Monarch Staffing Inc (MSTF)

[flemsnopes]

Maronti1, the DW/KM methodology does not require ownership of stock, and ingeniously removes any real risk for the "debt holders" (wink,wink) while providing fat "consultant/management" fees to the "related parties"(wink,wink). For some insight into the presumably legal M.O., take a look at the following excerpt from the last 10Q filed before going "dark". Just imagine what they can do now that they don't have to tell you anything.

NOTE 6 – RELATED PARTY TRANSACTIONS

As part of the Spin-off Agreement as described in Note 1 and Note 7 of the Company’s annual financial statements filed in its December 31, 2006 Annual Report on Form 10-KSB, a remaining amount of $30,441 is owed by the Company to the former controlling shareholders of the Company. The amount is non-interest bearing, unsecured, and payable on demand.

In November 2005, the Company agreed to issue an aggregate of 8,283,334 shares of common stock, to two entities, 4,141,667 shares to MEL Enterprises, Ltd., beneficially owned by Keith Moore, a Director of the Company and 4,141,667 shares to Monarch Bay Capital Group, LLC, beneficially owned by David Walters, our Chairman, in connection with the Company's acquisition of DCII.

Both Mr. Walters and Mr. Moore entered into Independent Contractor Agreements with DCII on February 1, 2005 (each a "Contractor Agreement" and collectively the "Contractor Agreements"). Mr. Moore's Contractor Agreement provides for him to serve DCII in the capacity of Secretary and Director and Mr. Walters' Contractor Agreement provides for him to serve DCII in the capacity of Chief Executive Officer. The Contractor Agreements were renewed on February 1, 2006 and expire December 31, 2008. The Contractor Agreements renew thereafter on an annual basis unless terminated by either party. Either of the Contractor Agreements may be terminated upon the breach of a term of either Contractor Agreement, which breach remains uncured for thirty (30) days or by either party, for any reason with thirty (30) days written notice. The Contractor Agreements contain confidentiality clauses and work for hire clauses. The Contractor Agreements provide that neither Mr. Walters nor Mr. Moore are employees of DCII. Mr. Walters and Mr. Moore are entitled to be paid $10,000 per month under the Contractor Agreements. The Company paid $90,000 and $290,000 (including $110,000 outstanding as of December 31, 2005) during the nine months ended September 30, 2007 and 2006, respectively, related to the Contractor Agreements. Amounts owed by the Company totaled $0 and $0 at September 30, 2007 and December 31, 2006, respectively. In February 2006, the Company also paid Mr. Walters and Mr. Moore a consulting fee of $25,000 each for additional consulting services outside the scope of the above agreements. On May 11, 2007, these agreements were terminated by mutual consent.

9

In March 2006, the Company entered into an agreement with Monarch Bay Management Company, L.L.C. ("MBMC") for chief financial officer services. David Walters and Keith Moore each are members of, and each owns 50% of the ownership interests in, MBMC. Under the chief financial officer services agreement with [color=red]MBMC , the Company is obligated to pay MBMC a monthly fee of $5,000 in cash. The Company also reimburses MBMC for certain expenses in connection with providing services to the Company. The initial term of the agreement expires on March 31, 2007 and renews thereafter on an annual basis unless terminated by either party.[/color] Services provided under this agreement commenced in March 2007 and continued until May 11, 2007 when this agreement was terminated by mutual consent. The fees incurred under this agreement totaled $12,500 and were paid during the three months ended September 30, 2007. No services were provided during 2006, accordingly, no amounts were paid to MBMC and/or accrued as of and for the three and nine months ended September 30, 2006.

On February 5, 2007, the Company borrowed $195,000 from MBMC pursuant to a working capital line of credit. Under the terms of working capital line of credit, MBMC may advance up to $500,000 in funding to the Company. The working capital line of credit is unsecured and bears interest at the rate of 10% of the unpaid principal balance or $150 per month, whichever is greater. All amounts outstanding under the working capital line of credit are due on or before December 31, 2008. The Company repaid $125,000 of the principal balance on February 8, 2007 and the remaining principal balance of $70,000 was repaid on February 15, 2007. On February 22, 2007, the Company borrowed $188,000 from MBMC. The Company repaid $55,000 during March 2007 and repaid the remaining principal balance of $133,000 on April 10, 2007. On April 25, 2007, the Company borrowed $100,000 from MBMC pursuant to the working capital line of credit. The Company repaid $40,000 on May 10, 2007. The remaining balance of $60,000 remains outstanding as of September 30, 2007.

Interest payments relating to the above transactions totaled $0 and $311 for the three and nine months ended September 30, 2007. Accrued interest totaled $4,972 as of September 30, 2007.

In March 2006, the Company made a $7,500 payment to a vendor on behalf of Monarch Bay Associates, L.L.C. (“MBA”). David Walters and Keith Moore each are members of, and each owns 50% of the ownership interests in MBA. The amount was non-interest bearing and owed to the Company as of December 31, 2006. The Company received payment in full in March 2007.

As discussed in Note 6 of the Company’s annual financial statements filed in its December 31, 2006 Annual Report on Form 10-KSB, on November 8, 2005, DCII and DCI entered into a Factoring and Security Agreement to sell accounts receivables to Systran Financial Services Corporation (“Systran”). David Walters and Keith Moore have personally guaranteed $500,000 of the total available facility. Mr. Walters and Mr. Moore did not receive any compensation for this personal guarantee in 2006 or 2007.

On May 11, 2007, the Company entered into a Support Services Agreement with MBMC. Under the Support Services Agreement, MBMC will provide the Company with financial management services, facilities and administrative services, business development services, creditor resolution services and other services as agreed by the parties. As a retainer for the services provided by MBMC under the Support Services Agreement, the Company issued to MBMC 5,000 shares of its Series A Preferred Stock. The Company will also pay to MBMC monthly cash fees of $22,000 for the services. In addition, MBMC will receive fees equal to (a) 6% of the revenue generated from any business development transaction with a customer or partner introduced to the Company by MBMC and (b) 20% of the savings to the Company from any creditor debt reduction resolved by MBMC on behalf of the Company. The initial term of the Support Services Agreement expires May 11, 2008. The Company paid $33,000 during the three and nine months ended September 30, 2007 under this agreement. The Company has accrued $66,000 as of September 30, 2007.

On May 11, 2007, the Company entered into a Placement Agency and Advisory Services Agreement with MBA (a NASD member firm). Under the agreement, MBA will act as the Company’s placement agent on an exclusive basis with respect to private placements of the Company’s capital stock and as the Company’s exclusive advisor with respect to acquisitions, mergers, joint ventures and similar transactions. As a retainer for the services provided by MBA under the Placement Agency and Advisory Services Agreement, the Company issued to MBA 5,000 shares of its Series A Preferred Stock. In addition, MBA will receive fees equal to (a) 9% of the gross proceed raised by the Company in any private placement (plus warrants to purchase 9% of the number of shares of common stock issued or issuable by the Company in connection with the private placement) and (b) 3% of the total consideration paid or received by the Company or stockholders in an acquisition, merger, joint venture or similar transaction. The initial term of the Placement Agency and Advisory Services Agreement expires May 11, 2008.

On July 26, 2007 the Company entered into an engagement agreement with MBMC to perform valuation services on the embedded derivative features within the convertibles notes as of June 30, 2007. The Company entered into a similar agreement on October 15, 2007 to perform valuation services as of September 30, 2007. The Company has paid MBMC $8,000 for services performed under these agreements.

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