St. Joseph 10Q 2010 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2010

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

For the transition period from _____ to _____.

Commission file number: 0-49936

ST. JOSEPH, INC.

(Exact name of registrant as specified in its charter)

	Colorado		CH 47-0844532
	(State or other jurisdiction of incorporation or organization)		(IRS Employer 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 checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o 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).

x Yes o No

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

Large accelerated filer o	Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)	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).

o Yes x No

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.

o Yes o No

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: 11,027,302 shares as of August 16, 2010.

ST. JOSEPH, INC.

Form 10-Q

Table of Contents

PART I – FINANCIAL INFORMATION		3
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	9
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	16
ITEM 4.	CONTROLS AND PROCEDURES	16
ITEM 4T.	CONTROLS AND PROCEDURES	16

PART II - OTHER INFORMATION		17
ITEM 1.	LEGAL PROCEEDINGS	17
ITEM 1A.	RISK FACTORS	17
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	17
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	17
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	17
ITEM 5.	OTHER INFORMATION	17
ITEM 6.	EXHIBITS	17

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

ST. JOSEPH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS
	UNAUDITED			AUDITED
	June 30,			December 31,
	2010			2009
CURRENT ASSETS:
Cash	$	80,789		$	149,981
Accounts receivable, net of allowance for doubtful accounts of $2,208		79,476			70,574

Total current assets		160,265			220,555

Property and equipment, net of Accum Dep of $151,329 and $149,606 respectively		2,797			3,371
Deposits		1,230			1,230

Total Assets	$	164,292		$	225,156

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	201,384		$	190,207
Accrued liabilities		6,205			11,080
Accrued preferred dividend		66,239			82,367
Notes payable:
Line of Credit (Note 4)		180,000			180,000
Loan from Officer		10,000			10,000

Total Current Liabilities		463,828			473,654

STOCKHOLDERS' DEFICIT (Note 7):
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, 11,027,302 issued and outstanding		11,027			10,812
Additional paid-in capital		2,233,711			2,123,426
Retained deficit		(2,544,280	)		(2,382,742	)

Total Stockholders' Deficit		(299,536	)		(248,498	)

Total Liabilities and Stockholders' Deficit	$	164,292		$	225,156

See accompanying notes to condensed consolidated financial statements

ST. JOSEPH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2010			2009			2010			2009
REVENUES:
Contract		$	125,710		$	176,901		$	225,378		$	550,251

COST OF REVENUES			85,929			136,576			165,979			429,057

Gross Margin			39,781			40,325			59,399			121,194

COSTS AND EXPENSES:
General and Administrative Expenses			110,319			115,242			214,456			226,221
Depreciation and Amortization			287			287			574			574
Total Costs and Expenses			110,606			115,529			215,030			226,795

Operating Income (Loss)			(70,825	)		(75,204	)		(155,631	)		(105,601	)

OTHER INCOME AND (EXPENSE):
Interest Income	��		-			-			-			-
Other Income (expense)			-			25,526			-			25,926
Interest Expense			(3,089	)		(8,485	)		(5,907	)		(11,929	)

Net Other Expense			(3,089	)		17,041			(5,907	)		13,997

Loss before provision for income taxes			(73,914	)		(58,163	)		(161,538	)		(91,604	)

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			(73,914	)		(58,163	)		(161,538	)		(91,604	)

Benefit from tax loss carryforward			-			-			-			-

Net Loss			(73,914	)		(58,163	)		(161,538	)		(91,604	)

Preferred stock dividend requirements			-			-			-			-

Loss applicable to common stockholders		$	(73,914	)	$	(58,163	)	$	(161,538	)	$	(91,604	)

Basic and diluted loss per common share		$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)

Weighted average common shares outstanding			11,014,802			10,156,802			10,932,064			9,573,469

See accompanying notes to condensed consolidated financial statements

ST. JOSEPH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
UNAUDITED

									Additional
	Preferred Stock-Series A				Common Stock				Paid-in		Retained
	Shares		Par value		Shares		Par value		Capital		Deficit			Total

Balance December 31, 2009		5,708	$	6		10,812,302	$	10,812	$	2,123,426	$	(2,382,742	)	$	(248,498	)

Sale of Common Stock @$0.50 per share						200,000		200		99,800					100,000

Common Stock @ $0.70 per share to settle lawsuit		-		-		15,000		15		10,485					10,500

Net loss for the six months ended June 30, 2010		-		-		-		-		-		(161,538	)		(161,538	)

Balance June 30, 2010		5,708	$	6		11,027,302	$	11,027	$	2,233,711	$	(2,544,280	)	$	(299,536	)

See accompanying notes to condensed consolidated financial statements

ST. JOSEPH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
UNDAUDITED

	Six Months Ended
	June 30,
OPERATING ACTIVITIES	2010			2009

Net loss	$	(161,538	)	$	(91,604	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		574			574
Gain on settlement of note payable due to related party and related accrued interest		-			(25,526	)
Lawsuit settlement for common shares		10,500			-
Changes in operating assets and liabilities:
Increase/decrease in accounts receivable		(8,902	)		162,917
Increase (decrease) in accounts payable		11,177			(73,176	)
Decrease in accrued liabilities		(4,875	)		(6,763	)

Net cash provided by (used in) operating activities		(153,064	)		(33,578	)

INVESTING ACTIVITIES
Equipment acquisitions		-			-

Net cash used in investing activities		-			-

FINANCING ACTIVITIES
Settlement of notes to related parties		-			(50,000	)
Payments on preferred stock dividends		(16,128	)		(16,128	)
Proceeds from sale of common stock		100,000			145,000

Net cash provided by (used in) financing activities		83,872			78,872

INCREASE (DECREASE) IN CASH		(69,192	)		45,294

CASH AT BEGINNING OF PERIOD		149,981			221,992

CASH AT END OF PERIOD	$	80,789		$	267,286


SUPPLEMENTAL INFORMATION:
Cash paid during the period for:
Interest	$	5,907		$	11,929
Income taxes	$	-		$	-

See accompanying notes to condensed consolidated financial statements

ST. JOSEPH, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(1)	Basis of Presentation

The condensed balance sheet at December 31, 2009 has been derived from financial statements included in the Form 10-K. The accompanying unaudited financial statements at June 30, 2010 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, 2009.

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 and six months ended June 30, 2010 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 June 30, 2010 and December 31, 2009. 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)	Line of Credit

The Company had a $200,000 line of credit which expired July 7, 2010 and was converted to a note. At June 30, 2010, the Company has an unpaid and outstanding balance of $180,000. The Company paid $3,089 in interest payments during the three months ended June 30, 2010. As of August 16, 2010 terms of the note are yet to be determined.

(3)	Shareholders’ Equity

Preferred Stock

During the six months ended June 30, 2010, 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 June 30, 2010. 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 therefor, 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 $66,239 as of June 30, 2010. This amount was lowered by $16,128 in the six months ended June 30, 2010. 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 completed in the quarter ended March 31, 2010, the Company sold 200,000 shares of common stock to four accredited investors at a price of $0.50 per share for gross proceeds of $100,000. 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 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 June 2010, the Company settled a lawsuit against a former employee as described in Note 6. Mr. Karo, the former employee, 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. The shares were valued based on the quoted price of $0.70 per share or $10,500.

Common Stock Options

The following schedule summarizes the changes in the Company’s equity awards for the six months ended June 30, 2010:

					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, 2010		385,000	$	1.05	$	1.05		2.2 years
Granted		-	$	-	$	-
Exercised		-	$	-	$	-
Cancelled/Expired		-	$	1.05	$	-
Outstanding at June 30, 2010		385,000	$	1.05	$	1.05	2.2 years		$	-

(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 six months ended June 30, 2009 and 2010, approximately 60% and 39% respectively of the Company's service revenues were conducted with this one customer.

(6)	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 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 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 therefor, 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. During the six months ending June 30, 2010, the Company lowered the accrued balance of Series A Convertible Preferred Stock dividends by $16,128, and this balance was $66,239 as of June 30, 2010.

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.

	Results of Operations for the Six Months Ended
	June, 2010							June 30, 2009							Change			Change
				% of							% of
	$			Revenue				$			Revenue				$			%
Net Revenues	$	225,378			100.00		%	$	550,251			100.00		%	$	(324,873	)		(59.04	)	%
Cost of Revenues		165,979			73.64		%		429,057			77.97		%		(263,078	)		(61.32	)	%
Gross Margin (Loss)		59,399			26.36		%		121,194			22.03		%		(61,795	)		(50.99	)	%
Operating Expenses
Selling, General and
Administrative Expenses		214,456			95.15		%		226,221			41.11		%		(11,765	)		(5.20	)	%
Depreciation and Amortization		574			0.25		%		574			0.10		%		0			0.00		%
Total Operating Expenses	$	215,030			95.41		%	$	226,795			41.22		%	$	(11,765	)		(5.19	)	%
Income (Loss) from Operations	$	(155,631	)		(69.05	)	%		(105,601	)		(19.19	)	%		(50,030	)		47.38		%
Other Income (Expense)
Other Income (Expense)		-			-		%		25,926			4.71		%		(25,926	)		(100.00	)	%
Interest Expense		(5,907	)		(2.62	)	%		(11,929	)		(2.17	)	%		6,022			(50.48	)	%
Net Other Expense	$	(5,907	)		(2.62	)	%	$	13,997			2.54		%	$	(19,904	)		(142.20	)	%
Loss before provision for income tax		(161,538	)		(71.67	)	%		(91,604	)		(16.65	)	%		(69,934	)		76.34		%
Provision for Income Taxes		0			0.00		%		-			0.00		%		0			0.00		%
Net Income (Loss)	$	(161,538	)		(71.67	)	%	$	(91,604	)		(16.65	)	%	$	(69,934	)		76.34		%

Gross Profit

For the six-month period ended June 30, 2010, we had a gross margin of $59,399 compared to a gross margin of $121,194 for the six-month period ended June 30, 2009. This decrease in our gross profitability of $61,795, or approximately 50.99% over the prior period, is due primarily to lower number of contractors and renegotiated bill rates as explained below.

Revenues for the six-month period ended June 30, 2010 decreased to $225,378 from $550,251 for the six-month period ended June 30, 2009. This decrease in net revenues of $324,873, or approximately 59.04%, over the prior period, is due primarily to lower number of contractors and renegotiated bill rates.

Cost of revenues for the six-month period ended June 30, 2010 decreased to $165,979 from $429,057 for the six-month period ended June 30, 2009. This decrease in cost of revenues of $263,078, or approximately 61.32%, over the prior period, is due primarily to lower number of contractors and renegotiated bill rates.

Total Costs and Expenses

Total costs and expenses for the six-month period ended June 30, 2010 decreased to $215,030 from $226,795 for the six-month period ended June 30, 2009. This decrease in our total operating expenses of $11,765 is approximately 5.19% under that of the prior period.

General and administrative expenses for the six-month period ended June 30, 2010 decreased to $214,456 from $226,221 for the six-month period ended June 30, 2009. This decrease in general and administrative expenses of $11,765 is approximately 5.20% under that of the prior period.

Other Income/Expenses

Interest expense for the six-month period ended June 30, 2010 decreased to $5,907 from $11,929 for the six-month period ended June 30, 2009. This decrease in interest expense of $6,022, or approximately 50.48% over the prior period, is due primarily to the decrease in interest due on legal fees and our line of credit.

For the six-month period ended June 30, 2010, we had other income of $0 compared to other income of $25,926 for the six-month period ended June 30, 2009. This decrease of other income of $25,926, or approximately 100% over the prior period, is due primarily to the gain on the settlement of liabilities due to related party.

For the six-month period ended June 30, 2010, we had total other Income/(Expenses) in the amount of $(5,907) compared to $13,997 in total other Income/(Expenses) for the six-month period ended June 30, 2009. This decrease of $19,904 is approximately 142.20% over the prior period.

Profits

Operating loss for the six-month period ended June 30, 2010 increased to $155,631 from $105,601 for the six-month period ended June 30, 2009. This increase in operating losses is due primarily to lower margins and decreased number of revenue generating contractor placements.

Net loss for the six-month period ended June 30, 2010 increased to $161,538 from $91,604 for the six-month period ended June 30, 2009. This increase in losses of $69,934 or 76.34% over the prior period is due primarily to decreased number of revenue generating contractor placements as discussed above.

	Results of Operations for the Three Months Ended
	June 30, 2010							June 30, 2009							Change			Change
				% of							% of
	$			Revenue				$			Revenue				$			%
Net Revenues	$	125,710			100.00		%	$	176,901			100.00		%	$	(51,191	)		(28.94	)	%
Cost of Revenues		85,929			68.35		%		136,576			77.20		%		(50,647	)		(37.08	)	%
Gross Margin (Loss)		39,781			31.65		%		40,325			22.80		%		(544	)		(1.35	)	%
Operating Expenses
Selling, General and
Administrative Expenses		110,319			87.76		%		115,242			65.14		%		(4,923	)		(4.27	)	%
Depreciation and Amortization		287			0.23		%		287			0.16		%		0			0.00		%
Total Operating Expenses	$	110,606			87.99		%	$	115,529			65.31		%	$	(4,923	)		(4.26	)	%
Income (Loss) from Operations	$	(70,825	)		(56.34	)	%		(75,204	)		(42.51	)	%		4,379			(5.82	)	%
Other Income (Expense)
Other Income (Expense)		-			-		%		25,526			14.43		%		(25,526	)		(100.00	)	%
Interest Expense		(3,089	)		(2.46	)	%		(8,485	)		(4.80	)	%		5,396			(63.59	)	%
Net Other Expense	$	(3,089	)		(2.46	)	%	$	17,041			9.63		%	$	(20,130	)		(118.13	)	%
Loss before provision for income tax		(73,914	)		(58.80	)	%		(58,163	)		(32.88	)	%		(15,751	)		27.08		%
Provision for Income Taxes		0			0.00		%		-			0.00		%		0			0.00		%
Net Income (Loss)	$	(73,914	)		(58.80	)	%	$	(58,163	)		(32.88	)	%	$	(15,751	)		27.08		%

Gross Profit

For the three-month period ended June 30, 2010, we had a gross profit of $39,781 compared to a gross profit of $40,325 for the three-month period ended June 30, 2009. This decrease in our gross profitability of $544, or approximately 1.35% over the prior period, is due primarily to lower number of contractors and renegotiated bill rates as explained below.

Revenues for the three-month period ended June 30, 2010 decreased to $125,710 from $176,901 for the three-month period ended June 30, 2009. This decrease in net revenues of $51,191, or approximately 28.94%, over the prior period, is due primarily to lower number of contractors and renegotiated bill rates.

Cost of revenues for the three-month period ended June 30, 2010 decreased to $85,929 from $136,576 for the three-month period ended June 30, 2009. This decrease in cost of revenues of $50,647, or approximately 37.08%, over the prior period, is due primarily to lower number of contractors and renegotiated bill rates.

Total Costs and Expenses

Total costs and expenses for the three-month period ended June 30, 2010 decreased to $110,606 from $115,529 for the three-month period ended June 30, 2009. This decrease in our total operating expenses of $4,923 is approximately 4.26% under that of the prior period.

General and administrative expenses for the three-month period ended June 30, 2010 decreased to $110,319 from $115,242 for the three-month period ended June 30, 2009. This decrease in general and administrative expenses of $4,923 is approximately 4.27% under that of the prior period.

Other Income/Expenses

Interest expense for the three-month period ended June 30, 2010 decreased to $3,089 from $8,485 for the three-month period ended June 30, 2009. This decrease in interest expense of $5,396, or approximately 63.59% under the prior period, is due primarily to the decrease in interest due on legal fees and our line of credit.

For the three-month period ended June 30, 2010, we had other income of $0 compared to other income of $25,526 for the three-month period ended June 30, 2009. This decrease of other income of $25,526, or approximately 100% over the prior period, is due primarily to the gain on the settlement of liabilities due to related party in 2009.

For the three-month period ended June 30, 2010, we had total other expenses in the amount of $3,089 compared to $17,041 in total other income for the three-month period ended June 30, 2009. This decrease of $20,130 is approximately 118.13% over the prior period.

Profits

For the three-month period ended June 30, 2010, we incurred an operating loss of $70,825 compared to an operating loss for the three-month period ended June 30, 2009 of $75,204. This decrease in operating losses is due primarily to lower margins and decreased number of revenue generating contractor placements.

Net loss for the three-month period ended June 30, 2010 increased to $73,914 from $58,163 for the three-month period ended June 30, 2009. This increase in losses of $15,751 or 27.08% over the prior period is due primarily to the gain on the settlement of liabilities due to related party in 2009 discussed above.

Liquidity and Capital Resources

As of June 30, 2010, we had a cash reserve of $80,789. During the six months ended June 30, 2010, we used cash in the amount of $153,064 in our operating activities. During this period $100,000 of new funds were raised.

During the six months ended June 30, 2010 and 2009, the Company’s cash activities were as follows:

	2010			2009
Cash used for operating activities	$	(153,064	)	$	(33,578	)
Cash used in investing activities		-			-
Cash provided by financing activities		83,872			78,872

Internal Sources of Liquidity

For the six months ended June 30, 2010, the funds generated from our operations were insufficient to fund our daily operations. For the six months ended June 30, 2010, we had a gross margin of $59,399, and we were thus unable to meet our operating expenses of $215,030 for the same period. After accounting for our total other expenses (mostly interest expenses) of $5,907 for this period, we suffered a net loss of $161,538 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, 2009.

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 June 30, 2010, the Company has an unpaid and outstanding balance of $180,000. The Company paid $3,089 in interest payments during the three months ended June 30, 2010. As of August 16, 2010 terms of the note are yet to be determined.

During the quarter ended March 31, 2010, we completed a private offering in which we sold 200,000 shares of common stock to 4 accredited investors at a price of $0.50 per share for gross proceeds of $100,000.

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, 2010.

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, June 30, 2010. 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, June 30, 2010, 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 June 30, 2010. 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 June 30, 2010, 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.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

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 June 30, 2010, we issued 15,000 shares of common stock to a single investor in settlement of a lawsuit. The shares were valued at $0.70 per share. 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 June 30, 2010.

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)

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: August 16, 2010

	ST. JOSEPH, INC.



	/s/ GERALD MCILHARGEY
	Gerald McIlhargey, Chief Executive Officer

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St. Joseph (STJO) Inactive 10-Q2010 Q2 Quarterly report

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