St. Joseph (STJO) 10-Q 2011 Q1 Quarterly report

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 March 31, 2011

OR

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

Commission File Number: 0-49936

ST. JOSEPH, INC.

(Exact name of registrant as specified in its charter)

Colorado	CH 47-0844532
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
4870 S. Lewis, Suite 250 Tulsa, OK	74105
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code(918) 742-1888

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     Noo

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x     Noo

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

Large accelerated filer   o                                Accelerated filer  o                                                              Non-accelerated filer  o                                Smaller reporting company  x

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

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o     Noo

1

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 11,242,302 shares as of May  4, 2011.

2

ST. JOSEPH, INC.

TABLE OF CONTENTS

Page

PART 1.	FINANCIAL INFORMATION	4
ITEM 1.	FINANCIAL STATEMENTS	4
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	10
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	15
ITEM 4.	CONTROLS AND PROCEDURES	15
ITEM 4T.	CONTROLS AND PROCEDURES	15

PART II	OTHER INFORMATION	16
ITEM 1.	LEGAL PROCEEDINGS	16
ITEM 1A.	RISK FACTORS	16
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	16
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	16
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	16
ITEM 5.	OTHER INFORMATION	16
ITEM 6.	EXHIBITS	16

3

ST. JOSEPH, INC.
FINANCIAL STATEMENTS
March 31, 2011

Index to Financial Statements

	PAGE #
CONDENSED CONSOLIDATED BALANCE SHEETS	4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)	5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited)	6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)	7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)	8

i

PART 1.     FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

ST. JOSEPH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
	Unaudited			Audited
	March 31,			December 31,
	2011			2010
ASSETS
CURRENT ASSETS:
Cash	$	9,219		$	8,406
Accounts receivable, net of allowance for doubtful accounts of $2,208		56,382			90,276
Total current assets		65,601			98,682
Property and equipment, net of accumulated depreciation of $152,191 and $151,904 respectively		1,935			2,222
Deposits		1,230			1,230
Total Assets	$	68,766		$	102,134
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	224,532		$	214,106
Accrued liabilities		15,377			14,190
Accrued preferred dividend		47,423			58,175
Notes payable:
Line of Credit		-			-
Bank Loan		168,974			174,234
Loan from Officer		16,000			16,000
Total current liabilities		472,306			476,705
STOCKHOLDERS' DEFICIT:
Stock subscription receivable		-			(25,000	)
Preferred stock, Series A, $.001 par value, $3.00 face value; 25,000,000 shares authorized, 5,708 shares issued and outstanding		6			6
Common stock, $.001 par value; 100,000,000 shares authorized, 2011-11,212,302 and 2010-11,172,302 issued and outstanding		11,212			11,172
Additional paid-in capital		2,326,026			2,306,066
Retained deficit		(2,740,784	)		(2,666,815	)
Total Stockholders' Deficit		(403,540	)		(374,571	)
Total Liabilities and Stockholders' Deficit	$	68,766		$	102,134

The accompanying footnotes are an integral part of these financial statements

4

ST. JOSEPH, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	Quarter Ended
	March 31,
	2011			2010
REVENUES:
Contract	$	113,134		$	99,668
COST OF REVENUES		87,750			80,050
Gross Margin		25,384			19,618
COSTS AND EXPENSES:
General and Administrative Expenses		92,756			104,137
Depreciation and Amortization		287			287
Total Costs and Expenses		93,043			104,424
Operating Income (Loss)		(67,659	)		(84,806	)
OTHER INCOME AND (EXPENSE):
Other Income (expense)		75			-
Interest Expense		(6,385	)		(2,818	)
Net Other Expense		(6,310	)		(2,818	)
Loss before provision for income taxes		(73,969	)		(87,624	)
PROVISION FOR INCOME TAXES:
Provision for Federal income tax		-			-
Provision for State income tax		-			-
Total provision for income taxes		-			-
Loss before benefit from tax loss carryforward		(73,969	)		(87,624	)
Benefit from tax loss carryforward		-			-
Net Loss	$	(73,969	)	$	(87,624	)
Loss applicable to common stockholders	$	(73,969	)	$	(87,624	)
Basic and diluted loss per common share	$	(0.01	)	$	(0.01	)
Weighted average common shares outstanding		11,190,969			10,878,969

The accompanying footnotes are an integral part of these financial statements

5

ST. JOSEPH, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

									Additional					Stock
	Preferred Stock-Series A				Common Stock				Paid-in		Retained			Subscription
	Shares		Par value		Shares		Par value		Capital		Deficit			Receivable			Total
Balance December 31, 2010		5,708	$	6		11,172,302	$	11,172	$	2,306,066	$	(2,666,815	)	$	(25,000	)		$	(374,571	)
Stock Subscription   Receivable		-		-		-		-		-		-			25,000				25,000
Sale of common stock @$0.50 per share		-		-		40,000		40		19,960		-			-				20,000
Net loss for the quarter ended March 31, 2011		-		-		-		-		-		(73,969	)		-				(73,969	)
Balance March 31, 2011		5,708	$	6		11,212,302	$	11,212	$	2,326,026	$	(2,740,784	)	$	-			$	(403,540	)

The accompanying footnotes are an integral part of these financial statements

6

ST. JOSEPH, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
	Quarter Ended
	March 31,
OPERATING ACTIVITIES	2011			2010
Net income (loss)	$	(73,969	)	$	(87,624	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		287			287
Gain on settlement of note payable due to related party and related accrued interest		-			-
Lawsuit settlement for common shares		-			-
Changes in operating assets and liabilities:
Increase/decrease in accounts receivable		33,894			4,701
Increase /decrease in accounts payable		10,426			3,469
Increase/decrease in accrued liabilities		1,187			553
Net cash provided by (used in) operating activities		(28,175	)		(78,614	)
INVESTING ACTIVITIES
Equipment acquisitions		-			-
Net cash used in investing activities		-			-
FINANCING ACTIVITIES
Repayment on bank loan		(5,260	)		-
Settlement of notes payable to related parties		-			-
Proceeds from related party		-			-
Proceeds from officer loan and notes payable		-			-
Payments on preferred stock dividends		(10,752	)		(8,064	)
Proceeds from sale of common stock		45,000			100,000
Net cash provided by (used in) financing activities		28,988			91,936
INCREASE (DECREASE) IN CASH		813			13,322
CASH AT BEGINNING OF PERIOD		8,406			149,981
CASH AT END OF PERIOD	$	9,219		$	163,303
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING INFORMATION:
Conversion of preferred stock into common stock	$	-		$	-
Conversion of notes payable into common stock	$	-		$	-
Conversion of bank line of credit into loan	$	-		$	-
SUPPLEMENTAL INFORMATION:
Cash paid for Taxes	$	-		$	-
Cash paid for interest	$	2,856		$	2,818

The accompanying footnotes are an integral part of these financial statements

7

ST. JOSEPH, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

(1)     Basis of Presentation

The condensed balance sheet at December 31, 2010 has been derived from financial statements included in the Form 10-K. The accompanying unaudited financial statements at March 31, 2011 presented herein have been prepared by St. Joseph, Inc. (the "Company") in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). These financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company's annual report on Form 10-K for the year ended December 31, 2010.

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim periods presented. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The results of operations presented for the three ended March 31, 2011 are not necessarily indicative of the results to be expected for the year.

There is no provision for dividends for the quarter to which this quarterly report relates.

Financial data presented herein are unaudited.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has incurred recurring losses and has negative working capital and a net capital deficiency at March 31, 2011 and December 31, 2010. These factors, among others, may indicate that the Company will be unable to continue as a going concern.

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

(2)     Bank Loan

The Company had a $200,000 line of credit of which $180,000 was unpaid and outstanding at December 31, 2009. The interest rate on the credit line was 6.79 percent.

In August 2010, the Company converted the line of credit to a bank loan which is collateralized by all of StafTek Services, Inc. assets, including all receivables and property and equipment. The bank loan agreement included the

8

following provisions 1) An agreement to provide insurance coverage for the collateralized assets in the amount of $180,000; 2) covenants to provide certain financial documents to the bank on a monthly and annual basis. The interest rate on the loan is 6.5 percent and the monthly principal and interest payment is $2,698. A final balloon payment is due on the maturity date of August 31, 2013. As of March 31, 2011, the bank loan agreement has not been executed and finalized by either party. Accordingly, the bank loan balance of $168,974 as of March 31, 2011 ($174,234 as of December 31, 2010) has been classified as a current liability on the accompanying consolidated financial statements. The Company continues to make the required payments according to the bank loan agreement and is current on the note as of March 31, 2011.

(3)     Shareholders' Equity

Preferred Stock

During the three months ended March 31, 2011, the Company did not issue any Series A Convertible Preferred Stock. The Board of Directors is authorized to issue shares of Series A Convertible Preferred Stock and to fix the number of shares in such series as well as the designation, relative rights, powers, preferences, restrictions, and limitations of all such series. In December 2003, the Company issued 386,208 shares of Series A Convertible Preferred Stock and a balance of 5,708 remains outstanding at March 31, 2011. Each share of Series A Convertible Preferred Stock is convertible to one share of common stock and has a yield of 6.75% dividend per annum, payable on a quarterly basis out of funds legally available therefore, for a period of 5 years or until December 31, 2008. There is an accrued amount of Series A Convertible Preferred Stock dividends in the amount of $47,423 as of March 31, 2011 ($58,175 at December 31, 2010). This amount was lowered by $10,752 in the three months ended March 31, 2011. The Company is currently making dividend payments pursuant to the terms of a settlement agreement, as disclosed in an 8-K released on May 9, 2009.

Common Stock

In a private placement during the quarter ended March 31, 2011, the Company sold 40,000 shares of common stock to one accredited investor at a price of $0.50 per share for gross proceeds of $20,000. No underwriters were used and no underwriting discounts or commissions were payable. The shares have been offered and sold by the Company in reliance upon the exemption from registration provided by Regulation D promulgated under the Securities Act of 1933, as amended. The shares were offered and sold to only to accredited investors; as such the term is defined by Rule 501 of Regulation D. All of the shares sold in the private placement are restricted securities pursuant to Rule 144.

Common Stock Options

The following schedule summarizes the changes in the Company's equity awards for the three months ended March 31, 2011:

					Weighted		Weighted
	Awards				Average		Average
	Outstanding		Exercise		Exercise		Remaining	Aggregate
	and		Price		Price		Contractual	Intrinsic
	Exercisable		Per Share		Per Share		Life	Value
Outstanding at January 1, 2011		460,000	$	1.05	$	1.05
Granted		-	$	1.05	$	1.05
Exercised		-	$	-	$	-
Cancelled/Expired		-	$	1.05	$	-
Outstanding at March 31, 2011		460,000	$	1.05	$	1.05	.45 years	$	-

9

(4)     Income Taxes

The Company records its income taxes in accordance with ASC 740 Income Taxes. The Company incurred net operating losses during all periods presented resulting in a deferred tax asset, which has been fully allowed for; therefore, the net benefit and expense resulted in no income taxes.

The Company's policy is to record estimated interest and penalties related to the underpayment of income taxes as income tax expense in the consolidated statements of operations. There has been no interest or penalties recognized in the condensed financial statements.

(5)     Concentration of Credit Risk

The Company conducts a significant portion of its operations with one customer. During the three months ended March 31, 2011 and 2010, approximately 82% and 29%, respectively of the Company's service revenues were conducted with this one customer.

(6)     Related Party Transactions

On October 13, 2010, COLEMC Investments, LTD., a Canadian company owned by Gerry McIlhargey, President and Director of the Company, advanced the Company $6,000 for working capital in exchange for a promissory note. The note matures on December 31, 2011 and does not bear any interest. At March 31, 2011 and December 31, 2010, the amount due to this affiliated entity was $16,000.

(7)     Subsequent Events

In a private placement on April 21, 2011, the Company sold 30,000 shares of common stock to an accredited investor at a price of $0.50 per share for gross proceeds of $15,000. No underwriters were used and no underwriting discounts or commissions were payable. The shares have been offered and sold by the Company in reliance upon the exemption from registration provided by Regulation D promulgated under the Securities Act of 1933, as amended. The shares were offered and sold to only to accredited investors; as such the term is defined by Rule 501 of Regulation D. All of the shares sold in the private placement are restricted securities pursuant to Rule 144.

On April 6, 2011, an Officer of the Company advanced $10,000 to the Company. The advance was converted to 20,000 shares of common stock (at a rate of $.50 per share) on May 1, 2011.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following presentation of Management's Discussion and Analysis has been prepared by internal management and should be read in conjunction with the financial statements and notes thereto included in Item 1 of this Quarterly Report on Form 10-Q. Except for the historical information contained herein, the discussion in this report contains certain forward-looking statements that involve risks and uncertainties, such as statements of our business plans, objectives, expectations and intentions as of the date of this filing. The cautionary statements about reliance on forward-looking statements made earlier in this document should be given serious consideration with respect to all forward-looking statements wherever they appear in this report, notwithstanding that the "safe harbor" protections

10

available to some publicly reporting companies under applicable federal securities law do not apply to us as an issuer of penny stocks. Our actual results could differ materially from those discussed here.

General

St. Joseph, Inc. ("us," "we," "our" or the "Company") currently conducts all of our business through our wholly-owned subsidiary, Staf*Tek Services, Inc. We also hope to acquire other operating companies as subsidiaries and are pursuing suitable candidates for future acquisition that could potentially create value for our existing shareholders. Acquisition targets may be in sectors other than our current sector of providing employment agency services. Although it is not our goal, we would also consider a reverse merger opportunity, if it were seen to be a growth opportunity for our existing shareholders.

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

Staf*Tek Services, Inc.

Staf*Tek Services, Inc. ("Staf*Tek") was organized as an Oklahoma corporation on January 2, 1997. On January 2, 2004, we closed our acquisition of Staf*Tek pursuant to an agreement by which we acquired 100% percent of the issued and outstanding shares of Staf*Tek's common stock in exchange for (i) 386,208 shares of our $.001 par value Series A convertible preferred stock; (ii) 219,500 shares of our $.001 par value common stock; and (ii) $200,000 in cash. Our Series A convertible preferred stock has a face value of $3.00 per share with a yield of 6.75% dividend per annum, payable on a quarterly basis out of funds legally available therefore, for a period of five years. The Company is currently making dividend payments pursuant to the terms of a settlement agreement, as disclosed in an 8-K released on May 9, 2009. There is an accrued amount of Series A Convertible Preferred Stock dividends in the amount of $47,423 as of March 31, 2011 ($58,175 at December 31, 2010). This amount was lowered by $10,752 in the three months ended March 31, 2011. The Company is currently making dividend payments pursuant to the terms of a settlement agreement, as disclosed in an 8-K released on May 9, 2009.

The Series A convertible preferred stock may be converted into our common stock at the rate of one share of convertible preferred stock for one share of common stock at any time by the shareholder. We may call the Series A convertible preferred stock for redemption no sooner than two years after the date of issuance, and only if our common stock is trading on a recognized United States stock exchange for a period of no less than thirty consecutive trading days at a market value of $5.00 or more per share. However, as of this date, our common stock has not traded at that amount.

Staf*Tek specializes in the recruiting and placement of professional technical personnel, as well as finance and accounting personnel on a temporary and permanent basis. Staf*Tek provides its customers with employee candidates with information technology ("IT") skills in areas ranging from multiple platform systems integration to end-user support, including specialists in programming, networking, systems integration, database design, help desk support, including senior and entry level finance and accounting candidates. Staf*Tek's candidate databases contain information on the candidates experience, skills, and performance and are continually being updated to include information on new referrals and to update information on existing candidates. Staf*Tek responds to a broad range of assignments from technical one-person assignments to major projects including, without limitation, Internet/Intranet development, desktop applications development, project management, enterprise systems development, SAP implementation and legacy mainframe projects. Staf*Tek also provides employee candidates computer training, online assessments, certification and the opportunity to be tested and certified in over 50 skill sets.

11

	ST. JOSEPH, INC Results of Operations for the Three Months Ended
	Quarter ended March 31, 2011						Quarter ended March 31, 2010							Change March 31, 2010
	$			%			$			%					$			%
REVENUES:
Contract	$	113,134			100.00	%	$	99,668			100.00		%		$	13,466			13.51	%
COST OF REVENUES		87,750			77,56	%		80,050			80.32		%			7,700			9.62	%
Gross Margin		25,384			22,44	%		19,618			19,68		%			5,766			29.39	%
COSTS AND EXPENSES:
General and Administrative Expenses		92,756			81,99	%		104,137			104,48		%			(11,381	)		-10,93	%
Depreciation and Amortization		287			0.25	%		287			0.29		%			-			0.00	%
Total Costs and Expenses		93,043			82,24	%		104,424			104.77		%			(11,381	)		-10.90	%
Operating Income (Loss)		(67,659	)		-59.80	%		(84,806	)		-85.09	)	%			17,147			-20.22	%
OTHER INCOME AND (EXPENSES):
Other Income (Expense)		75			0.07	%		-			0.00		%			75			0.00	%
Interest Expense		(6,385	)		-5.64	%		(2,818	)		-2.83		%			(3,567	)		126.58	%
Net Other Expense		(6,310	)		-5.58	%		(2,818	)		-2.83		%			(3,492	)		123.92	%
Loss before provision for income taxes		(73,969	)		-65.38	%		(87,624	)		-87.92		%			(13,655	)		-15.58	%
PROVISION FOR INCOME TAXES:
Provision for Federal income tax		-			0.00	%		-			0.00		%			-			0.00	%
Provision for State income tax		-			0.00	%		-			0.00		%			-			0.00	%
Total provision for income taxes		-			0.00	%		-			0.00		%			-			0.00	%
Loss before benefit from tax loss carryforward		(73,969	)		-65.38	%		(87,624	)		-87.92		%			(13,655	)		-15.58	%
Benefit from tax loss carryforward		0			0.00	%		-			0.00		%			0			0.00	%
Net Loss	$	(73,969	)		-65.38	%	$	(87,624	)		-87.92		%		$	(13,655	)		-15.58	%

12

Gross Profit

For the three-month period ended March 31, 2011, we had a gross profit of $25,384 compared to a gross profit of $19,618 for the three-month period ended March 31, 2010. This increase in our gross profitability of $5,766, or approximately 29% over the prior period, is due primarily to increase in margins of contractors.

Revenues for the three-month period ended March 31, 2011 increased to $113,134 from $99,668 for the three-month period ended March 31, 2010. This increase in net revenues of $13,466, or approximately 13%, over the prior period, is due primarily to increase in margins of contractors.

Cost of revenues for the three-month period ended March 31, 2011 increased to $87,750 from $80,050 for the three-month period ended March 31, 2010. This increase in cost of revenues of $7,700, or approximately 10%, over the prior period, is due primarily to increase in margins of contractors.

Total Costs and Expenses

Total costs and expenses for the three-month period ended March 31, 2011 decreased to $93,043 from $104,424 for the three-month period ended March 31, 2010. This decrease in our total operating expenses of $11,381 is approximately 11% under that of the prior period.

General and administrative expenses for the three-month period ended March 31, 2011 decreased to $92,756 from $104,137 for the three-month period ended March 31, 2010. This decrease in general and administrative expenses of $11,381 is approximately 11% under that of the prior period.

Other Income/Expenses

Interest expense for the three-month period ended March 31, 2011 increased to $6,385 from $2,818 for the three-month period ended March 31, 2010. This increase in interest expense of $3,567, or approximately 127% over the prior period, is due primarily to the increase in interest due on legal fees and our line of credit.

Profits

For the three-month period ended March 31, 2011, we incurred an operating loss of $67,659 compared to an operating loss for the three-month period ended March 31, 2010 of $84,806. This decrease in operating losses is due primarily to slightly higher margins on contractor placements.

Net loss for the three-month period ended March 31, 2011 decreased to $73,969 from $87,624 for the three-month period ended March 31, 2010. This decrease in losses of $13,655 or 15% over the prior period is due primarily to the decrease in interest due on our borrowings.

Liquidity and Capital Resources

As of March 31, 2011, we had a cash reserve of $9,219. During the three months ended March 31, 2011, we used cash in the amount of $28,175 in our operating activities. During this period $45,000 of new funds were raised.

During the three months ended March 31, 2011 and 2010, the Company's cash activities were as follows:

	2011			2010
Cash used for operating activities	$	(28,175	)	$	(78,614	)
Cash used in investing activities		-			-
Cash provided by financing activities	$	28,988		$	91,936

13

Internal Sources of Liquidity

For the three months ended March 31, 2011, the funds generated from our operations were insufficient to fund our daily operations. For the three months ended March 31, 2011, we had a gross margin of $25,384, and we were thus unable to meet our operating expenses of $93,043 for the same period. After accounting for our total other expenses (mostly interest expenses) of $6,385 for this period, we suffered a net loss of $73,969 for the period. We can provide no assurance that funds from our operations will continue to meet the requirements of our daily operations in the future. In the event that funds from our operations are insufficient to meet our expenses, we will need to seek other sources of financing to maintain liquidity.

External Sources of Liquidity

Because the funds generated from our operations have been not been sufficient to fully fund our operations, we have been on dependent on debt and equity financing to make up the shortfall. We actively pursue all potential financing options as we look to secure additional funds to both stabilize and grow our business operations. Our management will review any financing options at their disposal, and will judge each potential source of funds on its individual merits. There can be no assurance that we will be able to secure additional funds from debt or equity financing, as and when we need to, or if we can, that the terms of such financing will be favorable to us or our existing stockholders. As a result, our independent registered public accounting firm has issued a "going concern" modification to its report on our audited financial statements for the year ended December 31, 2010.

We have been utilizing a $200,000 line of credit in order to meet our operating expenses. This line of credit is secured by most of our assets and expired on July 7, 2010. At March 31, 2011, the Company has an unpaid and outstanding balance of $168,974. The Company paid $2,856 in interest payments during the three months ended March 31, 2011. The Company is currently negotiating with the bank to convert the line of credit into a note payable. As of March 31, 2011, the terms of the note are yet to be determined.

During the quarter ended March 31, 2011, we had a private offering in which we sold 40,000 shares of common stock to one accredited investor at a price of $0.50 per share for gross proceeds of $20,000.

Off Balance Sheet Arrangements

We do not have nor do we maintain any 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 our investors.

Risk Factors

Reference is made to "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2009 for information concerning risk factors. There have been no material changes in the risk factors since the filing of this Annual Report with the SEC on March 31, 2011.

14

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the "Exchange Act"), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls as of the end of the period covered by this report, March 31, 2011. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, Mr. Gerald McIlhargey, and our Treasurer, Mr. Kenneth L. Johnson (collectively, the "Certifying Officers"). Based upon that evaluation, our Certifying Officers concluded that as of the end of the period covered by this report, March 31, 2011, our disclosure controls and procedures are effective in timely alerting management to material information relating to us and required to be included in our periodic filings with the Securities and Exchange Commission (the "Commission").

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

Internal Control over Financial Reporting

Further, as required by Rule 13a-15(d) of the Exchange Act and under the supervision and with the participation of our Certifying Officers, we carried out an evaluation as to whether there has been any change in our internal control over financial reporting during our fiscal quarter ended March 31, 2011. Based upon this evaluation, our Certifying Officers have concluded that there has not been any change in our internal control over financial reporting during our fiscal quarter ended March 31, 2011, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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

ITEM 4T. CONTROLS AND PROCEDURES

Not Applicable.

15

PART II  -  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As previously disclosed in a quarterly report on Form 10-QSB, filed with the SEC on November 20, 2006, on July 28, 2006, Zachary Karo, a former employee of StafTek Services, Inc. filed a lawsuit against the Company and its subsidiary Staf*Tek Services, Inc. in the district court in Tulsa County, Oklahoma, Case No. CJ 2006 04713, in connection with stock options allegedly granted to Mr. Karo. Mr. Karo alleged that he was granted an option to purchase up to 25,000 shares of the Company's common stock at $0.10 per share but that management refused to issue Mr. Karo such shares upon his attempt to exercise of the alleged option. In June 2010, Mr. Karo agreed to dismiss his lawsuit in consideration of a payment by the Company to Mr. Karo of $20,000 in cash and the issuance to him of 15,000 shares of common stock.

ITEM 1A. RISK FACTORS

As a smaller reporting company, we are not required to provide the information required by this Item.

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

During the quarter ended March 31, 2011, we issued 40,000 shares of common stock to an accredited investor in a private offering. The shares were offered and sold by the Company in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. These shares were issued as restricted securities pursuant to Rule 144.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

No matters were submitted to a vote of our security holders during the three-month period ended March 31, 2011.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit No.	Description
31.1	Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith)
31.2	Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith)
32.1	Certification of Chief Executive Officer pursuant to pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
32.2	Certification of Chief Financial Officer pursuant to pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith)

16

SIGNATURES

Pursuant to the requirments 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.

Date: May 12, 2011

ST. JOSEPH, INC.

/s/ GERALD MCILHARGEY
Gerald McIlhargey, Chief Executive Officer

17