine months ending September 30, 2012 and September 30, 2011 gross billings of $73.607 and $65.371 million, less worksite employee payroll cost of $54.888 and $50.120 million, respectively)	$ 6,104,919	$ 4,628,141	$ 18,719,513	$ 15,251,133
Cost of revenue and service delivery	(6,312,692)	(4,783,318)	(17,619,577)	(12,448,612)
Gross profit (loss)	(207,773)	(155,177)	1,099,936	2,802,521
Selling, general and administrative expenses	(1,591,920)	(1,997,439)	(6,051,656)	(5,167,062)
Operating loss	(1,799,693)	(2,152,616)	(4,951,720)	(2,364,541)
Other Income
Other Income	315	0	342	0
Interest	0	(811,236)	(16,314)	(835,118)
Tax penalties	(85,644)	0	(527,386)	0
Net loss from continuing operations	(1,885,022)	(2,963,852)	(5,495,078)	(3,199,659)
Comprehensive loss for the period	$ (1,885,022)	$ (2,963,852)	$ (5,495,078)	$ (3,199,659)
Loss per share, basic and diluted	$ (0.04)	$ (0.06)	$ (0.11)	$ (0.09)
Weighted average shares outstanding basic and diluted	49,212,123	49,212,123	49,212,123	34,531,977

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Acquisitions

9 Months Ended

Sep. 30, 2012

Acquisitions [Text Block]

6.           Acquisitions

On October 1, 2011, Smart-Tek Solutions, Inc. acquired the assets and the brand name of Solvis Medical from American Marine LLC dba AMS Outsourcing, a Montana limited liability corporation.

The purchase price was $535,000 consisting of a $35,000 cash payment at closing plus a $500,000 promissory note that matures on September 30, 2013 and bears a 6% simple interest rate. The purchase price will be revalued at the one and two year time periods based on performance as follows:

• Year 2012 – At December 31, 2012, the acquired net assets will be revalued at four (4) times pretax earnings. A one year promissory note at 6% interest will be issued for the net change between the original value and the 2012 revalue.

• Year 2013 – At December 31, 2013, the acquired net assets will be revalued at four (4) times pretax earnings. A one year promissory note at 6% interest will be issued for the net change between the revalue as of December 31, 2012 and the revalue at December 31, 2013

The Company recorded the purchase price as follows:

Prepaid expenses	$	52,303
Furniture & fixtures	$	6,341
Goodwill	$	476,356
Total	$	535,000

Management does not believe that the calculation of 4 times earnings will exceed the purchase price of $535,000.

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Loss per share

9 Months Ended

Sep. 30, 2012

Loss per share [Text Block]

5.           Loss per share

		Three Months		Three Months
		Ended		Ended
		September 30,		September 30,
		2012		2011
Net income (loss)	$	(1,885,022)	$	(2,963,852)
Weighted number of shares outstanding		49,212,123		49,212,123
Loss per share	$	(0.04)	$	(0.06)

		Nine Months		Nine Months
		Ended		Ended
		September 30, 2012		September 30, 2011
Net loss	$	(5,495,078)	$	(3,199,659)
Weighted number of shares outstanding		49,212,123		34,531,977
Loss per share	$	(0.11)	$	(0.09)

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Equity (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Equity 1	49,212,123
Equity 2	10,000,000
Equity 3	21,897,999
Equity 4	$ 0.01
Equity 5	$ 218,980
Equity 6	3,000,000
Equity 7	$ 0.075
Equity 8	$ 225,000
Equity 9	7,000,000

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Related Party Transactions [Table Text Block]

		Due From		Due To
Allegiant Professional Business Services Inc.	$	425,996	$	604,248
American Marine LLC		884,214		156,600
Dalrada Management Consulting Corp.		341,791		62,484
American Transportation Administrative Services Corp.		33,284		-
Other		2,515		39,782
Total Due from Related Parties	$	1,687,800	$	863,114

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Liquidity and Management Plans [Policy Text Block]

Liquidity and Management Plans

At September 30, 2012, the Company had cash and cash equivalents of $0, a working capital deficit of approximately $17.57 million and an accumulated deficit of $19.7 million. The Company also has substantial unpaid tax liabilities as of September 30, 2012. Due to these circumstances, the Company’s management monitors and attempts to minimize, to the extent possible, all cash expenditures. The Company plans to seek additional funds, equity or debt, to support its operations. The Company’s management believes it will generate sufficient additional revenues to meet its working capital needs in future periods.

Principles of consolidation [Policy Text Block]

Principles of consolidation

The consolidated financial statements include the accounts of Smart-Tek Solutions Inc. and its wholly-owned subsidiary Smart-Tek Automated Services Inc. Significant inter-company transactions have been eliminated in consolidation.

Use of estimates [Policy Text Block]

Use of estimates

The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures. Specific areas, among others, requiring the application of management’s estimates and judgment includes assumptions pertaining to creditworthiness of customers, interest rates, useful lives of assets, future cost trends, tax strategies, and other external market and economic conditions. Actual results could differ from estimates and assumptions made.

Accounts Receivable [Policy Text Block]

Accounts Receivable

Accounts receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. The Company uses the allowance method to account for uncollectible accounts receivable balances. Under the allowance method, if needed, an estimate of uncollectible customer balances is made based upon specific account balances that are considered uncollectible. Factors used to establish an allowance include the credit quality and payment history of the customer. The allowance for doubtful accounts was $232,823 and zero as of September 30, 2012 and 2011, respectively.

The Company regularly discounts selected trade accounts receivable from clients to a commercial factoring company. Under the terms of the factoring agreement, the factor remits the invoiced amounts to the Company less a portion for reserves. When paid in full, the factor remits the reserve amount less a portion for processing fees and interest. Accounts are factored with recourse as to credit losses. The Company reflects a liability to the factoring company in its Balance Sheet for the amounts that remain uncollected until the factored invoices have been paid in full. At September 30, 2012 the company had $719,285 in assigned accounts receivable.

Workers compensation insurance [Policy Text Block]

Workers compensation insurance

The Company maintains reserves in the form of prepaid cash deposits for known workers' compensation claims which are made up of estimated collateral required to pay claims and estimated expenses to settle the claims. The collateral amounts are determined by the insurance carrier and are not recoverable by the Company until all claims related to a policy period are settled.

The prepaid cash deposits will not be recoverable in the near term and accordingly, they are classified as a long term asset. The Company reserves prepaid cash deposits for case reserves at a rate of 150%. Case reserves, included in accrued workers compensation, are an estimate for the costs of claims, administrative costs as well as legal costs. These estimates are continually reviewed and adjustments to liabilities are reflected in current operating results as they become known.

Concentration of credit risk [Policy Text Block]

Concentration of credit risk

Credit risk arises from the potential that a counterpart will fail to perform its obligations. The Company is exposed to credit risk related to its accounts receivable. The Company’s receivables are comprised of a number of debtors which minimizes the concentration of credit risk.

Revenue recognition [Policy Text Block]

Revenue recognition

The Company recognizes PEO revenues when each periodic payroll is delivered. 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.

PEO revenues also include professional service fees, which are primarily computed as a percentage of client payroll or on a per check basis. Revenues related to the Solvis Medical business are recognized when the services are invoiced to the client.

In determining the pricing of the markup component of its billings, the Company takes into consideration its estimates of the costs directly associated with its worksite employees, including payroll taxes, benefits and workers’ compensation costs, plus an acceptable gross profit margin. As a result, the Company’s operating results are significantly impacted by the Company’s ability to accurately estimate, control and manage its direct costs relative to the revenues derived from the markup component of the Company’s gross billings.

Goodwill [Policy Text Block]

Goodwill

The Company’s goodwill was derived from the acquisition of Solvis Medical assets. Goodwill is the excess of cost over the fair market value of net tangible assets acquired. Goodwill is not amortized but tested for impairment on an annual basis or if certain circumstances indicate a possible impairment may exist.

Share-based compensation [Policy Text Block]

Share-based compensation

The Company measures the cost of employee services received in exchange for equity awards based on the grant date fair-value of the awards. Fair value is typically the market price of the shares on the date of issuance. Costs are recognized as compensation expense over the vesting period of the awards.

Loss per share [Policy Text Block]

Loss per share

The Basic net loss per common share is computed by dividing the net loss available to common stock outstanding during the period. Net loss per share on a diluted basis is computed by dividing the net loss for the period by the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Due to the Company incurring a loss for the three and nine months ending September 30, 2012 and 2011, all potential dilutive securities were considered to be anti-dilutive.

Fair Value of Financial Instruments [Policy Text Block]

Fair Value of Financial Instruments

Fair value is determined to be the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company follows a fair value hierarchy that prioritizes the inputs used in measuring fair value into three broad levels as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.

Level 3—Unobservable inputs based on the Company's assumptions.

The Company is required to use observable market data if such data is available without undue cost and effort.

At September 30, 2012 and 2011, the carrying amounts of financial instruments, including cash, accounts and other receivables, accounts payable and accrued liabilities, and accounts payable to related parties approximate fair value because of their short maturity.

Recent Accounting Pronouncements [Policy Text Block]

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

The Company has reviewed accounting pronouncements and interpretations thereof that have effective dates during the periods reported and in future periods. The Company believes that the following impending standards may have an impact on its future filings. The applicability of any standard will be evaluated by the Company and is still subject to review by the Company.

The Company has adopted FASB ASC 220 “Comprehensive Income”, which establishes standards for reporting and display of comprehensive income (loss), its components and accumulated balances. The Company had no components of comprehensive income (loss) for the periods presented.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles—Goodwill and Other (Topic 350) Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”). ASU 2012-02 is intended to reduce the cost and complexity of the annual indefinite-lived intangible assets impairment testing by providing entities an option to perform a “qualitative” assessment to determine whether further impairment testing is necessary. As such, there is the possibility that quantitative assessments would not need to be performed if it is more likely than not that no impairment exists. This new update is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The Company will adopt ASU 2012-02 as of December 31, 2012 for its annual impairment testing. The Company does not expect it to significantly affect its testing.

We do not believe any other recent accounting pronouncements issued by the FASB, the AICPA, or the SEC have a material impact on the Company's present or future consolidated financial statements.

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Note Payable to Related Party

9 Months Ended

Sep. 30, 2012

Note Payable to Related Party [Text Block]

7.           Note Payable to Related Party

At September 30, 2012, the Company has an outstanding note payable in the amount of $500,000 payable to an affiliated company relating to the acquisition of Solvis Medical assets. The loan is unsecured, bears a simple 6% interest and matures at September 30, 2013.

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Related Party Transactions

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Text Block]

8.           Related Party Transactions

During the three month period ended September 30, 2012, Smart-Tek Automated Services Inc. (a wholly-owned subsidiary) paid $358,943 in management salaries to its Chief Executive Officer and Chief Operating Officer which included commissions of $70,000 and benefits of $100,481. Such costs have been reflected in the accompanying statement of operations.

During the nine months ended September 30, 2012, Smart-Tek Automated Services Inc. (a wholly-owned subsidiary) paid $1,017,032 in management salaries to its Chief Executive Officer and Chief Operating Officer which included commissions of $279,078 and benefits of $179,878. Such costs have been reflected in the accompanying statement of operations.

From time to time, Smart-Tek Automated Services Inc. purchases additional services from related parties to take advantage of economies of scale as opposed to maintaining full time staff and resources within its own operations. Likewise, Smart-Tek Automated services shares its own resources with these same related parties again to leverage economies of scale.

During the three and nine months ended September 30, 2012, Smart-Tek Automated Services Inc. (a wholly-owned subsidiary) paid consulting fees of $61,000 and $383,500, respectively, to a company controlled by an officer of the Company for Financial, HR and Legal Services. Such costs have been reflected in the accompanying statement of operations.

Smart-Tek additionally pays certain fees to another related party for the sharing of office space and utilities. These expenses are included in the accompanying statement of operations and were based upon actual usage or allocations agreed to by management personnel.

Amounts due from/to related companies

Mr. Brian Bonar, the Company’s Chief Executive Officer and Chairman, has a 40% direct and a 50% indirect ownership interest in American Marine LLC (“AMS”), American Transportation Administrative Services, Corp is owned by AMS. Mr. Bonar is the CEO and director of Dalrada Management, and is a minority shareholder. The amounts due from or to related companies are interest-free, unsecured and payable on demand.

Following is a summary of the balances both due to and from these related parties as of September 30, 2012 which in some cases is an accumulation over several years of activity:

		Due From		Due To
Allegiant Professional Business Services Inc.	$	425,996	$	604,248
American Marine LLC		884,214		156,600
Dalrada Management Consulting Corp.		341,791		62,484
American Transportation Administrative Services Corp.		33,284		-
Other		2,515		39,782
Total Due from Related Parties	$	1,687,800	$	863,114

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Equipment (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Property, Plant and Equipment [Table Text Block]

						September 30,						December 31,
						2012						2011
				Accumulated		Net Book				Accumulated		Net Book
		Cost		Depreciation		Value		Cost		Depreciation		Value
Computer equipment & software	$	55,008	$	27,142	$	27,866	$	55,008	$	20,574	$	34,434
Office furniture & equipment		19,334		11,754		7,580		19,334		7,397		11,937
Automobile		23,242		20,417		2,825		23,242		14,606		8,636
	$	97,584	$	59,313	$	38,271	$	97,584	$	42,577	$	55,007

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Summary of significant accounting policies (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Summary Of Significant Accounting Policies 1	$ 0
Summary Of Significant Accounting Policies 2	17,570,000
Summary Of Significant Accounting Policies 3	19,700,000
Summary Of Significant Accounting Policies 4	232,823
Summary Of Significant Accounting Policies 5	$ 719,285
Summary Of Significant Accounting Policies 6	150.00%

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Related Party Transactions (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Related Party Transactions 1	$ 358,943
Related Party Transactions 2	70,000
Related Party Transactions 3	100,481
Related Party Transactions 4	1,017,032
Related Party Transactions 5	279,078
Related Party Transactions 6	179,878
Related Party Transactions 7	61,000
Related Party Transactions 8	$ 383,500
Related Party Transactions 9	40.00%
Related Party Transactions 10	50.00%

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Statement of Operations (Parenthetical) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Gross Billings	$ 23,259	$ 28,834	$ 73,607	$ 65,371
Employee payroll costs	$ 17,154	$ 24,206	$ 54,888	$ 50,120

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Equity

9 Months Ended

Sep. 30, 2012

Equity [Text Block]

4.           Equity

At September 30, 2012, the Company is authorized to issue shares as follows:

Common Stock

At September 30, 2012, there are 49,212,123 shares of common stock outstanding.

On June 16, 2011 the Board of Directors approved the Smart-Tek Solutions 2011 Stock Compensation Plan (“2011 Plan”) authorizing the sale or award of up to an additional 10,000,000 shares and/or options of the Company's Common Stock. The Stock Option Plan expires in August 20, 2013. On June 13, 2011, the company issued 21,897,999 shares to the Company’s CEO pursuant to a Strategic Marketing Agreement. The cost of these shares was measured at the market value of $.01 per share or $218,980 and expensed at the time of issuance. On June 16, 2011 3,000,000 shares were issued to a consultant as compensation for services rendered. The cost of these shares was measured at the market value of $.075 per share or $225,000 and expensed at the time of issuance. The value in excess of Par Value was recognized as Additional Paid in Capital. 7,000,000 shares and/or options of the Company’s common stock are available for issuance under the 2011 Plan as of September 30, 2012.

Preferred Shares

There are no preferred shares issued or outstanding.

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Schedule of Property, Plant and Equipment (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Equipment Schedule Of Property, Plant And Equipment 1	$ 55,008
Equipment Schedule Of Property, Plant And Equipment 2	27,142
Equipment Schedule Of Property, Plant And Equipment 3	27,866
Equipment Schedule Of Property, Plant And Equipment 4	55,008
Equipment Schedule Of Property, Plant And Equipment 5	20,574
Equipment Schedule Of Property, Plant And Equipment 6	34,434
Equipment Schedule Of Property, Plant And Equipment 7	19,334
Equipment Schedule Of Property, Plant And Equipment 8	11,754
Equipment Schedule Of Property, Plant And Equipment 9	7,580
Equipment Schedule Of Property, Plant And Equipment 10	19,334
Equipment Schedule Of Property, Plant And Equipment 11	7,397
Equipment Schedule Of Property, Plant And Equipment 12	11,937
Equipment Schedule Of Property, Plant And Equipment 13	23,242
Equipment Schedule Of Property, Plant And Equipment 14	20,417
Equipment Schedule Of Property, Plant And Equipment 15	2,825
Equipment Schedule Of Property, Plant And Equipment 16	23,242
Equipment Schedule Of Property, Plant And Equipment 17	14,606
Equipment Schedule Of Property, Plant And Equipment 18	8,636
Equipment Schedule Of Property, Plant And Equipment 19	97,584
Equipment Schedule Of Property, Plant And Equipment 20	59,313
Equipment Schedule Of Property, Plant And Equipment 21	38,271
Equipment Schedule Of Property, Plant And Equipment 22	97,584
Equipment Schedule Of Property, Plant And Equipment 23	42,577
Equipment Schedule Of Property, Plant And Equipment 24	$ 55,007

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INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Narrative) (Details)	9 Months Ended
	Sep. 30, 2012
Interim Condensed Consolidated Financial Statements 1	100.00%
Interim Condensed Consolidated Financial Statements 2	100.00%