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


                                FORM 10-KSB
                                 (Mark One)


     [X]  Annual report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

                   For the period ended December 31, 2006
                                     OR

     [ ]  Transition report pursuant to Section 13 or 15(d) of the
          Securities Exchange Act of 1934

                      Commission file number: 0-49915

                           MONARCH STAFFING, INC.
          --------------------------------------------------------
           (Exact name of registrant as specified in its charter)

     Nevada                                                 88-0477056
---------------------------------              ----------------------------
(State or other jurisdiction                        (I.R.S. Employer
 of incorporation or organization)                   Identification No.)

                         30950 Rancho Viejo Rd #120
                       San Juan Capistrano, CA  92675
        ------------------------------------------------------------
        (Address of principal executive offices, including zip code)

      Registrant's Telephone No., including area code: (949)-260-0150

      Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to section 12(g) of the Act:

                  Common Stock, par value $.001 per share
                --------------------------------------------
                              (Title of Class)

    Check whether the issuer is not required to file reports pursuant to
                Section 13 or 15(d) of the Exchange Act. [ ]

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 [ ]


Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]

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

The aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common
equity was sold as of March 22, 2007, was approximately $747,104 based on a
price on such date.

The number of shares issued and outstanding of the Common Stock as of March
22, 2007 was 9,961,384.

Documents incorporated by reference. There are no annual reports to
security holders, proxy information statements, or any prospectus filed
pursuant to Rule 424 of the Securities Act of 1933 incorporated herein by
reference.

Transitional Small Business Disclosure Format (Check one): Yes [ ]; No [X]


                             TABLE OF CONTENTS


PART I     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ITEM 1.   BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ITEM 2.   PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . .24

ITEM 3.   LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . .24

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . .24

PART II    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . . . .25

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . .27

ITEM 7.   FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . .40

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . . . . . .78

ITEM 8A.  CONTROL AND PROCEDURES . . . . . . . . . . . . . . . . . . .79

ITEM 8B.  OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . .80

PART III   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80

ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY. . . . . . .80

ITEM 10.  EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . .82

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . .84

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS . . . .85

ITEM 13.  EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . .89

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . .91

          SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . .92

          CERTIFICATIONS . . . . . . . . . . . . . . . . . . . . . . .93





                                   PART I

             SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

Except for the historical information contained herein, the matters
discussed in this Annual Report on Form 10-KSB, including discussions of
our business strategies and market factors influencing our results, are
forward-looking statements that involve certain risks and uncertainties.
Actual results may differ materially from those anticipated by us as a
result of various factors, both foreseen and unforeseen, including, but not
limited to, our ability to continue to offer new services and increase
sales in markets characterized by rapid technological evolution,
consolidation within our target marketplace and among our competitors, and
competition from larger, better capitalized competitors. Many other
economic, competitive, governmental and technological factors could impact
our ability to achieve our goals. Interested persons are urged to review
the risks described under "Item 1. Business. Risk Factors" and in "Item 6.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" as well as in the Company's other public disclosures and
filings with the Securities and Exchange Commission ("SEC"). All forward-
looking statements speak only as of the date of this report. We do not
intend to publicly update or revise any forward-looking statements as a
result of new information, future events or otherwise, except as required
by law.

ITEM 1. BUSINESS

COMPANY OVERVIEW

We provide healthcare staffing services to both commercial and government
sector customers. We are focused on building a nationally recognized
healthcare staffing company by growing our current customer bases,
expanding our service offerings, and acquiring and growing profitable
healthcare staffing services companies.

We operate our healthcare staffing services business through our wholly
owned subsidiary Drug Consultants, Inc. ("DCI"). DCI furnishes personnel to
perform a range of pharmacy, nursing and other health care services in
support of the operations of government and commercial facilities,
including its largest client, the State of California Department of
Corrections and Rehabilitation ("CDCR"). DCI was formed in 1977 and is
located in San Juan Capistrano, California.

DCI has experience in providing its services in rural areas of California
where many state facilities are located and healthcare professionals are
not readily available. This experience and DCI's database of healthcare
professionals have allowed it to competitively price its services and
expand its business to meet these unique requirements of the CDCR.

DCI currently operates under three master contracts with the CDCR. The
master contracts are for terms of three years and currently expire between
September 30, 2007 and June 30, 2008.   DCI's contracts with the CDCR do
not provide for a minimum purchase commitment of our services and can be
terminated by the CDCR at any time on 30 days' notice.    In April 2006, a
federal court-appointed receiver assumed total control over CDCR's
healthcare delivery system to address the court's findings of substandard
medical care.  Among the receiver's objectives is to reduce the CDCR's
reliance on staffing service providers like DCI.  Since the receiver's
appointment, DCI has experienced a loss of several of its healthcare
professionals who have accepted positions with the CDCR.  We believe that
the ongoing implications of the receiver's management of the CDCR's
                                     4
healthcare delivery system include lower demand from the CDCR for DCI's
services, higher attrition of our healthcare professionals, increased
competition for recruiting healthcare professionals to fill positions with
the CDCR and reduced margins for the services we provide CDCR.

GROWTH STRATEGY

Our goal is to build a nationally recognized healthcare staffing company.
The key components of our business strategy include:

  -   INCREASE PENETRATION OF EXISTING CLIENT RELATIONSHIPS. We have built
      strong relationships with our existing clients, particularly the
      State of California. We will seek to increase the penetration of our
      services to agencies of the State which we do not currently serve.

  -   LEVERAGE PROCESSES AND EXPERIENCE TO ENTER NEW MARKETS. We have
      experience in meeting the staffing needs of government entities,
      particularly in rural areas. We will seek to leverage our experience
      and associated processes and contacts to provide similar services to
      government entities in other high-growth states such as Arizona,
      Nevada, Oregon and Utah.

  -   EXPAND SERVICE OFFERINGS THROUGH NEW STAFFING SOLUTIONS. In order to
      enhance the growth in our business and improve our competitive
      position, we continue to explore new service offerings. As our
      clients' needs change, we will explore what additional services we
      can provide to better serve our clients.

  -   EXPAND OUR CUSTOMER BASE. We have experience in servicing the needs
      of government entities that we will transfer to the commercial
      client market.

  -   CAPITALIZE ON ACQUISITION OPPORTUNITIES. The markets we serve are
      highly fragmented. In order to enhance our competitive position, we
      intend to aggregate multiple smaller staffing service providers. Our
      general criteria for acquisition targets are: companies who provide
      similar services to our own in other geographic areas, companies who
      have strong client relationships, companies who offer vertical
      services that complement our own, and companies that generate
      positive cash flow and have the prospect for year-over-year revenue
      growth.

  -   BUILD OUR MANAGEMENT TEAM AND CORE BACK-OFFICE FUNCTIONS. We intend
      to expand our executive, sales and operations management teams to
      support the growth of our business. In addition, we plan to build
      centralized administrative support systems to support our business
      model across business units.

COMPANY BACKGROUND

Prior to August 2003, we were a development stage company. Although we were
incorporated only six years ago, we have undergone a number of changes in
our business strategy and organization.

The Company was originally incorporated in Nevada under the name
JavaJuice.net on September 13, 2000. The Company's business plan was to
engage in the operation of an Internet Cafe, in Reno, Nevada. On August 8,
2003, the Company acquired M.T. Marketing Int. Corp "(MTM") and control of
the Company shifted to the former MTM shareholders. MTM operated a payroll
nurse staffing and homecare business. JavaJuice was considered a "shell" at
the time of the acquisition; therefore, the transaction was treated as a
reverse merger. As a result of a change in business focus due to the
acquisition, the Company changed its name to MT Ultimate Healthcare Corp.
                                     5

The Company expanded its operations through the acquisition of B.P. Senior
Care, Inc. ("BP"), a provider of healthcare services to senior citizens in
New Jersey), the operation of which was terminated in June 2005, and
Abundant Healthcare, Inc. ("Abundant"), a provider of medical staffing
services in Pennsylvania). All of the business and operations of MTM and
Abundant have been discontinued and disposed of by the Company in
connection with the disposition of Marathon Healthcare Corporation
described below.

On August 31, 2004, the Company entered into a securities purchase
agreement with four accredited investors for the sale of secured
convertible notes having an aggregate principal amount of $700,000, a 10%
annual interest rate (payable quarterly), and a term of two years. We also
agreed to sell warrants to purchase up to an aggregate of 7,777 shares of
our Common Stock at $40.50 per share. We only sold $500,000 principal
amount of secured convertible notes under the 2004 agreement. As a result,
we sold to the investors warrants to purchase up to an aggregate of 5,556
shares of our Common Stock at $40.50 per share. The investors have agreed
to purchase the remaining $200,000 commitment under the terms of our 2005
securities purchase agreement with the investors.

On November 4, 2005, we entered into an additional securities purchase
agreement with the same accredited investors, for the sale of secured
convertible notes having an aggregate principal amount of $3,000,000, an 8%
annual interest rate (payable quarterly), and a term of three years. We
also agreed to sell warrants to purchase up to an aggregate of 166,667
shares of our Common Stock at $9.00 per share.

On March 29, 2007, the Company obtained an amendment to the 2005 securities
purchase agreement whereby interest payments are payable at the same time
the corresponding principal balance is due and payable, whether at maturity
or upon acceleration or by prepayment.
As of December 31, 2006, we had issued under the two securities purchase
agreements dated August 31, 2004 and November 4, 2005:

  -   $3,075,000 aggregate principal amount of secured convertible notes,
  -   Warrants to purchase 5,556 shares of our Common Stock at $40.50 per
      shares, and
  -   Warrants to purchase 143,056 shares of our Common Stock at $9.00 per
      share, and
  -   Warrants to purchase 166,667 shares of our Common Stock at $4.50 per
      share.

As mentioned above, the investors are required to purchase an additional
$625,000 principal amount of secured convertible notes and warrants to
purchase 2,222 shares of our Common Stock at $40.50 per share and warrants
to purchase 23,611 shares of our Common Stock at $9.00 per share five days
following the date that a registration statement for the resale of the
shares of common stock issuable upon conversion of the secured convertible
notes and exercise of the warrants is declared effective by the Securities
and Exchange Commission and if other conditions are satisfied.

On November 4, 2005, we acquired 100% of the issued and outstanding shares
of Drug Consultants International, Inc.('DCII"), formerly known as
iTechexpress, Inc., a provider of technical staffing services, in exchange
for 9,203,704 newly issued shares of our Common Stock.

On November 7, 2005, DCII purchased all of the outstanding shares of Drug
Consultants, Inc. for a purchase price of $1,800,000, of which $1,600,000
was paid at closing and $200,000 shall be paid pursuant to a secured
promissory note, which was subsequently paid in January 2006.

                                     6

As part of our focus on growing profitable operations, we decided to
discontinue and dispose of certain operations which we determined did not
demonstrate suitable growth or profitability prospects. On December 15,
2005, we completed the disposition of all of the outstanding capital stock
of Marathon Healthcare Corporation ("Marathon"), a newly formed holding
company, to Macdonald Tudeme and Marguerite Tudeme, the former controlling
shareholders of the Company. At the time of the disposition, Marathon's
assets included substantially all of the corporate names, business,
operations, assets, properties, intellectual properties, trademarks,
service marks, trade names, uniform resource locators, telephone numbers,
and goodwill of the Company and its subsidiaries (other than DCII and DCI).
These assets included all of the operations of the Company's former
operating subsidiaries MTM and Abundant. In exchange for all of the
outstanding capital stock of Marathon and payments to the Tudemes of
$80,441, the Company received from the Tudemes 396,569 shares of the
Company's Common Stock. In connection with the disposition of Marathon, we
also (a) assumed and released the Tudemes from certain liabilities and (b)
pledged to Marathon 222,222 shares of our Common Stock as collateral to
secure the performance and payment of a promissory note payable to Lisa
Stern originally entered into as part of the Company's purchase of
Abundant. If we fail to pay any principal of or interest on the note when
due, we will be in default of our obligations and Marathon will be able to
retain and sell the pledged Common Stock to satisfy our obligations.

On March 31, 2006, we completed the following corporate actions: (a) we
changed our corporate name to "Monarch Staffing, Inc." from "MT Ultimate
Healthcare Corp.", (b) we effected a one-for-ninety reverse stock split of
our Common Stock, (c) we re-authorized for issuance 400,000,000 shares of
Common Stock, par value $.001 per share, after giving effect to the reverse
stock split and (d) we authorized 5,000,000 shares of "blank check"
preferred stock.

INDUSTRY AND MARKET OVERVIEW

Temporary healthcare staffing industry revenues are expected to grow at a
compound annual growth rate of approximately 8% from 1997 through 2008,
according to industry estimates. The industry has grown each year except
2003 and 2004, in which it declined on an annual basis primarily due to
economic conditions and resulting pressures on healthcare facilities to
reduce outsourced staffing solutions. Industry revenues for 2007 are
expected to grow by 7% to $11.4 billion as compared to 2006.

COMPETITION AND COMPETITIVE STRATEGY

The healthcare staffing industry is both highly fragmented and highly
competitive. There are a large number of firms engaged in the provision of
healthcare personnel. A significant number of these companies are very
small competitors operating on a localized basis. There are however, a few
larger companies that operate on a national basis. Some of our larger
competitors in the temporary healthcare staffing sector include AMN
Healthcare Services, Cross Country Healthcare, InteliStaf Healthcare, CHG
Healthcare Services, Inc., Medical Staffing Network and On Assignment.

We compete in the healthcare staffing industry based primarily on our long-
standing customer relationships, experience in meeting the needs of
government entities, particularly with rural facilities, as well as with
superior client service.



                                     7

OUR BUSINESS MODEL

Recruitment
-----------
Our recruitment methods include recruiting trained, experienced healthcare
staff from schools and universities. Some of our temporary healthcare
professionals are independent contractors due to their requirement to hold
specialized licenses. Additionally, because they require specialized
licenses, they are in high demand and often work with more than one agency.

Screening and Quality Management
--------------------------------
We screen all candidates prior to placement, and we continue to evaluate
our temporary healthcare professionals after they are placed to provide
adequate performance and manage risk, as well as to determine feasibility
for future placements. Our internal processes are designed to determine
whether our temporary healthcare professionals have the appropriate
experience, credentials and skills for the assignments that they accept.
Our screening and quality management process includes three principal
stages:

INITIAL SCREENING. Each new temporary healthcare professional candidate who
submits an application with us must meet certain criteria, including
appropriate prior work experience and proper educational and licensing
credentials. We independently verify each applicant's work history and
references in an effort to improve the ability of our clients to depend on
our temporary healthcare professionals for competency and personal
reliability.

ASSIGNMENT SPECIFIC SCREENING. Once an assignment is accepted by a
temporary healthcare professional, we track the necessary documentation and
license verification required for the temporary healthcare professional to
meet the requirements set forth by us, the client and, when required, the
applicable state licensing authorities. Additionally, where state and
federal laws apply with regard to the employment of healthcare workers, we
believe we have in place the necessary procedures to comply with material
requirements. These requirements may include obtaining copies of specific
health records, drug screening, criminal background checks and certain
certifications or continuing education courses.

ONGOING EVALUATION. We evaluate our temporary healthcare professionals'
performance through a verbal and written evaluation process. We receive
these evaluations directly from our clients, and use the feedback to
determine appropriate future assignments.

Account Management and Placement
--------------------------------
Our account managers are responsible for soliciting and receiving orders
from our clients and working with our recruiters to fill those orders with
qualified temporary healthcare professionals and technicians. As an
example, we operate under master contracts with the State of California to
provide temporary health professionals. We receive requests or "orders"
from specific state healthcare facilities for temporary healthcare
professionals to fill assignments. Depending upon their size and specific
needs, one healthcare facility client may have from one to over fifty open
orders at one time. Because clients often list their orders with multiple
service providers, open orders may also be listed with our competitors. An
order will generally be filled by the company that provides a suitable
candidate first, highlighting the need for a large network of temporary
healthcare professionals and technicians and responsive client service

                                     8

Billing and Payroll
-------------------
Our staffing services are generally provided on a time-and-materials basis,
meaning that we bill our clients for the number of hours worked in
providing services to the client. Hourly bill rates are typically
determined based on contractual rates or the level of skill and experience
of the temporary healthcare professional assigned and the supply and demand
in the current market for those qualifications. Alternatively, the bill
rates for some assignments are based on a mark-up over compensation and
other direct and indirect costs.

We maintain a variable cost model in which we compensate most of our
temporary healthcare professionals only for those hours that we bill to our
clients. The temporary healthcare professionals who perform services for
our clients consist of our employees as well as independent contractors and
subcontractors. With respect to those temporary healthcare professionals
who are employees, we are responsible for all employment-related costs,
including medical and health care costs, workers' compensation and federal
social security and state unemployment taxes

GOVERNMENT REGULATION

The healthcare industry is subject to extensive and complex federal and
state laws and regulations related to professional licensure, conduct of
operations, payment for services and payment for referrals. Our business,
however, is not directly impacted by or subject to the extensive and
complex laws and regulations that generally govern the healthcare industry.
The laws and regulations that are applicable to our hospital and healthcare
facility clients could indirectly impact our business to a certain extent,
but because we provide services on a contract basis and are paid directly
by our hospital and healthcare facility clients, we do not have any direct
Medicare or managed care reimbursement risk.

Most of our temporary healthcare professionals are required to be
individually licensed or certified under applicable state laws. We take
prudent steps to ensure that they possess all necessary licenses and
certifications in all material respects.

EMPLOYEES

The Company employs approximately 27 total employees, with 24 of those
full-time and 3 part-time.

None of our employees are covered by collective bargaining agreements, and
management believes that its relationships with its employees are good.

RISK FACTORS

The more prominent risks and uncertainties inherent in our business are
described below. However, additional risks and uncertainties may also
impair our business operations. If any of the following risks actually
occur, our business, financial condition or results of operations will
likely suffer. Any of these or other factors could harm our business and
future results of operations and may cause you to lose all or part of your
investment.


                                     9

RISKS RELATING TO OUR BUSINESS

---------------------------------------------------------------------------
WE MAY CONTINUE TO BE UNPROFITABLE AND MAY NOT GENERATE PROFITS TO CONTINUE
OUR BUSINESS PLAN.
---------------------------------------------------------------------------

We have historically lost money. As of December 31, 2006, we had $617,812
in accumulated deficit. There is a risk that our healthcare staffing
services business will fail. If our business plan is not successful, we
will likely be forced to curtail or abandon our business plan. If this
happens, investors could lose their entire investment in our Common Stock.

---------------------------------------------------------------------------
WE DO NOT HAVE SUFFICIENT CASH ON HAND AND CASH FLOW FROM OPERATIONS TO
MEET OUR LIQUIDITY REQUIREMENTS, AND WILL REQUIRE ADDITIONAL NEAR-TERM
FINANCING TO CONTINUE OUR BUSINESS OPERATIONS AND PURSUE OUR GROWTH
STRATEGY.
---------------------------------------------------------------------------

We project that our cash on hand and cash flow generated from operations
will not be sufficient to fund operational liquidity requirements.  As a
result, our ability to continue our operations and growth strategy depends
on our ability to access the capital markets in the near term.

Our secured convertible note investors are required to purchase an
additional $625,000 principal amount of secured convertible notes and
related warrants five days following the date that a registration statement
for the resale of the shares of common stock issuable upon conversion of
the secured convertible notes and exercise of the warrants is declared
effective by the Securities and Exchange Commission and if other conditions
are satisfied.  There can be no assurance that we will satisfy the
conditions to funding or, if we do, that we will do so on a timetable that
meets our operational liquidity needs

There also can be no assurance that capital from other outside sources will
be available, or if such financing is available, that it will be on terms
that management deems sufficiently favorable. If we are unable to obtain
additional financing upon terms that management deems sufficiently
favorable, or at all, we could be forced to restructure or to default on
our obligations or to curtail or abandon our business plan, any of which
may devalue or make worthless an investment in the Company.


---------------------------------------------------------------------------
OUR AUDITORS HAVE EXPRESSED AN OPINION THAT THERE IS SUBSTANTIAL DOUBT
ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
---------------------------------------------------------------------------

Our auditors have expressed an opinion that there is substantial doubt
about our ability to continue as a going concern primarily because we have
yet to generate sufficient working capital to support our operations and
our ability to pay outstanding employment taxes. Our most recent financial
statements have been prepared assuming that we will continue as a going
concern. The financial statements do not include any adjustments that might
result from our inability to continue as a going concern. If we are unable
to continue as a going concern, investors will lose their entire investment
in our Common Stock.

                                     10


---------------------------------------------------------------------------
OUR OPERATIONS ARE RECENTLY ACQUIRED WHICH MEANS THAT WE HAVE A LIMITED
OPERATING HISTORY UPON WHICH YOU CAN BASE YOUR INVESTMENT DECISION.
---------------------------------------------------------------------------

Prior to August 2003, we were a development stage company. Although we were
incorporated only six years ago, we have undergone a number of changes in
our business strategy and organization. In August 2003, we entered the
payroll nurse staffing and homecare business. We adjusted our business
strategy again in November 2005 by broadening our service offerings and to
focus our activities on growing profitable operations. We have begun to
implement this strategy by acquiring DCII and DCI.

The operations of DCII and DCI, which will represent our entire business
for the foreseeable future, were acquired in November 2005. Accordingly, we
have a limited operating history upon which an evaluation of our prospects
can be made. Our strategy is unproven and the revenue and income potential
from our strategy is unproven.  Our business strategy may not be successful
and we may not be able to successfully address these risks. If we are
unsuccessful in the execution of our current strategic plan, we could be
forced to reduce or cease our operations. If this happens, investors could
lose their entire investment in our Common Stock.

---------------------------------------------------------------------------
WE WILL REQUIRE SIGNIFICANT ADDITIONAL CAPITAL TO REPAY MONIES BORROWED BY
US, CONTINUE OUR BUSINESS OPERATIONS AND PURSUE OUR GROWTH STRATEGY.
---------------------------------------------------------------------------

We have sold $3,075,000 in secured convertible notes and have agreed to
sell an additional $625,000 of secured convertible notes to the note
investors. We do not currently have enough capital to repay any of these
amounts and we may never generate enough revenue to repay the amounts owed.
As a result, we could be forced to curtail or abandon our business plan,
making any investment in our Common Stock worthless.

Our continued operations and growth strategy depend on our ability to
access the capital markets. There can be no assurance that capital from
outside sources will be available, or if such financing is available, that
it will be on terms that management deems sufficiently favorable. If we are
unable to obtain additional financing upon terms that management deems
sufficiently favorable, or at all, it would have a material adverse impact
upon our ability to continue our business operations and pursue our growth
strategy. In the event we do not raise additional capital, it is likely
that our growth will be restricted and that we may be forced to scale back
or curtail implementing our business plan. If this happens, investors would
likely experience a devaluing of our Common Stock.

---------------------------------------------------------------------------
WE MAY BE FORCED TO SELL SHARES OF COMMON STOCK AND/OR ENTER INTO
ADDITIONAL CONVERTIBLE NOTE FINANCING AGREEMENTS IN ORDER TO REPAY AMOUNTS
OWED AND CONTINUE OUR BUSINESS PLAN.
---------------------------------------------------------------------------

Assuming the sale of all of our secured convertible notes, we will owe
approximately $3,700,000 to the holders of the notes (not including any
accrued interest).  We do not currently have enough capital to repay any of
these amounts and we may never generate enough revenue to repay the amounts
owed. We may be forced to raise additional funds to repay these amounts
through the issuance of equity, equity-related or convertible debt
securities. The issuance of additional common stock dilutes existing
stockholdings. Additionally, in furtherance of our convertible secured note


                                     11

transaction, we may issue additional shares of common stock throughout the
term, and accordingly, our stockholders may experience significant
dilution. Further procurement of additional financing through the issuance
of equity, equity-related or convertible debt securities or preferred stock
may further dilute existing stock. The perceived risk of dilution may cause
the holders of our secured convertible notes, as well as other holders, to
sell their shares, which would contribute to downward movement in the price
of your shares. Additionally, if such additional shares are issued,
investors would likely experience a devaluing of our Common Stock.

---------------------------------------------------------------------------
WE HAVE PLEDGED ALL OF OUR ASSETS TO EXISTING CREDITORS.
---------------------------------------------------------------------------

Our secured convertible notes are secured by a lien on substantially all of
our assets, including our equipment, inventory, contract rights,
receivables, general intangibles, and intellectual property. A default by
us under the secured convertible notes would enable the holders of the
notes to take control of substantially all of our assets. The holders of
the secured convertible notes have no operating experience in our industry
and if we were to default and the note holders were to take over control of
our Company, they could force us to substantially curtail or cease our
operations. If this happens, investors could lose their entire investment
in our Common Stock.

DCII and DCI, our principal operating subsidiaries, have pledged
substantially all of their accounts receivable to secure the payment of
accounts receivable sold under a factoring agreement with Systran Financial
Services Corporation ("Systran").  If Systran is unable to collect our
accounts receivable purchased from us, they could take control of all of
our accounts receivable, which would substantially reduce our working
capital and could force us to curtail or abandon our business plan. If this
happens, investors could lose their entire investment in our Common Stock.

In addition, the existence of these asset pledges to the holders of the
secured convertible notes and to Systran will make it more difficult for us
to obtain additional financing required to repay monies borrowed by us,
continue our business operations and pursue our growth strategy.

---------------------------------------------------------------------------
THE SECURED CONVERTIBLE NOTES BECOME IMMEDIATELY DUE AND PAYABLE UPON
DEFAULT AND WE MAY BE REQUIRED TO PAY AN AMOUNT IN EXCESS OF THE
OUTSTANDING AMOUNT DUE UNDER OF THE SECURED CONVERTIBLE NOTES, AND WE MAY
BE FORCED TO SELL ALL OF OUR ASSETS.
---------------------------------------------------------------------------

The secured convertible notes become immediately due and payable upon an
event of default including:

  -   failure to obtain effectiveness of the registration statement
      covering the resale of the shares of our Commons Stock issuable upon
      conversion of the secured convertible notes and exercise of the
      warrants on or before October 31, 2007 (or November 25, 2007) if the
      Company is making good faith efforts to respond to Securities and
      Exchange Commission comments with respect to the registration
      statement);
  -   failure to pay interest and principal payments when due;
  -   a breach by us of any material covenant or term or condition of the
      secure convertible notes or any agreement made in connection
      therewith;

                                     12

  -   a breach by us of any material representation or warranty made in
      the 2005 securities purchase agreement or in any agreement made in
      connection therewith;
  -   we make an assignment for the benefit of our creditors, or a
      receiver or trustee is appointed for us;
  -   the entering of any money judgment, writ or similar process against
      us or any of our subsidiaries or any of our property or other assets
      for more than $50,000;
  -   any form of bankruptcy or insolvency proceeding is instituted by or
      against us; and
  -   our failure to timely deliver shares of Common Stock when due upon
      conversions of the secured convertible notes.

If we default on the secured convertible notes and the holders demand all
payments due and payable, we will be required to pay the holders of the
secured convertible notes an amount equal to the greater of (x) 130% times
the sum of the outstanding amount of the secured convertible notes per
month plus accrued and unpaid interest on the secured convertible notes
plus additional amounts owed to the holders of the notes under the 2004
securities purchase agreement and the 2005 securities purchase agreement
and related documents or (y) the value of the highest number of shares of
Common Stock issuable upon conversion of or otherwise pursuant to the
amount calculated under clause (x) determined based on the highest closing
price of the Common Stock during the period beginning on the date of
default and ending on the date of the payment described herein. We do not
currently have the cash on hand to repay this amount. If we are unable to
raise enough money to cover this amount we may be forced to restructure,
file for bankruptcy, sell assets or cease operations. If any of these
events happen, investor could lose their entire investment in our Common
Stock.

---------------------------------------------------------------------------
WE MAY BE SUBJECT TO LIQUIDATED DAMAGES IN THE AMOUNT OF 3% OF THE
OUTSTANDING AMOUNT OF THE SECURED CONVERTIBLE NOTES PER MONTH PLUS ACCRUED
AND UNPAID INTEREST ON THE SECURED CONVERTIBLE NOTES FOR BREACHES BY US OF
OUR REPRESENTATIONS AND WARRANTIES AND CERTAIN COVENANTS UNDER THE 2005
SECURITIES PURCHASE AGREEMENT.
---------------------------------------------------------------------------

In the 2005 securities purchase agreement relating to our secured
convertible notes, we made certain representations and warranties and
agreed to certain covenants that are customary for securities purchase
agreements. In the event that we breach those representations, warranties
or covenants, we will be subject to liquidated damages in the amount of 3%
of the outstanding amount of the secured convertible notes, per month, plus
accrued and unpaid interest on the notes for such breaches. As of the March
21, 2007, the outstanding amount of the secured convertible notes was
$3,075,000. We have not previously been required to pay any liquidated
damages, however if we do breach the representations, warranties or
covenants, we will be forced to pay liquidated damages to the note holders.
If we do not have enough cash on hand to cover the amount of the liquidated
damages, we could be forced to sell part or all of our assets, which could
force us to scale back our business operations. If this happens, investors
would likely experience a devaluing of our Common Stock.


                                     13

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WE ARE HEAVILY DEPENDENT ON THE OPERATIONS OF DCI FOR OUR REVENUES, WHICH
ITSELF IS HIGHLY DEPENDENT ON THE STATE OF CALIFORNIA DEPARTMENT OF
CORRECTIONS AND REHABILITATION AS ITS MAJOR CUSTOMER.
---------------------------------------------------------------------------

We anticipate approximately 95% of our revenues for the foreseeable future
will come from the operations of DCI. Approximately 95% of DCI's revenue
comes from the CDCR. DCI's agreements with the CDCR do not provide for a
minimum purchase commitment of our services and can be terminated by the
CDCR at any time on 30 days' notice. Our dependence on the CDCR as our
major customer subjects us to significant financial risks in the operation
of our business if the CDCR were to terminate or materially reduce, for any
reason, its business relationship with us.

We recently have experienced a decrease in revenues from our services
provided to the CDCR (as well as the loss of several of our healthcare
professionals who have accepted positions with the CDCR) due to a federal
court-appointed receiver's management of the CDCR healthcare delivery
system. See "THE COURT-APPOINTED RECEIVER MANAGING THE CDCR'S HEALTHCARE
DELIVERY SYSTEM INTENDS TO REDUCE THE CDCR'S UNTILIZATION OF STAFFING
SERVICE PROVIDERS LIKE DCI" below.

Further, the CDCR is subject to unique political and budgetary constraints
and has special contracting requirements that may affect our ability to
obtain additional contacts or business. In addition, future sales to the
CDCR and other governmental agencies, if any, will depend on our ability to
meet government contracting requirements, certain of which may be onerous
or impossible to meet, resulting in our inability to obtain a particular
contract. Common requirements in government contracts include bonding;
provisions permitting the purchasing agency to modify or terminate, at
will, the contract without penalty; and provisions permitting the agency to
perform investigations or audits of our business practices. If we are
unable to maintain our contracts in the CDCR and/or gain new contracts in
California and elsewhere, we could be forced to curtail or abandon our
business plan. If this happens, investors could lose their entire
investment in our Common Stock.

---------------------------------------------------------------------------
THE COURT-APPOINTED RECEIVER MANAGING THE CDCR'S HEALTHCARE DELIVERY SYSTEM
INTENDS TO REDUCE UTILIZATION OF STAFFING SERVICE PROVIDERS LIKE DCI.
---------------------------------------------------------------------------

In April 2006, a federal court-appointed receiver assumed total control
over CDCR's healthcare delivery system to address the court's findings of
substandard medical care.  Among the receiver's objectives is to reduce the
CDCR's reliance on staffing service providers like DCI.  Since the
receiver's appointment, DCI has experienced a loss of several of its
healthcare professionals who have accepted positions with the CDCR.  We
believe that the ongoing implications of the receiver's management of the
CDCR's healthcare delivery system include lower demand from the CDCR for
DCI's services, higher attrition of our healthcare professionals, increased
competition for recruiting healthcare professionals to fill positions with
the CDCR and reduced margins for the services we provide the CDCR.  These
factors will have a material adverse impact on our results of operations,
and could have an adverse effect on the value of our Common Stock, unless
we can successfully reduce our dependence on the CDCR and obtain higher
margin contracts with other customers.



                                     14

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WE HAVE BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE THAT OUR TEMPORARY
HEALTHCARE PROFESSIONALS SHOULD BE CLASSIFIED AS EMPLOYEES AND NOT
INDEPENDENT CONTRACTORS.
---------------------------------------------------------------------------

We have received notice from the Internal Revenue Service (the "IRS") that
the IRS had concluded that our subsidiary DCI was a third-party payer to
and thus employer of a pharmacist who provided services to DCI's client,
the California Department of Corrections. Although the IRS notice applies
only to the case of the individual pharmacist, if unchanged, it could
require DCI to classify other pharmacists and nurses in its registry who
provide services to DCI's clients as employees of DCI. Accordingly,
compensation payable to such pharmacists and nurses would be subject to
federal income tax withholding, Federal Insurance Contributions Act (FICA)
tax, and Federal Unemployment Tax Act (FUTA) tax. This result would have a
material adverse effect on our business, financial condition and results of
operations. The Company is evaluating its response to the IRS notice.

---------------------------------------------------------------------------
WE FACE SIGNIFICANT COMPETITION FOR OUR SERVICES AND AS A RESULT, WE MAY BE
UNABLE TO COMPETE IN THE HEALTHCARE STAFFING INDUSTRY.
---------------------------------------------------------------------------

We face significant competition for our staffing services. The markets for
our services are intensely competitive and we face significant competition
from a number of different sources. Several of our competitors have
significantly greater name recognition as well as substantially greater
financial, technical, service offerings, product development and marketing
resources than we do. Additionally, competitive pressures and other factors
may result in price or market share erosion that could have a material
adverse effect on our business, results of operations and financial
condition.

---------------------------------------------------------------------------
THERE IS A SHORTAGE OF WORKERS IN THE HEALTHCARE INDUSTRY THAT MAY IMPEDE
OUR ABILITY TO ACQUIRE QUALIFIED HEALTHCARE PROFESSIONALS FOR OUR CONTINUED
GROWTH.
---------------------------------------------------------------------------

Presently, the healthcare industry is experiencing a growing shortage of
healthcare professionals. As the operations of DCI are in part based on the
placement of healthcare professionals, there can be no assurance that we
will be able to acquire qualified healthcare professionals to meet our
growing needs. Any shortage in the number of professionals in the
healthcare industry could impede the Company's ability to place such
healthcare professionals into jobs and/or impede our growth rate. If we are
unable to find qualified healthcare professionals to place in jobs, it
would prevent us from continuing our current business strategy. If this
happens, investors would likely experience a devaluing of our Common Stock.




                                     15

---------------------------------------------------------------------------
WE ARE ACTIVELY SEEKING TO ACQUIRE COMPANIES RELATED TO OUR BUSINESS
OPERATIONS, BUT OUR EFFORTS MAY NOT MATERIALIZE INTO DEFINITIVE AGREEMENTS.
---------------------------------------------------------------------------

Our business model is dependent upon growth through acquisition of other
staffing service providers. We completed the acquisition of DCI in November
2005. Although we currently have no commitments with respect to any other
acquisitions, we expect to continue making acquisitions that will enable us
to expand our staffing services and build our customer base. There can be
no assurance that we will be successful in identifying suitable acquisition
candidates or in coming to definitive terms with respect to any
negotiations which we may enter into, or, assuming that we reach definitive
agreements, that we will close the acquisitions. In the event that we do
not reach any additional definitive agreements or close any additional
acquisitions, our expansion strategy will not proceed as intended which
will have a material adverse effect on our growth.

---------------------------------------------------------------------------
OUR FUTURE ACQUISITIONS, IF ANY, MAY BE COSTLY AND MAY NOT REALIZE THE
BENEFITS ANTICIPATED BY US.
---------------------------------------------------------------------------

We may engage in future acquisitions, which may be expensive and time-
consuming and from which we may not realize anticipated benefits. We may
acquire additional businesses, technologies, products and services if we
determine that these additional businesses, technologies, products and
services are likely to serve our strategic goals. We currently have no
commitments or agreements with respect to any acquisitions. The specific
risks we may encounter in these types of transactions include the
following:

  -   Potentially dilutive issuances of our securities, the incurrence of
      debt and contingent liabilities and amortization expenses related to
      intangible assets, which could adversely affect our results of
      operations and financial conditions;
  -   The possible adverse impact of such acquisitions on existing
      relationships with third-party partners and suppliers of services;
  -   The possibility that staff or customers of the acquired company
      might not accept new ownership and may transition to different
      technologies or attempt to renegotiate contract terms or
      relationships;
  -   The possibility that the due diligence process in any such
      acquisition may not completely identify material issues associated
      with product quality, intellectual property issues, key personnel
      issues or legal and financial contingencies; and
  -   Difficulty in integrating acquired operations due to geographical
      distance, and language and cultural differences.

A failure to successfully integrate acquired businesses for any of these
reasons could have a material adverse effect on our results of operations.



                                     16

---------------------------------------------------------------------------
WE MAY BE UNABLE TO MANAGE OUR GROWTH.
---------------------------------------------------------------------------

Any growth that we experience is expected to place a significant strain on
our managerial and administrative resources. We have limited employees who
perform management or administrative functions. Further, if our business
grows, we will be required to manage multiple relationships with various
clients, healthcare professionals and third parties. These requirements
will be exacerbated in the event of further growth. There can be no
assurance that our other resources such as our systems, procedures or
controls will be adequate to support our growing operations or that we will
be able to achieve the rapid execution necessary to successfully offer our
services and implement our business plan. Assuming that our business grows,
our future success will depend on our ability to add additional management
and administrative personnel to help compliment our current employees as
well as other resources. If we are unable to add additional managerial and
administrative resources, it will prevent us from continuing our business
plan, which calls for expanding our operations, and could have an adverse
effect on the value of our Common Stock.

---------------------------------------------------------------------------
WE HEAVILY DEPEND ON OUR CHIEF EXECUTIVE OFFICER, JOEL WILLIAMS, AND OUR
CHAIRMAN, DAVID WALTERS.
---------------------------------------------------------------------------

The success of the Company heavily depends upon the personal efforts and
abilities of Joel Williams and David Walters. Mr. Williams serves as the
Company's Chief Executive Officer and Mr. Walters serves as our Chairman
and together they are primarily responsible for the operation of the
Company's wholly owned subsidiaries DCII and DCI.  If either were to leave
unexpectedly; we may not be able to execute our business plan. Our future
performance depends in significant part upon the continued service of Mr.
Williams and Mr. Walters as they have acquired specialized knowledge and
skills with respect to our business. Additionally, because we have a
relatively small number of employees when compared to other leading
companies in the same industry, our dependence on maintaining our
relationship with Mr. Williams and Mr. Walters is particularly significant.
We cannot be certain that we will be able to retain Mr. Williams or Mr.
Walters in the future. The loss of Mr. Williams or Mr. Walters could have a
material adverse effect on our business and operations and cause us to
expend significant resources in finding a replacement, which could cause
the value of our Common Stock to decline or become worthless.

---------------------------------------------------------------------------
DAVID WALTERS AND KEITH MOORE CAN VOTE AN AGGREGATE OF 83.9% OF OUR COMMON
STOCK AND CAN EXERCISE CONTROL OVER CORPORATE DECISIONS INCLUDING THE
APPOINTMENT OF NEW DIRECTORS.
---------------------------------------------------------------------------

David Walters and Keith Moore can vote an aggregate of 8,283,334 shares (or
83.9%) of our outstanding Common Stock. Accordingly, Mr. Walters and Mr.
Moore will exercise control in determining the outcome of all corporate
transactions or other matters, including the election of directors,
mergers, consolidations, the sale of all or substantially all of our
assets, and also the power to prevent or cause a change in control. All of
our other stockholders are minority stockholders and as such will have
little to no say in the direction of the Company and the election of
Directors. Additionally, it will be difficult if not impossible for
stockholders to remove Mr. Walters and Mr. Moore as Directors of the
Company, which will mean they will remain in control of who serves as
officers of the Company as well as whether any changes are made in the
Board of Directors.
                                     17

---------------------------------------------------------------------------
OUR RESULTS OF OPERATIONS HAVE FLUCTUATED IN THE PAST AND AS A RESULT, THE
RESULTS OF ONE QUARTER MAY NOT BE INDICATIVE OF OUR YEARLY RESULTS, MAKING
ANY INVESTMENT IN US SPECULATIVE.
---------------------------------------------------------------------------

Our quarterly operating results and revenue has historically fluctuated in
the past and may do so in the future from quarter to quarter and period to
period, as a result of a number of factors including, without limitation:
  -   the size and timing of orders from clients;
  -   changes in pricing policies or price reductions by us or our
      competitors;
  -   changes in revenue recognition or other accounting guidelines
      employed by us and/or established by the Financial Accounting
      Standards Board or other rule-making bodies;
  -   our success in expanding our sales and marketing programs;
  -   execution of or changes to Company strategy;
  -   personnel changes; and
  -   general market/economic factors.
  -   Due to all of the foregoing factors, it is possible that our
      operating results may be below the expectations of public market
      analysts and investors. In such event, the price of our Common Stock
      would likely decline and any investment in us could become
      worthless.

---------------------------------------------------------------------------
WE FACE POTENTIAL LIABILITY FOR SECURITY BREACHES RELATING TO OUR
TECHNOLOGY.
---------------------------------------------------------------------------

We face the possibility of damages resulting from internal and external
security breaches, and viruses. The systems with which we may interface,
such as the Internet and related systems may be vulnerable to security
breaches, viruses, programming errors, or similar disruptive problems. The
effect of these security breaches and related issues could reduce demand
for our services. Accordingly, we believe that it is critical that these
facilities and related infrastructures not only be secure, but also be
viewed by our customers as free from potential breach. Maintaining such
standards, protecting against breaches and curing security flaws, may
require us to expend significant capital.

---------------------------------------------------------------------------
RISKS RELATING TO OUR CURRENT FINANCING ARRANGEMENT
---------------------------------------------------------------------------

IF THE REGISTRATION STATEMENT COVERING THE RESALE OF THE SHARES OF OUR
COMMON STOCK ISSUABLE UPON CONVERSION OF THE SECURED CONVERTIBLE NOTES AND
EXERCISE OF THE WARRANTS IS NO DECLARED EFFECTIVE BEFORE OCTOBER 31, 2007,
WE MAY BE FORCED TO INCUR SUBSTANTIAL PENALTIES.
---------------------------------------------------------------------------

The Company is subject to a $53,000 per month penalty payable to the
secured convertible note holders, if the registration statement fails to
become effective on or before October 31, 2007 (or November 25, 2007 if the
Company is making good faith efforts to respond to Securities and Exchange
Commission comments with respect to the registration statement). If this
penalty becomes payable, the Company will likely be forced to pay this
amount out of the proceeds of the sale of the secured convertible notes.
This will likely have a materially adverse affect on the Company's
financial condition, and could force the Company to curtail its business
plan.

                                     18

---------------------------------------------------------------------------
THE ISSUANCE AND SALE OF COMMON STOCK UNDERLYING THE SECURED CONVERTIBLE
NOTES AND THE WARRANTS MAY DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.
---------------------------------------------------------------------------

As of March 22, 2007, we had 9,961,384 shares of Common Stock issued and
outstanding. We plan to register the shares of Common Stock issuable upon
conversion of $3,700,000 of secured convertible notes and related warrants
(341,112 shares as of March 22, 2007). As sequential conversions and sales
take place, the price of our Common Stock may decline, and as a result, the
holders of the secured convertible notes could be entitled to receive an
increasing number of shares, which could then be sold, triggering further
price declines and conversions for even larger numbers of shares, to the
detriment of the investors in this Offering. All of the shares issuable
upon conversion of the secured convertible notes and upon exercise of the
warrants, may be sold without restriction. The sale of these shares may
adversely affect the market price of our Common Stock.

---------------------------------------------------------------------------
THE ISSUANCE AND SALE OF COMMON STOCK UNDERLYING THE SECURED CONVERTIBLE
NOTES AND THE WARRANTS REPRESENT OVERHANG.
---------------------------------------------------------------------------

In addition, the Common Stock issuable upon conversion of the secured
convertible notes and exercise of the warrants may represent overhang that
may also adversely affect the market price of our Common Stock. Overhang
occurs when there is a greater supply of a company's stock in the market
than there is demand for that stock. When this happens the price of the
company's Common Stock will decrease, and any additional shares which
shareholders attempt to sell in the market will only decrease the share
price even more. The secured convertible notes may be converted at a
conversion price of $0.01 per share, as of March 22, 2007. Warrants to
purchase 5,556 shares of our Common Stock may be exercised at a price of
$40.50 per share, warrants to purchase 143,056 shares of our Common Stock
may be exercised at a price of $9.00 per share, and warrants to purchase
166,667 shares of our Common Stock may be exercised at $4,50 per share. As
of March 22, 2007, the market price for one share of our Common Stock was
$0.075. Therefore, the secured convertible notes and warrants may be
converted into Common Stock at a discount to the market price, providing
holders with the ability to sell their Common Stock at or below market and
still make a profit. In the event of such overhang, holders will have an
incentive to sell their Common Stock as quickly as possible. If the share
volume of the Company's Common Stock cannot absorb the discounted shares,
the market price per share of our Common Stock will likely decrease.

---------------------------------------------------------------------------
THE ISSUANCE OF COMMON STOCK UNDERLYING THE SECURED CONVERTIBLE NOTES AND
THE WARRANTS WILL CAUSE IMMEDIATE AND SUBSTANTIAL DILUTION.
---------------------------------------------------------------------------

The issuance of Common Stock upon conversion of the secured convertible
notes and exercise of the warrants by the holders of the notes and warrants
will result in immediate and substantial dilution to the interests of other
stockholders since the note holders may ultimately receive and sell the
full amount issuable on conversion or exercise. Although the note holders
may not convert their secured convertible notes and/or exercise their
warrants if such conversion or exercise would cause them to own more than
4.9% of our outstanding Common Stock, this restriction does not prevent the
note holders from converting and/or exercising some of their holdings,
selling those shares, and then converting the rest of their holdings, while
still staying below the 4.9% limit. In this way, the note holders could
sell more than this limit while never actually holding more shares than
this limit allows. If the note holders choose to do this it will cause
substantial dilution to the holders of our Common Stock.
                                     19

---------------------------------------------------------------------------
THE CONTINUOUSLY ADJUSTABLE CONVERSION PRICE FEATURE OF OUR SECURED
CONVERTIBLE NOTES COULD REQUIRE US TO ISSUE A SUBSTANTIALLY GREATER NUMBER
OF SHARES, WHICH MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK
AND CAUSE DILUTION TO OUR EXISTING STOCKHOLDERS.
---------------------------------------------------------------------------

Our existing stockholders will experience substantial dilution of their
investment upon conversion of the secured convertible notes and exercise of
the warrants by the holders thereof. The secured convertible notes are
convertible into shares of our Common Stock at the lesser of $0.90 or 50%
of the average of the three lowest trading prices of our Common Stock
during the 20 trading day period ending one trading day before the date
that a holder sends us a notice of conversion. If converted on March 22,
2007, the secured convertible notes would be convertible into approximately
394,889,600 shares of Common Stock based upon a conversion price of $0.01.
The number of shares issuable could prove to be significantly greater in
the event of a decrease in the trading price of our Common Stock that would
cause dilution to our existing stockholders. The sale of shares of Common
Stock issuable upon conversion of the secured convertible notes and
exercise of the warrants may adversely affect the market price of our
Common Stock. As sequential conversions and sales take place, the price of
our Common Stock may decline and if so, the holders of secured convertible
notes would be entitled to receive an increasing number of shares, which
could then be sold, triggering further price declines and conversions for
even larger numbers of shares, which would cause additional dilution to our
existing stockholders. Additionally, there are no provisions in the 2005
securities purchase agreement, the secured convertible notes, the warrants,
or any other document which restrict the holders' ability to sell short our
Common Stock, which they could do to decrease the price of our Common Stock
and increase the number of shares they would receive upon conversion and
thereby further dilute other stockholders.

The following is an example of the amount of shares of our Common Stock
that are issuable upon conversion of the secured convertible notes based on
conversion prices that are 25%, 50% and 75% below the conversion price as
of March 22, 2007 of $0.01.

Percentage Below Conversion Price as of March 22, 2007 Estimated

<Table>
<Caption>
Percentage Below       Estimated     Approximate          % of
Conversion Price       Conversion    Number of            Outstanding
As of March 22, 2007   Price         Shares Issuable (1)  Common Stock (1,2)
--------------------   -----------   -------------------  ------------------
<S>                    <C>           <C>                  <C>
25%                    $0.008        526,519,467          98.14%
50%                    $0.005        789,779,200          98.75%
75%                    $0.003        1,579,558,400        99.37%
</Table>

(1) Includes shares of Common Stock issuable upon conversion of the secured
convertible notes. Does not include 341,112 shares of Common Stock issuable
upon exercise of outstanding warrants.
(2) As of March 22, 2007, we had 9,961,384 shares of Common Stock issued
and outstanding.

As illustrated, the number of shares of Common Stock issuable upon
conversion of the secured convertible notes will increase if the conversion
price of our Common Stock declines, which will cause dilution to our
existing stockholders.

                                     20

---------------------------------------------------------------------------
THE CONTINUOUSLY ADJUSTABLE CONVERSION PRICE FEATURE OF THE SECURED
CONVERTIBLE NOTES MAY ENCOURAGE INVESTORS, INCLUDING THE NOTE HOLDERS, TO
SELL SHORT OUR COMMON STOCK, WHICH COULD HAVE A DEPRESSIVE EFFECT ON THE
PRICE OF OUR COMMON STOCK.
---------------------------------------------------------------------------

The secured convertible notes are convertible into shares of our Common
Stock at the lesser of $0.90 or 50% of the average of the three lowest
trading prices of our Common Stock during the 20 trading day period ending
one trading day before the date that a holder sends us notice of
conversion. The significant downward pressure on the price of our Common
Stock as the note holders convert and sell material amounts of our Common
Stock could encourage investors, including the selling stockholders, to
short sell our Common Stock. This could place further downward pressure on
the price of our Common Stock. In addition, not only the sale of shares
issued upon conversion of the secured convertible notes or exercise of the
warrants, but also the mere perception that these sales could occur, may
adversely affect the market price of our Common Stock.

---------------------------------------------------------------------------
WE MUST SATISFY CERTAIN CONDITIONS BEFORE THE INVESTORS ARE OBLIGATED TO
PURCHASE THE REMAINING SECURED CONVERTIBLE NOTES AND WARRANTS.
---------------------------------------------------------------------------

As of March 22, 2007, we had issued to the secured convertible note
investors $3,075,000 aggregate principal amount of secured convertible
notes, warrants to purchase 5,556 shares of our Common Stock at $40.50 per
share, warrants to purchase 143,056 shares of our Common Stock at $9.00 per
share, and warrants to purchase 166,667 shares of our Common Stock at $4.50
per share. The investors are required to purchase an additional $625,000
principal amount of secured convertible notes and warrants to purchase
2,222 shares of our Common Stock at $40.50 per share and warrants to
purchase 23,611 shares of Common Stock at $9.00 per share five days
following the date that the registration statement for the resale of the
shares of common stock issuable upon conversion of the secured convertible
notes and exercise of the warrants is declared effective by the Securities
and Exchange Commission and conditioned upon certain other conditions,
including: (i) the Company's representations and warranties contained in
the 2005 securities purchase agreement being true and correct in all
material respects on the date when made and as of the date of such
purchase; (ii) the Company having performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
the 2005 agreement; (iii) there being no litigation, statute, rule,
regulation, executive order, decree, ruling or injunction that has been
enacted, entered, promulgated or endorsed by or in any court or government
authority of competent jurisdiction or any self-regulatory organization
having requisite authority which prohibits the transactions contemplated by
the 2005 agreement; (iv) no event having occurred which could reasonably be
expected to have a material adverse effect on the Company; and (v) the
shares of Common Stock issuable upon conversion of the secured convertible
notes and exercise of the warrants having been authorized for quotation on
the OTC Bulletin Board and trading in our Common Stock on the OTC Bulletin
Board having not been suspended by the Securities and Commission or the OTC
Bulletin Board.

If the registration statement is not declared effective within the agreed-
upon time frame or we fail to satisfy these additional conditions, the
investors have no obligation to purchase the remaining secured convertible
notes and warrants. If the investors do not purchase the remaining secured
convertible notes and warrants, the Company may be required to curtail or
abandon its business plan, which would decrease the value of our Common
Stock.
                                     21

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THE NOTE HOLDERS MAY EXPLOIT A MAJOR ANNOUNCEMENT MADE BY THE COMPANY TO
CONVERT THE SECURED CONVERTIBLE NOTES AT A PRICE SUBSTANTIALLY LOWER THEN
THE CONVERSION PRICE WOULD BE OTHERWISE.
---------------------------------------------------------------------------

Under the terms of the secured convertible notes, the conversion price
which the note holders must pay is changed after major announcements by the
Company, discussed below. In the event the Company makes a major
announcement, the conversion price of the secured convertible notes is
equal to the lower of the conversion price that would be in effect on the
date the announcement is made or the current conversion price at the time
the note holders wish to convert. Therefore, if the Company's stock price
was to increase substantially after a major announcement the note holders
could still convert the secured convertible notes the lower price which
applied before the announcement. In this way, the note holders could hold
shares of Common Stock worth much more then the note holders originally
paid for them. Therefore, the note holders could sell the shares at a price
lower then the current market prices, still making a profit on their
investment which would drive down the price of the Common Stock.

---------------------------------------------------------------------------
IF THE COMPANY WISHES TO MERGE OR CONSOLIDATE ITS ASSETS WITH ANOTHER
COMPANY PRIOR TO FULLY PAYING BACK THE SECURED CONVERTIBLE NOTES, IT COULD
LEAD TO A DEFAULT UNDER THE NOTES, MAKING THEM IMMEDIATELY DUE.
---------------------------------------------------------------------------

Under the terms of the secured convertible notes, any sale, conveyance or
disposition of all or substantially all of the assets of the Company in
which more than 50% of the voting power of the Company is disposed of, or
the consolidation, merger or other business combination of the Company with
or into any other entity when the Company is not the survivor shall either:
(i) be deemed to be an event of default under the notes which could cause
the Company to pay substantial penalties, or (ii) require the Company to
get written approval by the successor entity that such successor entity
assumes the obligations of the secured convertible notes. Additionally, if
the Company makes any issuance of shares of Common Stock, options for
shares of Common Stock, or issuances any additional convertible notes for
consideration less than the conversion price then in effect, the conversion
price of the secured convertible notes will become the price the shares or
options were issued for or the price the additional convertible notes will
be convertible for. If the Company is forced to pay penalties under the
secured convertible notes or the conversion price of the notes is decreased
substantially, the Company could be forced to curtail its business
operations or issue more shares of Common Stock, which would have a
dilutive effect on then shareholders.

RISKS RELATING TO OUR COMMON STOCK

---------------------------------------------------------------------------
THE MARKET PRICE OF OUR COMMON STOCK HISTORICALLY HAS BEEN VOLATILE.
---------------------------------------------------------------------------

The market price of our Common Stock historically has fluctuated
significantly based on, but not limited to, such factors as: general stock
market trends, announcements of developments related to our business,
actual or anticipated variations in our operating results, our ability or
inability to generate new revenues, conditions and trends in the healthcare
industry and in the industries in which our customers are engaged.

                                     22


Our Common Stock is traded on the OTC Bulletin Board. In recent years the
stock market in general has experienced extreme price fluctuations that
have oftentimes have been unrelated to the operating performance of the
affected companies. Similarly, the market price of our Common Stock may
fluctuate significantly based upon factors unrelated or disproportionate to
our operating performance. These market fluctuations, as well as general
economic, political and market conditions, such as recessions, interest
rates or international currency fluctuations may adversely affect the
market price of our Common Stock.

---------------------------------------------------------------------------
OUR COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES OF THE COMMISSION
WHICH LIMITS THE TRADING MARKET IN OUR COMMON STOCK, MAKES TRANSACTIONS IN
OUR COMMON STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN
OUR COMMON STOCK.
---------------------------------------------------------------------------

Our Common Stock is considered a "penny stock" as defined in Rule 3a51-1
promulgated by Commission under the Securities Exchange Act of 1934. In
general, a security which is not quoted on NASDAQ or has a market price of
less than $5 per share where the issuer does not have in excess of
$2,000,000 in net tangible assets (none of which conditions the Company
meets) is considered a penny stock. The Commission's Rule 15g-9 regarding
penny stocks impose additional sales practice requirements on broker-
dealers who sell such securities to persons other than established
customers and accredited investors (generally persons with net worth in
excess of $1,000,000 or an annual income exceeding $200,000 or $300,000
jointly with their spouse). For transactions covered by the rules, the
broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. Thus, the rules affect the ability of broker-dealers to
sell our Common Stock should they wish to do so, because of the adverse
effect that the rules have upon liquidity of penny stocks. Unless the
transaction is exempt under the rules, under the Securities Enforcement
Remedies and Penny Stock Reform Act of 1990, broker-dealers effecting
customer transactions in penny stocks are required to provide their
customers with (i) a risk disclosure document; (ii) disclosure of current
bid and ask quotations if any; (iii) disclosure of the compensation of the
broker-dealer and its sales personnel in the transaction; and (iv) monthly
account statements showing the market value of each penny stock held in the
customer's account. As a result of the "penny stock" rules, the market
liquidity for our Common Stock may be adversely affected by limiting the
ability of broker-dealers to sell our Common Stock and the ability of
purchasers to resell our Common Stock. Additionally, the value of the
Company's securities may be adversely affected by the "penny stock" rules,
because of the additional disclosures required by broker-dealers, which
take additional time and effort from broker-dealers, decreasing the
likelihood that broker-dealers will sell the Company's Common Stock. This
may in turn have an adverse effect on the liquidity of the Company's
securities which in turn could adversely affect the price of the Company's
securities.

In addition, various state securities laws impose restrictions on
transferring "penny stocks" and as a result, investors in the Common Stock
may have their ability to sell their shares of the Common Stock impaired.

---------------------------------------------------------------------------
THE COMPANY HAS NOT PAID ANY CASH DIVIDENDS.
---------------------------------------------------------------------------

The Company has paid no cash dividends on its Common Stock to date and it
is not anticipated that any cash dividends will be paid to holders of the
Company's Common Stock in the foreseeable future. While the Company's
dividend policy will be based on the operating results and capital needs of
the business, it is anticipated that any earnings will be retained to
finance the future expansion of the Company.
                                     23



ITEM 2. PROPERTY

The Company's executive offices are located in San Juan Capistrano,
California in a shared office space with Monarch Bay Management Company.
To date, the Company has not been assessed any rental charges for the use
of this space.  The Company also leases 385 square feet of office space in
Moreno Valley California.  This lease requires monthly payments of $539 and
expires November 30, 2007.

We also have personnel who provide services to us from their home offices.
We do not subsidize home office expenses.

We believe that our current facilities are adequate for its current level
of operations and that suitable additional or alternative space will be
available as needed.

We own a variety of computers and other computer equipment for our
operational needs. We believe that our equipment is suited for our present
needs and that additional or alternative computer equipment will be
available as needed.

ITEM 3. LEGAL PROCEEDINGS

On January 19, 2006, Community Capital Bank filed a complaint in the
Supreme Court of the State of New York (Kings County) against the Company,
Macdonald S. Tudeme (our former CEO) and Marguerite Tudeme (our former
Secretary). The complaint seeks payment of three loans made by Community
Capital Bank having a total outstanding principal amount of $202,527.67
plus unpaid interest. The Company believes that the Community Capital Bank
loans were made to MTM, a former subsidiary that was disposed of on
December 15, 2005 as part of the disposition of Marathon (as described in
Note 1), and are guaranteed by the Tudemes. As a result, the Company does
not believe it is obligated to repay any amounts due under the Community
Capital Bank loans.

On January 25, 2006, the Company received notice from the Internal Revenue
Service (the "IRS") that the IRS had concluded that the Company's
subsidiary (DCI) was a third-party payer to and thus employer of a
pharmacist who provided services to DCI's client, the California Department
of Corrections.  Although the IRS notice applies only to the case of the
individual pharmacist, if unchanged, it could require DCI to classify other
pharmacists and nurses in its registry who provide services to DCI's
clients as employees of DCI.  Accordingly, compensation payable to such
pharmacists and nurses would be subject to federal income tax withholding,
Federal Insurance Contributions Act (FICA) tax, and Federal Unemployment
Tax Act (FUTA) tax.   This result would have a material adverse effect on
the Company's business, financial condition and results of operations.  The
Company disagrees with the conclusion of the IRS notice, believes that the
pharmacist in question was properly classified as an independent contractor
and is in the process of contesting the conclusion of the IRS.

On June 5, 2006, Phillip Evans, a former contractor of DCI, filed a
complaint in the Superior Court of California (Riverside County) against
DCI.  The complaint alleges, among other things, libel and unfair business
practices, and seeks general special and punitive damages of $2,170,000.
The Company believes the claims are without merit and is contesting the
suit.

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

There were no matters submitted to a vote of the shareholders during the
fourth quarter of the year covered by this report by a solicitation of
proxies or otherwise.
                                     24

                                  PART II.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

Our common stock currently trades on the OTC Bulletin Board under the
trading symbol "MSTF".

The high and low trading prices, on the OTC Bulletin Board, recorded for
our common stock, for each quarter during the last two fiscal years is set
forth below:

<Table>
<Caption>
                                          Fiscal Year Ended
                         December 31, 2006        December 31, 2005
                      ----------------------   ----------------------
                         High          Low        High          Low
                      ----------   ----------  ----------   ----------
     <S>              <C>          <C>         <C>          <C>
     Quarter 1          $  0.45      $  0.09    $  15.30     $   0.90
     Quarter 2          $  1.00      $  0.20    $   5.40     $   0.27
     Quarter 3          $  0.29      $  0.07    $   3.60     $   0.45
     Quarter 4          $  0.20      $  0.03    $   2.70     $   0.45
</Table>

The market for our common stock has been limited and the prices for our
common stock quoted by brokers are not necessarily a reliable indication of
the value of our common stock.

There are approximately 27 holders of our common stock in certificate form
according to our stockholder list and over 452 holders in street name.

There have been no cash dividends declared on our common stock since our
inception. Dividends will be declared at the sole discretion of our Board
of Directors, provided that so long as our convertible secured notes remain
outstanding, we cannot, without the prior written consent of the holders of
the notes, directly or indirectly declare or pay any dividends, other than
dividends paid to us or any of our wholly-owned subsidiaries.

Securities Offered for Issuance Under Equity Incentive Plans

Our 2005 Stock Incentive Plan (the "2005 Plan") was adopted by our Board of
Directors on December 1, 2005 and approved by the our stockholders on March
27, 2006. The 2005 Plan reserves 1,111,111 shares of the Company's common
stock for grant under the plan to directors, key employees and independent
contractors who provide services to the Company. The 2005 Plan is
administered by the Board of Directors. Our Board of Directors, in its sole
discretion, will determine the exercise price of any options granted under
the 2005 Plan. The exercise price of an incentive stock option cannot be
less than (i) 100% of the fair market value of the common stock on the date
of grant or (ii) in the case of an incentive stock option granted to an
individual who owns (or is deemed to own pursuant to Section 424(d) of the
Internal Revenue Code), at the time of grant, stock possessing more than
10% of the total combined voting power of all classes of our stock (a "10%
Stockholder"), 110% of the fair market value of the common stock on the
date of grant. The exercise price of a nonqualified stock option may be
less than 100% of the fair market value of the common stock on the date of
grant; provided, however, that the exercise price of each nonqualified
stock option granted under the 2005 Plan cannot in any event be less than
the par value per share of our Common Stock.

                                     25

Our Board of Directors, in its sole discretion, will determine the
expiration date of any options granted under the 2005 Plan; provided that
with respect to an incentive stock option the expiration date must be
within (i) ten years from the date of grant, or such shorter period as may
be specified by our board of directors, or (ii) in the case of a 10%
Stockholder, five years from the date of grant.

The following schedule provides additional information on our equity
incentive plans:

<Table>
<Caption>
Plan Category                    Number of    Weighted-average   Number of securities
                                Securities      exercise price    remaining available
                              to be issued      of outstanding    for future issuance
                             upon exercise   options, warrants           under equity
                            of outstanding          and rights           compensation
                         options, warrants                           plans (excluding
                            and rights (a)                       securities reflected
                                                                        in column (a)
                         -----------------   -----------------  ---------------------
<S>                      <C>                 <C>                <C>
Equity compensation
plans approved by
security holders                  931,589               $0.63                179,522

Equity compensation
plans not approved by
security holders                        0                  NA                      0
                         -----------------   -----------------  ---------------------
     Total                        931,589               $0.63                179,522
</Table>

Penny Stock

Our common stock is subject to the provisions of Section 15(g) and Rule
15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), commonly referred to as the "penny stock rule." Section 15(g) sets
forth certain requirements for transactions in penny stocks, and Rule
15g-9(d) (1) incorporates the definition of "penny stock" that is found in
Rule 3a51-1 of the Exchange Act. The SEC generally defines "penny stock" to
be any equity security that has a market price less than $5.00 per share,
subject to certain exceptions. If our common stock is deemed to be a penny
stock, trading in the shares will be subject to additional sales practice
requirements on broker-dealers who sell penny stocks to persons other than
established customers and accredited investors. "Accredited investors" are
persons with assets in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 together with their spouse. For transactions covered
by these rules, broker-dealers must make a special suitability
determination for the purchase of such security and must have the
purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt,
the rules require the delivery, prior to the first transaction, of a risk
disclosure document, prepared by the SEC, relating to the penny stock
market. A broker-dealer also must disclose the commissions payable to both
the broker-dealer and the registered representative, and current quotations
for the securities. Finally, monthly statements must be sent disclosing
recent price information for the penny stocks held in an account and
information on the limited market in penny stocks. Consequently, these
rules may restrict the ability of broker-dealers to trade and/or maintain a
market in our common stock and may affect the ability of our shareholders
to sell their shares.

                                     26

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The discussion should be read in conjunction with our consolidated
financial statements and related notes and the other financial information
included elsewhere in this report.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

Except for the historical information and discussions contained herein,
statements contained in this Form 10-KSB may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995.

The forward-looking statements generally include our management's plans and
objectives for future operations, including plans, objectives and
expectations relating to our future economic performance, business
prospects, revenues, working capital, liquidity, ability to obtain
financing, generation of income and actions of secured parties not to
foreclose on our assets. The forward-looking statements may also relate to
our current beliefs regarding revenues we might earn if we are successful
in implementing our business strategies. The forward-looking statements
generally can be identified by the use of the words "believe," "intend,"
"plan," "expect," "forecast," "project," "may," "should," "could," "seek,"
"pro forma," "estimate," "continue," "anticipate" and similar words. The
forward-looking statements and associated risks may include, relate to, or
be qualified by other important factors, including, without limitation:

  -   anticipated trends in our financial condition and results of
      operations (including expected changes in our gross margin and
      general, administrative and selling expenses);
  -   our ability to finance our working capital and other cash
      requirements;
  -   our business strategy for expanding our presence in the information
      security products and services markets; and
  -   our ability to distinguish ourselves from our current and future
      competitors.

We do not undertake to update, revise or correct any forward-looking
statements. The forward-looking statements are based largely on our current
expectations and are subject to a number of risks and uncertainties. Actual
results could differ materially from these forward-looking statements.

Important factors to consider in evaluating forward-looking statements
include:
  -   changes in external competitive market factors or in our internal
      budgeting process that might impact trends in our results of
      operations;
  -   changes in our business strategy or an inability to execute our
      strategy due to unanticipated changes in the markets; and
  -   various other factors that may prevent us from competing
      successfully in the marketplace.

OVERVIEW

We provide healthcare staffing services to both commercial and government
sector customers. We are focused on building a nationally recognized
healthcare staffing company by growing our current customer bases,
expanding our service offerings, and acquiring and growing profitable
staffing services companies.

                                     27

We operate our healthcare staffing services business through our wholly
owned subsidiary Drug Consultants, Inc. DCI furnishes personnel to perform
a range of pharmacy technician, nursing and other health care services in
support of the operations of government and commercial facilities,
including its largest client, the State of California Depart of Corrections
and Rehabilitation (which accounted for approximately 99% of DCI's 2006
revenue). DCI currently operates under three master contracts with the
CDCR. The master contracts are for terms of three years and currently
expire between September 30, 2007 and June 30, 2008. Historically, DCI has
been able to obtain replacement contracts for its services to the CDCR upon
expiration of its master contracts. DCI's contracts with the CDCR do not
provide for a minimum purchase commitment of our services and can be
terminated by the CDCR at any time on 30 days' notice.

In April 2006, a federal court-appointed receiver assumed total control
over CDCR's healthcare delivery system to address the court's findings of
substandard medical care.  Among the receiver's objectives is to reduce the
CDCR's reliance on staffing service providers like DCI.  Since the
receiver's appointment, DCI has experienced a loss of several of its
healthcare professionals who have accepted positions with the CDCR.  We
believe that the ongoing implications of the receiver's management of the
CDCR's healthcare delivery system include lower demand from the CDCR for
DCI's services, higher attrition of our healthcare professionals, increased
competition for recruiting healthcare professionals to fill positions with
the CDCR and reduced margins for the services we provide the CDCR.

Our revenues generally consist of fees received from clients to whom we
provide temporary healthcare professionals.

Our costs of revenue generally consist of amounts paid to the temporary
healthcare professionals who provide services to our clients.

On November 4, 2005, we acquired 100% of the issued and outstanding shares
of DCII (formerly, iTechexpress, Inc.) in exchange for shares of our Common
Stock representing approximately 93% of our outstanding Common Stock after
issuance. As a result, we have accounted for the DCII acquisition as a
reverse takeover of the Company by the shareholders of DCII and a
recapitalization of DCII. Accordingly, our consolidated financial
statements represent a continuation of DCII and the discussion below
relates to the financial results of DCII.

COMPARISON OF OPERATING RESULTS

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006 COMPARED TO THE
YEAR ENDED DECEMBER 31, 2005

Revenues for the year ended December 31, 2006 totaled $7,727,646 compared
to $1,851,148 for the year ended December 31, 2005.  This is an increase of
$5,876,498 or 317% and is attributable to the acquisition of DCI in
November 2005 and the inclusion of 12 months of operations in our 2006
revenues.

Cost of revenues for the year ended December 31, 2006 totaled $6,597,677
compared to $1,154,862 for the year ended December 31, 2005.  This is an
increase of $5,442,815 or 471% and is attributable to the acquisition of
DCI in November 2005 and the inclusion of 12 months of operations in our
2006 cost of revenues.

                                     28

Operating expenses for the year ended December 31, 2006 totaled $1,355,933
compared to $1,273,817 for the year ended December 31, 2005.  This is an
increase of $82,116 or 6% and is attributable to the acquisition of DCI in
November 2005 and the inclusion of 12 months of operating expenses in our
2006 operating expenses.  These increases were partially offset by the
acquisition costs of DCII and DCI which were included in our 2005 operating
expenses and not in 2006.

Other income (expense) for the year ended December 31, 2006 totaled
$640,487 in expense compared to other income of $876,762 for the year ended
December 31, 2005.  The increase in expense can be primarily attributed to
an increase in interest expense of $907,588 due to additional borrowings
under our secured convertible notes as well as the fact that 2005 interest
expense reflected approximately two months of expense from the November
2005 financing versus a full year in 2006.  A decrease in the gain on
derivative valuation can also be attributed to the overall increase in
other expense compared to the prior year.   These factors were partially
offset by the loss on disposition of subsidiary and loss on discontinued
operations which were included in the 2005 results of operations.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2006, we had negative net working capital of $546,798.
Our current assets of $1,300,061 consisted of cash and cash equivalents of
$1 and accounts receivable, net of $1,300,060. Our current liabilities of
$1,846,859 consisted of accounts payable and accrued expenses of $910,841;
a factoring liability of $579,780; accrued interest of $266,670; notes
payable, current of $59,401; and, accounts payable related parties of
$30,167.

As of December 31, 2006, we had long-term debt of $1,842,971, consisting of
$175,046 in derivatives, $1,547,648 outstanding under our convertible
secured notes and $120,277 in notes payable.

Net cash used in operating activities for the year ended December 31, 2006
was $1,360,683, compared to net cash provided by operating activities of
$243,190 for the year ended December 31, 2005. Our increase of net cash
used in operating activities in 2006 is primarily attributable to an
increase in accounts receivables and a decrease in accounts payable
compared to the prior year.

There was no cash provided by or used in investing activities during the
year ended December 31, 2006.  Net cash used in investing activities for
the year ended December 31, 2005 was $1,600,000 and reflects the purchase
of DCI in November 2005.

Net cash provided by financing activities for the year ended December 31,
2006 was $319,251 compared with net cash provided by financing activities
of $2,361,078 for the year ended December 31, 2005. Net cash provided by
financing activities in 2006 includes $425,000 of proceeds from our
issuance of convertible secured notes compared with $2,150,000 of proceeds
in 2005.  Payments made on notes payable totaled $350,396 for the year
ended December 31, 2006 compared with payments of $124,054 in 2005.

Our consolidated financial statements are prepared using the accrual method
of accounting in accordance with GAAP, and have been prepared on a going
concern basis, which contemplates the realization of assets and the
settlement of liabilities in the normal course of business. We had $617,812
in accumulated deficit at December 31, 2006. Our management has taken
various steps to revise its operating and financial requirements, which it
believes will be sufficient to provide the Company with the ability to
continue its operations for the next twelve months.

                                     29

In view of our net working capital deficit, operating cash flow deficit,
long-term debt and the other matters described above, recoverability of a
major portion of the recorded asset amounts shown in our consolidated
balance sheet is dependent upon continued operations of the Company, which
in turn is dependent upon our ability to raise additional capital, obtain
financing and to succeed in our future operations. The financial statements
do not include any adjustments relating to the recoverability and
classification of recorded asset amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a going
concern.  We project that our cash on hand and cash flow generated from
operations will not be sufficient to fund operational liquidity
requirements.  As a result, our ability to continue our operations and
growth strategy depends on our ability to access the capital markets in the
near term.

Our secured convertible note investors are required to purchase an
additional $625,000 principal amount of secured convertible notes and
related warrants five days following the date that a registration statement
for the resale of the shares of common stock issuable upon conversion of
the secured convertible notes and exercise of the warrants is declared
effective by the Securities and Exchange Commission and if other conditions
are satisfied.  There can be no assurance that we will satisfy the
conditions to funding or, if we do, that we will do so on a timetable that
meets our operational liquidity needs

There also can be no assurance that capital from other outside sources will
be available, or if such financing is available, that it will be on terms
that management deems sufficiently favorable. If we are unable to obtain
additional financing upon terms that management deems sufficiently
favorable, or at all, we could be forced to restructure or to default on
our obligations or to curtail or abandon our business plan, any of which
may devalue or make worthless an investment in the Company.

The operations of DCII and DCI, which will represent our entire business
for the foreseeable future, were acquired in November 2005. Accordingly, we
have a limited operating history upon which an evaluation of our prospects
can be made. Our strategy is unproven and the revenue and income potential
from our strategy is unproven. It is difficult for us to predict future
liquidity requirements with certainty and our forecast is based upon
certain assumptions, which may differ from actual future outcomes. Over the
longer term, we must successfully execute our plans to increase revenue and
income streams that will generate significant positive cash flow if we are
to sustain adequate liquidity without impairing growth or requiring the
infusion of additional funds from external sources.

We had an operating cash flow deficit in 2006. We do not currently have
enough capital to repay our outstanding convertible secured notes and other
liabilities and we may never generate enough revenue to repay the amounts
owed. In addition, execution of our acquisition-based growth strategy will
likely acquire significant additional capital.


                                     30

As a result, our continued operations, ability to repay outstanding
liabilities and growth strategy all depend on our ability to access the
capital markets. We do not have any commitments or identified sources of
additional capital from third parties, other than the commitment from the
convertible secure note investors and Systran mentioned above, or from its
officers, directors or majority shareholders. There can be no assurance
that capital from outside sources will be available, or if such financing
is available, that it will be on terms that management deems sufficiently
favorable. If we are unable to obtain additional financing upon terms that
management deems sufficiently favorable, or at all, it would have a
material adverse impact upon our ability to continue our business
operations and pursue our growth strategy. In the event we do not raise
additional capital, it is likely that our growth will be restricted and
that we may be forced to scale back or curtail implementing our business
plan.

RECEIVABLES FACTORING FACILITY

On November 8, 2005, DCII and DCI entered into a Factoring and Security
Agreement to sell accounts receivables to Systran Financial Services
Corporation.  The purchase price for each invoice sold is the face amount
of the invoice less a discount of 1.5%.

On July 24, 2006, the Factoring Agreement was amended and under the terms
of the amendment a fee equal to prime plus 1.50% shall be charged on a
daily basis based upon total of invoices purchased by Systran that remain
unpaid and outstanding, less the deposit held by Systran.   Further, the
purchase price for each invoice sold was amended to be the face amount of
the invoice less a discount of 0.65%.  Additionally, a one time fee of
0.50% on all invoices that remain unpaid from the date sold shall be
incurred on the 91st day from the date sold.

All accounts sold are with recourse by Systran.  Systran may defer making
payment to DCII of a portion of the purchase price payable for all accounts
purchased which have not been paid up to 10.0% of such accounts (reserve).

All of DCII's and DCI's accounts receivable are pledged as collateral under
the agreement.  The initial term is for thirty-six months and will
automatically renew for an additional twelve months at the end of the term,
unless the Company gives thirty days written notice of its intention to
terminate the factoring agreement.

CONVERTIBLE SECURED NOTES

On August 31, 2004, the Company entered into a securities purchase
agreement with four accredited investors for the sale of secured
convertible notes having an aggregate principal amount of $700,000, a 10%
annual interest rate payable quarterly, and a term of two years. We also
agreed to sell warrants to purchase up to an aggregate of 7,777 shares of
our Common Stock at $40.50 per share. We only sold $500,000 principal
amount of secured convertible notes under the 2004 agreement. As a result,
we sold to the investors warrants to purchase up to an aggregate of 5,556
shares of our Common Stock at $40.50 per share. The investors have agreed
to purchase the remaining $200,000 commitment under the terms of our 2005
securities purchase agreement with the investors.

On November 4, 2005, we entered into an additional securities purchase
agreement with the same accredited investors, for the sale of secured
convertible notes having an aggregate principal amount of $3,000,000, an 8%
annual interest rate (payable quarterly), and a term of three years. We
also agreed to sell warrants to purchase up to an aggregate of 166,667
shares of our Common Stock at $9.00 per share.

                                     31

On March 29, 2007, the Company obtained an amendment to the 2005 securities
purchase agreement whereby interest payments are payable at the same time
the corresponding principal balance is due and payable, whether at maturity
or upon acceleration or by prepayment.

As of March 22, 2007, we had issued under the two securities purchase
agreements:

  -   $3,075,000 aggregate principal amount of secured convertible notes,
  -   Warrants to purchase 5,556 shares of our Common Stock at $40.50 per
      shares,
  -   Warrants to purchase 143,056 shares of our Common Stock at $9.00 per
      share, and
  -   Warrants to purchase 166,667 shares of our Common Stock at $4.50 per
      share.

The investors are required to purchase an additional $625,000 principal
amount of secured convertible notes and warrants to purchase 2,222 shares
of our Common Stock at $40.50 per share and warrants to purchase 23,611
shares of our Common Stock at $9.00 per share five days following the date
that the registration statement for the resale of the shares of common
stock issuable upon conversion of the secured convertible notes and
exercise of the warrants is declared effective by the Securities and
Exchange Commission and if other conditions are satisfied, including: (i)
the Company's representations and warranties contained in the 2005
securities purchase agreement being true and correct in all material
respects on the date when made and as of the date of such purchase; (ii)
the Company having performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by the 2005
agreement; (iii) there being no litigation, statute, rule, regulation,
executive order, decree, ruling or injunction that has been enacted,
entered, promulgated or endorsed by or in any court or government authority
of competent jurisdiction or any self-regulatory organization having
requisite authority which prohibits the transactions contemplated by the
2005 agreement; (iv) no event having occurred which could reasonably be
expected to have a material adverse effect on the Company; and (v) the
shares of Common Stock issuable upon conversion of the secured convertible
notes and exercise of the warrants having been authorized for quotation on
the OTC Bulletin Board and trading in our Common Stock on the OTC Bulletin
Board having not been suspended by the Securities and Exchange Commission
or the OTC Bulletin Board.

On November 1, 2006, we obtained an amendment to the 2005 securities
purchase agreement extending the date by which the Company must obtain the
effectiveness of the registration statement covering the resale of the
shares of our Commons Stock issuable upon conversion of the secured
convertible notes and the exercise of the warrants to April 30, 2007 (or
May  25, 2007 if the Company is making a good faith effort to respond to
the Securities and Exchange Commission's comments) in exchange for issuing
warrants to purchase 166,667 shares of our Common Stock at $4.50 per share
to the holders of the secured convertible notes.

On March 29, 2007, we obtained an amendment extending the date by which the
Company must obtain the effectiveness of the registration statement
covering the resale of the shares of our Commons Stock issuable upon
conversion of the secured convertible notes and the exercise of the
warrants to October 31, 2007 (or November 25, 2007 if the Company is making
a good faith effort to respond to the Securities and Exchange Commission's
comments).

                                     32

In connection with the 2005 securities purchase agreement, we entered into
a security agreement, whereby we granted the investors a continuing, first
priority security interest in the Company's general assets including all of
the Company's:
  -   Goods, including without limitations, all machinery, equipment,
      computers, motor vehicles, trucks, tanks, boats, ships, appliances,
      furniture, special and general tools, fixtures, test and quality
      control devices and other equipment of every kind and nature and
      wherever situated;
  -   Inventory (except that the proceeds of inventory and accounts
      receivable;
  -   Contract rights and general intangibles, including, without
      limitation, all partnership interests, stock or other securities,
      licenses, distribution and other agreements, computer software
      development rights, leases, franchises, customer lists, quality
      control procedures, grants and rights, goodwill, trademarks, service
      marks, trade styles, trade names, patents, patent applications,
      copyrights, deposit accounts, and income tax refunds;
  -   Receivables including all insurance proceeds, and rights to refunds
      or indemnification whatsoever owing, together with all instruments,
      all documents of title representing any of the foregoing, all rights
      in any merchandising, goods, equipment, motor vehicles and trucks
      which any of the same may represent, and all right, title, security
      and guaranties with respect to each receivable, including any right
      of stoppage in transit; and documents, instruments and chattel
      paper, files, records, books of account, business papers, computer
      programs and the products and proceeds of all of the foregoing and
      the Company's intellectual property.

Additionally, we entered into an intellectual property security agreement
with the investors, whereby we granted them a security interest in all of
the Company's software programs, including source code and data files, then
owned or thereafter acquired, all computers and electronic processing
hardware, all related documentation, and all rights with respect to any
copyrights, copyright licenses, intellectual property, patents, patent
licenses, trademarks, trademark licenses or trade secrets.

Additional material terms of the 2005 securities purchase agreement, the
secured convertible notes and the warrants are described below:

Conversion and Conversion Price
-------------------------------
The secured convertible notes are convertible into our Common Stock, at the
investors' option, at the lower of (i) $0.90 or (ii) 50% of the average of
the three lowest intraday trading prices for the Common Stock on a
principal market for the 20 trading days before but not including the
conversion date. Accordingly, there is in fact no limit on the number of
shares into which the notes may be converted.

The conversion price is adjusted after major announcements by the Company.
In the event the Company makes a public announcement that the Company
intends to consolidate or merge with any other corporation (other than a
merger in which the Company is the surviving or continuing corporation and
its capital stock is unchanged) or sell or transfer all or substantially
all of the assets of the Company or any person, group or entity (including
the Company) publicly announces a tender offer to purchase 50% or more of
the Company's Common Stock (or any other takeover scheme) then the
conversion price will be equal to the lower of the conversion price that
would be effect on the date the announcement is made or the current
conversion price at the time the secured convertible note holders wish to
convert.
                                     33

The secured convertible notes also provide anti-dilution rights, whereby
the conversion price shall be adjusted in the event that the Company issues
or sells any shares of Common Stock for no consideration or consideration
less than the average of the last reported sale prices for the shares of
the Common Stock on the OTC Bulletin Board for the five trading days
immediately preceding such date of issuance or sale. The conversion price
is also proportionately increased or decreased in the event of a reverse
stock split or forward stock split, respectively. The conversion price is
also adjusted in the event the Company effects a consolidation, merger or
sale of substantially all its assets (which may also be treated as an event
of default) or if the Company declares or makes any distribution of its
assets (including cash) to holders of its Common Stock, as provided in the
secured convertible notes.

If a note holder gives the Company a notice of conversion relating to the
secured convertible notes and the Company is unable to issue such note
holder the shares of Common Stock underlying the secured convertible note
within five days from the date of receipt of such notice, the Company is
obligated to pay the note holder $2,000 for each day that the Company is
unable to deliver such Common Stock underlying the secured convertible
note.

The secured convertible notes contain a provision whereby no note holder is
able to convert any part of the notes into shares of the Company's Common
Stock, if such conversion would result in beneficial ownership by the note
holder and its affiliates of more than 4.99% of the Company's then
outstanding shares of Common Stock.

In addition, we have the right under certain circumstances described below
under "Company Call Option and Prepayment Rights" to prevent the note
holders from exercising their conversion rights during any month after a
month in which we have exercised certain prepayment rights.

Company Call Option and Prepayment Rights
-----------------------------------------
Each secured convertible note contains a call option in favor of the
Company, whereby as long as no event of default under the note has
occurred, the Company has a sufficient number of authorized shares reserved
for issuance upon full conversion of the secured convertible notes and our
Common Stock is trading at or below $0.90 per share (subject to adjustment
in the secured convertible note), the Company has the right to prepay all
or a portion of the note. The prepayment amount is equal to the total
amount of principal and accrued interest outstanding under the note, and
any other amounts which may be due to the note holders, multiplied by 130%.

In the event that the average daily trading price of our Common Stock for
each day of any month is below $0.90, the Company may at its option prepay
a portion of the outstanding principal amount of the secured convertible
notes equal to 104% of the principal amount thereof divided by thirty-six
plus one month's interest on the secured convertible notes, or the amount
of the remaining principal and interest, whichever is less. No note holder
is entitled to convert any portion of the secured convertible notes during
any month after the month on which the Company exercises this prepayment
option.

                                     34

Events of Default
-----------------
Upon an event of default under the secured convertible notes, and in the
event the note holders give the Company a written notice of default, an
amount equal to 130% of the amount of the outstanding secured convertible
notes and interest thereon shall become immediately due and payable or
another amount as otherwise provided in the notes. Events of default under
the secured convertible notes include the following:
  -   failure to pay any amount of principal or interest on the notes;
      failure to issue shares to the selling stockholders upon conversion
      of the notes, and such failure continues for ten days after
      notification by the note holders;
  -   failure to obtain effectiveness of the registration statement
      covering the resale of the shares of our Commons Stock issuable upon
      conversion of the secured convertible notes and the exercise of the
      warrants on or before October 31, 2007 (or November 25, 2007 if the
      Company is making a good faith effort to respond to the Securities
      and Exchange Commission's comments), or an effective registration
      statement covering such shares ceases to be effective for any ten
      consecutive days or any twenty days in any twelve month period;
  -   breaches by the Company of any of the convents contained in the
      notes;
  -   breaches by the Company of any representations and warranties made
      in the 2005 securities purchase agreement or any related document;
  -   appointment by the Company of a receiver or trustee or makes an
      assignment for the benefit of creditors;
  -   filing of any judgment against the Company for more than $50,000;
  -   bringing of bankruptcy proceedings against the Company and such
      proceedings are not stayed within sixty days of such proceedings
      being brought; or
  -   delisting of the Common Stock from the OTC Bulletin Board or
      equivalent replacement exchange.

Stock Purchase Warrants
-----------------------
The warrants expire five years from their date of issuance. The warrants
include anti-dilution rights, whereby the exercise price of the warrants
shall be adjusted in the event that the Company issues or sells any shares
of the Company's Common Stock for no consideration or consideration less
than the average of the last reported sale prices for the shares of the
Company's Common Stock on the OTC Bulletin Board for the five trading days
immediately preceding such date of issuance or sale. The exercise price of
the warrants are also proportionately increased or decreased in the event
of a reverse stock split or forward stock split, respectively. The exercise
price is also adjusted pursuant to the warrants in the event the Company
effects a consolidation, merger or sale of substantially all of its assets
and/or if the Company declares or makes any distribution of its assets
(including cash) to holders of its common stock as a partial liquidating
dividend, as provided in the warrants.


                                     35

The warrants also contain a cashless exercise, whereby after February 2,
2006, and if a registration statement covering the warrants is not
effective, the warrant holders may convert the warrants into shares of the
Company's restricted Common Stock. In the event of a cashless exercise
under the warrants, in lieu of paying the exercise price in cash, the
selling stockholders can surrender the warrant for the number of shares of
Common Stock determined by multiplying the number of warrant shares to
which it would otherwise be entitled by a fraction, the numerator of which
is the difference between (i) the average of the last reported sale prices
for the Company's Common Stock on the OTC Bulletin Board for the five
trading days preceding such date of exercise and (ii) the exercise price,
and the denominator of which is the average of the last reported sale
prices for the Company's Common Stock on the OTC Bulletin Board for the
five trading days preceding such date of exercise. For example, if the
selling stockholder is exercising 100,000 warrants with a per warrant
exercise price of $0.75 per share through a cashless exercise when the
average of the last reported sale prices for the Company's Common Stock on
the OTC Bulletin Board for the five trading days preceding such date of
exercise is $2.00 per share, then upon such cashless exercise the warrant
holder will receive 62,500 shares of the Company's Common Stock.

Registration Rights Agreement
-----------------------------
We also entered into a registration rights agreement with the investors
that grants the investors demand registration rights with respect to 200%
of the Common Stock underlying the secured convertible notes and 200% of
the Common Stock underlying the warrants. The Company will be subject to
the payment of certain damages in the event that it does not satisfy its
obligations including its obligation to have a registration statement with
respect to the Common Stock underlying the secured convertible notes and
warrants declared effective by the Securities and Exchange Commission on or
prior to October 31, 2007; in the event that after the registration
statement is declared effective, sales of the Company's securities cannot
be made pursuant to the registration statement; and in the event that the
Company's Common Stock is not listed on the OTC Bulletin Board or the
NASDAQ, New York or American stock exchanges. The damages are equal to 0.02
times the number of months (prorated for partial months) that any such
event occurs (subject to adjustment as provided in the registration rights
agreement).

Side Letter Agreement
---------------------
We entered into a aide letter agreement with the investors on November 10,
2005. The Side Letter Agreement provided that in consideration for the
November 2005 sale of the secured convertible notes, the investors agreed
that the face amount of the $500,000 of secured convertible notes issued to
the investors in August 2004 and the $200,000 in secured convertible notes
which remained to be issued under the 2004 securities purchase agreement
upon the effectiveness of a registration statement covering such secured
convertible notes shall be included in the amount advanced to the Company
under the November 2005 secured convertible notes. The side letter
agreement also provided that the terms of the 2005 securities purchase
agreement shall supercede the prior 2004 securities purchase agreement and
that all interest, penalties, fees, charges or other obligations accrued or
owed by the Company to the investors pursuant to the 2004 securities
purchase agreement are waived, provided that in the event of any material
breach of the 2005 securities purchase agreement by the Company, which
breach is not cured within five days of receipt by the Company of written
notice of such breach, the novation of the 2004 securities purchase
agreement and the waiver of the prior obligations thereunder shall be
revocable by the selling stockholders and all such prior obligations shall
be owed as if the 2004 securities purchase agreement was never superceded.
                                     36

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Critical Accounting Policies
----------------------------
We prepare our consolidated financial statements in conformity with GAAP.
As such, we are required to make certain estimates, judgments and
assumptions that we believe are reasonable based upon the information
available. These estimates and assumptions affect the reported amounts of
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the periods presented. The
significant accounting policies which we believe are the most critical to
aid in fully understanding and evaluating our reported financial results
include the following:

Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of Monarch
Staffing, Inc. (formerly MT Ultimate Healthcare Corp.) (Monarch), and its
wholly-owned subsidiaries, Drug Consultants International, Inc., formerly
known as  iTechexpress, Inc., (DCII) and Drug Consultants, Inc. (DCI), and
DCII's wholly-owned subsidiary, Success Development Group, Inc. (SDG). All
significant intercompany balances and transactions have been eliminated in
the consolidation.

Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make a number of estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent assets
and liabilities at the dates of the financial statements and the reported
amounts of revenue and expenses during the reporting periods.  Actual
results could differ from those estimates.

Accounts Receivable and Allowance for Doubtful Accounts
-------------------------------------------------------
Accounts receivable consists of amounts billed to customers upon
performance of service.  The Company performs ongoing credit evaluations of
customers and adjusts credit limits based upon payment history and the
customer current creditworthiness, as determined by its review of their
current credit information.  The Company continuously monitors collections
and payments from its customers and maintains a provision for estimated
credit losses based upon its historical experience and any
customer-specific collection issues that it has identified.  Accounts
receivable are shown net of an allowance for doubtful accounts of $0 at
December 31, 2006 and 2005, respectively. An allowance is established
whenever receivables are over 90 days old and the customer has not
responded to efforts to reconcile differences. Such receivables are deemed
to be uncollectible after 180 days. There were no such receivables for the
current year or prior year.

Cash
----
Cash equivalents include short-term, highly liquid investments with
maturities of three months or less at the time of acquisition.


                                     37

Long-Lived Assets
-----------------
The Company accounts for its long-lived assets in accordance with SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS
No. 144 requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the historical cost
carrying value of an asset may no longer be appropriate. The Company
assesses recoverability of the carrying value of an asset by estimating the
future net cash flows expected to result from the asset, including eventual
disposition. If the future net cash flows are less than the carrying value
of the asset, an impairment loss is recorded equal to the difference
between the asset's carrying value and fair value or disposable value.

Goodwill
--------
The excess of purchase price and related costs over the fair value of net
assets of entities acquired is recorded as goodwill. In accordance with
SFAS No. 142, Goodwill and Other Intangible Assets , the Company evaluates
goodwill annually for impairment at the reporting unit level and whenever
circumstances occur indicating that goodwill might be impaired. The
performance of the test involves a two-step process. The first step of the
impairment test involves comparing the fair value of the Company's
reporting units with the reporting unit's carrying amount, including
goodwill. The Company generally determines the fair value of its reporting
units using the expected present value of future cash flows, giving
consideration to the market valuation approach. If the carrying amount of
the Company's reporting units exceeds the reporting unit's fair value, the
Company performs the second step of the goodwill impairment test to
determine the amount of impairment loss. The second step of the goodwill
impairment test involves comparing the implied fair value of the Company's
reporting unit's goodwill with the carrying amount of that goodwill. At
December 31, 2006 and 2005, the Company performed the annual impairment
test and determined there was no impairment of goodwill.

Beneficial Conversion Feature
-----------------------------
From time to time, the Company has debt with conversion options that
provide for a rate of conversion that is below market value. This feature
is normally characterized as a beneficial conversion feature ("BCF"), which
is recorded by the Company pursuant to Emerging Issues Task Forces ("EITF")
Issue No. 98-5 ("EITF 98-05"), "Accounting for Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion
Ratios," and EITF Issue No. 00-27, "Application of EITF Issue No. 98-5 to
Certain Convertible Instruments."

If a BCF exists, the Company records it as a debt discount and amortizes it
to interest expense over the life of the debt on a straight-line basis,
which approximates the effective interest method.


                                     38

Derivative Financial Instruments
--------------------------------
The Company's derivative financial instruments consist of embedded
derivatives related to the convertible notes, since the notes are not
conventional convertible debt. These embedded derivatives include certain
conversion features, monthly payment options, variable interest features,
call options, liquidated damages clauses in the registration rights
agreement and certain default provisions.  The accounting treatment of
derivative financial instruments requires that we record the derivatives
and related warrants at their fair values as of the inception date of the
agreement and at fair value as of each subsequent balance sheet date.

Any change in fair value of these instruments will be recorded as non-
operating, non-cash income or expense at each reporting date. If the fair
value of the derivatives is higher at the subsequent balance sheet date, we
will record a non-operating, non-cash charge. If the fair value of the
derivatives is lower at the subsequent balance sheet date, we will record
non-operating, non-cash income. The derivative and warrant liabilities are
recorded as long-term liabilities in the consolidated balance sheet.

Revenue Recognition
-------------------
Revenues and costs of revenues from services are recognized during the
period in which the services are provided.  The Company applies the
provisions of SEC Staff Accounting Bulletin ("SAB") No. 104, Revenue
Recognition in Financial Statements ("SAB 104"), which provides guidance on
the recognition, presentation, and disclosure of revenue in financial
statements filed with the SEC. SAB 104 outlines the basic criteria that
must be met to recognize revenue and provides guidance for disclosure
related to revenue recognition policies. In general, the Company recognizes
revenue related to monthly contracted amounts for services provided when
(i) persuasive evidence of an arrangement exists, (ii) delivery has
occurred or services have been rendered, (iii) the fee is fixed or
determinable, and (iv) collectibility is reasonably assured.

The Company has contracts with various governments and governmental
agencies. Government contracts are subject to audit by the applicable
governmental agency. Such audits could lead to inquiries from the
government regarding the allowability of costs under applicable government
regulations and potential adjustments of contract revenues. To date, the
Company has not been involved in any such audits.

Income Taxes
------------
The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, deferred tax assets and
liabilities are recognized for future tax benefits or consequences
attributable to temporary differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. A valuation
allowance is provided for significant deferred tax assets when it is more
likely than not that such assets will not be realized through future
operations. We currently have recorded a valuation allowance against all of
our deferred tax assets. We have considered future taxable income and
ongoing tax planning strategies in assessing the amount of the valuation
allowance. If actual results differ favorably from these estimates, we may
be able to realize some or all of the deferred tax assets, which could
favorably impact our operating results.

                                     39

Issuance of Shares for Non-Cash Consideration
---------------------------------------------
The Company accounts for the issuance of equity instruments to acquire
goods and/or services based on the fair value of the goods and services or
the fair value of the equity instrument at the time of issuance, whichever
is more reliably determinable. The majority of equity instruments have been
valued at the market value of the shares on the date issued.

The Company's accounting policy for equity instruments issued to
consultants and vendors in exchange for goods and services follows the
provisions of EITF 96-18, "Accounting for Equity Instruments That are
Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services" and EITF 00-18, "Accounting Recognition for
Certain Transactions Involving Equity Instruments Granted to Other Than
Employees." The measurement date for the fair value of the equity
instruments issued is determined at the earlier of (i) the date at which a
commitment for performance by the consultant or vendor is reached or (ii)
the date at which the consultant or vendor's performance is complete. In
the case of equity instruments issued to consultants, the fair value of the
equity instrument is recognized over the term of the consulting agreement.
In accordance to EITF 00-18, an asset acquired in exchange for the issuance
of fully vested, nonforfeitable equity instruments should not be presented
or classified as an offset to equity on the grantor's balance sheet once
the equity instrument is granted for accounting purposes.

ITEM 7. FINANCIAL STATEMENTS

The Reports of Independent Registered Public Accounting Firms and the
consolidated financial statements of the Company and the notes thereto
appear on the following pages.


                                     40

                                  CONTENTS

Report of Independent Registered Public Accounting Firm. . . . . . . . .3

Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . .4

Consolidated Statements of Operations. . . . . . . . . . . . . . . . . .5

Consolidated Statements of Stockholders' Equity (Deficit). . . . . . . .6

Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . . . .7

Notes to the Consolidated Financial Statements . . . . . . . . . . . . .8



/Letterhead/

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
Monarch Staffing, Inc. and Subsidiaries
(formerly MT Ultimate Healthcare Corp.)
San Juan Capistrano, California

We have audited the accompanying consolidated balance sheet of Monarch
Staffing, Inc. and Subsidiaries (formerly MT Ultimate Healthcare Corp.) as
of December 31, 2006 and 2005, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the years
then ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the PCAOB
(United States). Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audits included consideration of
internal controls over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company's
internal controls over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial
statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Monarch Staffing, Inc. and Subsidiaries (formerly MT Ultimate
Healthcare Corp.) as of December 31, 2006 and 2005, and the consolidated
results of their operations and their cash flows for the years then ended,
in conformity with accounting principles generally accepted in the United
States of America.

The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As discussed in Note
2 to the consolidated financial statements, the Company has a stockholders'
deficiency and has suffered significant losses to date, which raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2.
The consolidated financial statements do not include any adjustments that
might result from the outcome of these uncertainties.

/S/ Chisholm, Bierwolf & Nilson, LLC

Chisholm Bierwolf & Nilson, LLC
Bountiful, Utah
March 1, 2007

                                     F-3

<PAGE>
                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)
                         Consolidated Balance Sheet
                                   ASSETS
                                  -------
<Table>
<Caption>
                                                           December 31,  December 31,
                                                               2006          2005
                                                           ------------  ------------
<S>                                                        <C>           <C>
CURRENT ASSETS
  Cash and cash equivalents (Note 1)                       $         1   $ 1,041,433
  Accounts receivable, net (Note 1)                          1,300,060       736,547
                                                           ------------  ------------
   Total Current Assets                                      1,300,061     1,777,980
                                                           ------------  ------------
OTHER ASSETS
  Other receivable                                              75,006           -
  Goodwill (Note 1)                                          1,245,481     1,245,481
                                                           ------------  ------------
   Total Other Assets                                        1,320,487     1,245,481
                                                           ------------  ------------
   TOTAL ASSETS                                            $ 2,620,548   $ 3,023,461
                                                           ============  ============
                    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                    ----------------------------------------------
CURRENT LIABILITIES
  Accounts payable                                         $   491,990   $   886,125
  Accounts payable - related party (Note 3)                     30,167        52,967
  Accrued expenses                                             418,851       527,882
  Accrued interest                                             266,670           -
  Factoring liability (Note 6)                                 579,780       335,132
  Notes payable - current portion (Note 4)                      59,401       350,394
                                                           ------------  ------------
   Total Current Liabilities                                 1,846,859     2,152,500
                                                           ------------  ------------
LONG-TERM DEBT
  Derivatives                                                  175,046       603,401
  Notes payable (Note 4)                                       120,277       179,680
  Callable secured convertible notes payable
   (net of debt discount of $1,527,352 and $2,237,070
   at December 31, 2006 and 2005, respectively)              1,547,648       412,930
                                                           ------------  ------------
   Total Long-Term Debt                                      1,842,971     1,196,011
                                                           ------------  ------------
   Total Liabilities                                         3,689,830     3,348,510
                                                           ------------  ------------
COMMITMENTS AND CONTINGENCIES (Note 8)                             -             -

STOCKHOLDERS' EQUITY (DEFICIT)
  Common stock, $.001 par value; 400,000,000 shares
   authorized; 9,862,691 outstanding at December 31,
   2006 and 2005, respectively                                   9,863         9,863
  Additional paid-in capital                                  (461,333)     (583,553)
  Retained Earnings (Accumulated deficit)                     (617,812)      248,640
                                                           ------------  ------------
   Total Stockholders' Equity (Deficit)                     (1,069,281)     (325,050)
                                                           ------------  ------------
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)    $ 2,620,548   $ 3,023,461
                                                           ============  ============
</Table>
              The accompanying notes are an integral part of
                  these consolidated financial statements
                                     F-4

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)
                    Consolidated Statement of Operations
<Table>
<Caption>
                                                              For the Years Ended
                                                                   December 31,
                                                           --------------------------
                                                               2006          2005
                                                           ------------  ------------
<S>                                                        <C>           <C>
NET REVENUES                                               $ 7,727,646   $ 1,851,148

COST OF REVENUES                                             6,597,677     1,154,862
                                                           ------------  ------------
GROSS PROFIT                                               $ 1,129,969   $   696,286
                                                           ------------  ------------
OPERATING EXPENSES
  Salaries and wages (including stock compensation expense)    390,067       399,368
  Consulting                                                   313,474       110,500
  Professional fees                                            303,512       246,309
  General and administrative                                   345,395       494,466
  Bad debt expense                                               3,485        23,174
                                                           ------------  ------------
   Total Operating Expenses                                  1,355,933     1,273,817
                                                           ------------  ------------
INCOME (LOSS) FROM OPERATIONS                                 (225,964)     (577,531)
                                                           ------------  ------------
OTHER INCOME (EXPENSE)
  Interest income                                                1,672           196
  Loss on discontinued operations (Note 7)                         -         (15,825)
  Loss on disposition of subsidiary (Note 7)                       -        (699,616)
  Gain (loss) on disposition of asset                              -          (1,062)
  Gain (loss) on derivative valuation                          540,578     1,868,218
  Interest expense                                          (1,182,737)     (275,149)
                                                           ------------  ------------
   Total Other Income (Expense)                               (640,487)      876,762
                                                           ------------  ------------
INCOME (LOSS) BEFORE INCOME TAXES                             (866,452)      299,231

  Provision for income taxes                                       -             -
                                                           ------------  ------------
NET INCOME (LOSS)                                          $  (866,452)  $   299,231
                                                           ============  ============
BASIC INCOME (LOSS) PER SHARE                              $     (0.09)  $      0.03
                                                           ============  ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING         9,862,691     9,862,691
                                                           ============  ============
</Table>

              The accompanying notes are an integral part of
                  these consolidated financial statements
                                     F-5

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)
         Consolidated Statements of Stockholders' Equity (Deficit)
                   Years Ended December 31, 2006 and 2005
<Table>
<Caption>
                                                                           Retained
                                        Common Stock         Additional    Earnings
                                 -------------------------    Paid-in    (Accumulated
                                    Shares      Amount        Capital       Deficit)
                                 ------------ -----------  ------------  ------------
<S>                              <C>          <C>          <C>           <C>
Balance, January 1, 2005           9,203,704  $    9,204   $  (582,894)  $   (50,591)

Common stock issued to acquire
DCII (Note 1)                      1,055,556       1,056        (1,056)          -

Common stock cancelled through
spinoff of subsidiary (Note 1)      (396,569)       (397)          397           -

Net income for the year ended
December 31, 2005                        -           -             -         299,231
                                 ------------ -----------  ------------  ------------
Balance, December 31, 2005         9,862,691  $    9,863   $  (583,553)  $   248,640
                                 ------------ -----------  ------------  ------------
Valuation of stock options               -           -         122,220           -

Net loss for the year ended
December 31, 2006                        -           -             -        (866,452)
                                 ------------ -----------  ------------  ------------
Balance, December 31, 2006         9,862,691  $    9,863   $  (461,333)  $  (617,812)
                                 ============ ===========  ============  ============















</Table>

              The accompanying notes are an integral part of
                         these financial statements
                                     F-6

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)
                   Consolidated Statements of Cash Flows
<Table>
<Caption>
                                                               For the Years Ended
                                                                  December 31,
                                                            -------------------------
                                                               2006          2005
                                                           ------------  ------------
<S>                                                        <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)                                          $  (866,452)  $   299,231
Adjustments to reconcile net income (loss) to net cash
 provided by (used in) operating activities:
  Depreciation                                                     -           1,649
  Amortization of debt discount                                821,942       108,480
  Loss on disposition of subsidiary                                -         699,616
  Loss on disposition of asset                                     -           1,062
  Change in fair value of derivative liabilities              (540,578)   (1,742,150)
  Bad debt expense                                               3,485       322,727
  Non-cash stock option expense                                122,220           -
Changes in operating assets and liabilities:
  Accounts receivable                                         (566,998)      381,161
  Other assets                                                 (75,006)          -
  Accounts payable                                            (416,935)      133,187
  Accrued expenses and other current liabilities               157,638        38,226
                                                           ------------  ------------
   Net Cash Provided by (Used in) Operating Activities      (1,360,683)      243,190
                                                           ------------  ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of subsidiary                                           -      (1,600,000)
                                                           ------------  ------------
   Net Cash Provided by (Used in) Investing Activities             -      (1,600,000)
                                                           ------------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments made on notes payable                              (350,396)     (124,054)
  Net advances from factored receivables                       244,648       335,132
  Proceeds received on convertible debt                        425,000     2,150,000
                                                           ------------  ------------
   Net Cash Provided by (Used in) Financing Activities         319,251     2,361,078
                                                           ------------  ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS        (1,041,432)    1,004,268
                                                           ------------  ------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR               1,041,433        37,165
                                                           ------------  ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                   $         1   $ 1,041,433
                                                           ============  ============

SUPPLEMENTAL CASH FLOW INFORMATION
  Cash Payments For:
   Interest                                                $    53,472   $    14,670
   Income taxes                                            $       -     $       -

</Table>
              The accompanying notes are an integral part of
                  these consolidated financial statements
                                     F-7

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Organization

The consolidated financial statements presented are those of Monarch
Staffing, Inc. (formerly MT Ultimate Healthcare Corp.) (Monarch), and its
wholly-owned subsidiaries, Drug Consultants International, Inc.., formerly
known as iTechexpress, Inc., (DCII) and Drug Consultants, Inc. (DCI), and
DCII's wholly-owned subsidiary, Success Development Group, Inc. (SDG).
Collectively, they are referred to herein as the "Company". Monarch was
originally incorporated in Nevada under the name JavaJuice.net on September
13, 2000. The Company filed amended Articles of Incorporation with the
State of Nevada on August 15, 2003 to change the name to MT Ultimate
Healthcare Corp. On March 31, 2006, the name was changed to Monarch
Staffing, Inc. Monarch was organized to operate a payroll nurse staffing
and homecare business, and provided healthcare professionals to hospitals,
nursing homes, licensed home care service agencies, other health-related
businesses, to the homes of the elderly, sick and incapacitated.

Prior to the Spinoff Agreement as described below, Monarch also included
Abundant Nursing, Inc. (Abundant) (a Pennsylvania corporation),
wholly-owned by Monarch through an acquisition agreement dated October 1,
2004. Abundant provided staffing in the central area of Pennsylvania and
the Lancaster area.

In addition, as disclosed in prior filings of the Company, Monarch included
a wholly-owned subsidiary, BP Senior Care, Inc. (BP), acquired on May 20,
2004. The acquisition agreement between Monarch and BP, however, was
rescinded during 2005. The financial statements do not include any amounts
related to the operations of BP.

On November 4, 2005, Monarch and DCII and the former DCII shareholders
entered into a Share Exchange and Reorganization Agreement (the "Exchange"
or "Acquisition") whereby DCII became a wholly-owned subsidiary of Monarch.
As part of the Exchange, Monarch acquired 100% of the issued and
outstanding shares of  DCII in exchange for 828,333,333 (9,203,704
post-split) newly issued shares of Monarch's common stock. As the number of
shares issued represented approximately 92% of the outstanding common stock
of Monarch after issuance, the transaction has been accounted for as a
reverse takeover of Monarch by the shareholders of DCII. Accordingly, the
transaction has been treated for accounting purposes as a recapitalization
of  DCII; therefore, these consolidated financial statements represent a
continuation of DCII, not Monarch, the legal survivor. DCII is treated as
the survivor for accounting purposes and Monarch is the survivor for legal
purposes. The historical financial statements presented are those of DCII
rather than Monarch.



                                     F-8

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

a. Organization (Continued)

On November 7, 2005, DCII entered into a Stock Purchase Agreement
("Purchase") with Drug Consultants, Inc. ("DCI"), whereby DCI became a
wholly-owned subsidiary of DCII. As part of the Purchase, DCII purchased
all of the outstanding shares of DCI from the former shareholder of DCI for
a purchase price of $1,800,000, of which $1,600,000 was paid at the closing
of the Purchase and $200,000 shall be paid pursuant to a Secured Promissory
Note (see Note 5). The Promissory Note is secured by a Stock Pledge
Agreement ("Pledge Agreement"), whereby DCII pledged to the former DCI
shareholder 51% of the stock of DCI ("DCI Stock") held by DCII to secure
the full and prompt payment and performance by DCII of the Promissory Note.
Pursuant to this Purchase, the Company recorded goodwill of $1,245,481.

Effective December 15, 2005, Macdonald Tudeme and Marguerite Tudeme
(collectively, the "Tudemes"), the former controlling shareholders of the
Company and the Company entered into a Spinoff Agreement ("Spinoff") which
provided for (1) the transfer of the corporate names, business, operations,
assets, properties, intellectual properties, trademarks, service marks,
trade names, uniform resource locators, telephone numbers, and goodwill of
the Company and its subsidiaries (other than DCII and DCI), together with
the operating business of Abundant, to be placed into to a newly-formed
Delaware corporation wholly-owned by the Company ("Marathon"), (2) the
acquisition and cancellation by the Company from the Tudemes of their
outstanding shares of capital stock of the Company, totaling 35,691,200
(396,569 post-split) shares, (3) the assumption and release by the Company
and its subsidiaries and the Tudemes of certain liabilities, and (4) the
sale to the Tudemes of all of the outstanding capital stock of Marathon,
and the payment to the Tudemes of $80,441 for amounts owed to the Tudemes
and other creditors by the Company, of which $50,000 was paid prior to
December 31, 2005.

The Company also entered into a Security Agreement ("Security Agreement")
with Marathon, whereby the Company pledged to Marathon 20,000,000 (222,222
post-split) shares of its common stock as collateral ("Collateral") to
secure its performance and payment of the promissory note payable to Lisa
Stern ("Stern Note") originally entered into as part of Monarch's purchase
of Abundant during 2004. The Company will be in default under the Security
Agreement upon the failure to pay any principal or interest of the Stern
Note when due. Upon default, Marathon is able to retain the Collateral and
apply the consideration received from the Collateral against any principal
and interest due.


                                     F-9

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

a. Organization (Continued)

DCII, established in 1999 and located in Irvine, California, places
technicians into technical jobs in both commercial and government sectors
on a national basis.   DCII performs various IT and staffing services for
Equant.

DCII's wholly-owned subsidiary, SDG, a Nevada corporation, established in
April 2000, provides management services on behalf of DCII and other
clients of DCII.

DCI, established in 1977 and located in Irvine, California, is engaged in
furnishing personnel to perform a range of pharmacy technician, nursing and
other health care services in support of the operations of government and
commercial facilities. DCI currently operates under three State of
California contracts, three years in length. DCI's largest client is the
State of California and DCI provides many of its services in rural areas of
California where health care professionals are not readily available.

As a result of the above transactions, the operations of the Company going
forward will be comprised of the operations of DCII, DCI and SDG.

Effective March 31, 2006, the Company completed the following corporate
actions: (a) effected a one-for-ninety (1 for 90) reverse stock split of
its outstanding common stock, (b) re-authorized for issuance 400,000,000
shares of Common Stock, par value $.001 per share, (c) authorized 5,000,000
shares of "blank check" preferred stock. The reverse stock split resulted
in corresponding adjustments to the calculation of the conversion price of
the Company's secured convertible notes and the exercise price of the
Company's outstanding warrants.  The accompanying financial statements have
been adjusted to retroactively reflect this stock split.

b. Basis of Presentation

The accompanying consolidated financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission ("SEC") for the presentation of financial information. These
consolidated financial statement, in the opinion of management, include all
adjustments (consisting of normal recurring adjustments and accruals)
necessary to present fairly the consolidated balance sheet, consolidated
operating results and consolidated cash flows for the periods presented in
accordance with accounting principles generally accepted in the United
States of America ("GAAP"). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with GAAP
have been omitted in accordance with the rules and regulations of the SEC.

c. Accounting Methods

The Company's consolidated financial statements are prepared using the
accrual method of accounting. The Company has elected a December 31 year
end.



                                     F-10

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

d. Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid investments with
maturities of three months or less at the time of acquisition.

e. Principles of Consolidation

The consolidated financial statements include the accounts of Monarch
Staffing, Inc. (formerly MT Ultimate Healthcare Corp.) (Monarch), and its
wholly-owned subsidiaries, Drug Consultants International, Inc., formerly
known as  iTechexpress, Inc., (DCII) and Drug Consultants, Inc. (DCI), and
DCII's wholly-owned subsidiary, Success Development Group, Inc. (SDG). All
significant intercompany balances and transactions have been eliminated in
the consolidation.

f. Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make a number of estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent assets
and liabilities at the dates of the financial statements and the reported
amounts of revenue and expenses during the reporting periods.  Actual
results could differ from those estimates.

g. Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consists of amounts billed to customers upon
performance of service.  The Company performs ongoing credit evaluations of
customers and adjusts credit limits based upon payment history and the
customer current creditworthiness, as determined by its review of their
current credit information.  The Company continuously monitors collections
and payments from its customers and maintains a provision for estimated
credit losses based upon its historical experience and any
customer-specific collection issues that it has identified.  Accounts
receivable are shown net of an allowance for doubtful accounts of $0 at
December 31, 2006 and 2005, respectively. An allowance is established
whenever receivables are over 90 days old and the customer has not
responded to efforts to reconcile differences. Such receivables are deemed
to be uncollectible after 180 days. There were no such receivables for the
current year or prior year.


                                     F-11

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

h. Basic Income Per Share

The computations of basic income per share of common stock are based on the
weighted average number of common shares outstanding during the period of
the consolidated financial statements. Common stock equivalents, consisting
of employee stock options of 931,589, and stock warrants, in the amount of
315,277, have been considered but have not been included in the calculation
as their effect is antidilutive for the periods presented.

<Table>
<Caption>                                                December 31,
                                                 --------------------------
                                                     2006          2005
                                                 ------------  ------------
  <S>                                            <C>           <C>
  Numerator - Net income (loss)                  $  (866,452)  $   299,231

  Denominator - weighted average number of
   shares outstanding                              9,862,691     9,862,691
                                                 ------------  ------------
  Net income (loss) per share                    $     (0.09)  $      0.03
                                                 ------------  ------------
</Table>

i. Revenue Recognition

Revenues and costs of revenues from services are recognized during the
period in which the services are provided.  The Company applies the
provisions of SEC Staff Accounting Bulletin ("SAB") No. 104, Revenue
Recognition in Financial Statements ("SAB 104"), which provides guidance on
the recognition, presentation, and disclosure of revenue in financial
statements filed with the SEC. SAB 104 outlines the basic criteria that
must be met to recognize revenue and provides guidance for disclosure
related to revenue recognition policies. In general, the Company recognizes
revenue related to monthly contracted amounts for services provided when
(i) persuasive evidence of an arrangement exists, (ii) delivery has
occurred or services have been rendered, (iii) the fee is fixed or
determinable, and (iv) collectibility is reasonably assured.

j. Provision for Income Taxes

The Company has adopted the provisions of Financial Accounting Standards
Board Statement No. 109, Accounting for Income Taxes. The Company currently
has no issues that create timing differences that would mandate deferred
tax expense. Net operating losses would create possible tax assets in
future years. Due to the uncertainty as to the utilization of net operating
loss carry forwards, a valuation allowance has been made to the extent of
any tax benefit that net operating losses may generate.

No provision for income taxes has been recorded due to net operating loss
carryforwards totaling approximately $2,039,000 as of December 31, 2005
that will be offset against future taxable income. These NOL carryforwards
begin to expire in the year 2021. No tax benefit has been reported in the
consolidated financial statements because the Company believes there is a
50% or greater chance the carryforwards will expire unused.


                                     F-12


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

j. Provision for Income Taxes (continued)

Deferred tax asset and the valuation account is as follows:

<Table>
<Caption>
                                                                  December 31,
                                                           --------------------------
                                                               2006          2005
                                                           ------------  ------------
     <S>                                                   <C>           <C>
     Deferred tax asset:
       NOL Carryforward                                    $   693,260   $   494,360
       Valuation allowances                                   (693,260)     (494,360)
                                                           ------------  ------------
        Total                                              $      -      $      -
                                                           ============  ============
     The components of income tax expense are as follows:

     Current Federal Tax                                   $       -     $       -
     Current State Tax                                             -             -
     Change in NOL benefit                                     198,900       453,709
     Change in valuation allowance                            (198,900)     (453,709)
                                                           ------------  ------------
                                                           $       -     $       -
                                                           ============  ============
</Table>

k. Goodwill

The excess of purchase price and related costs over the fair value of net
assets of entities acquired is recorded as goodwill. In accordance with
SFAS No. 142, Goodwill and Other Intangible Assets , the Company evaluates
goodwill annually for impairment at the reporting unit level and whenever
circumstances occur indicating that goodwill might be impaired. The
performance of the test involves a two-step process. The first step of the
impairment test involves comparing the fair value of the Company's
reporting units with the reporting unit's carrying amount, including
goodwill. The Company generally determines the fair value of its reporting
units using the expected present value of future cash flows, giving
consideration to the market valuation approach. If the carrying amount of
the Company's reporting units exceeds the reporting unit's fair value, the
Company performs the second step of the goodwill impairment test to
determine the amount of impairment loss. The second step of the goodwill
impairment test involves comparing the implied fair value of the Company's
reporting unit's goodwill with the carrying amount of that goodwill. At
December 31, 2006 and 2005, the Company performed the annual impairment
test and determined there was no impairment of goodwill.

As previously discussed, effective November 7, 2005, the Company acquired
the business and certain related assets of DCI, an unrelated company. The
purchase price of $1,800,000 was satisfied by the Company paying $1,600,000
in cash and a $200,000 pursuant to a secured promissory note. The
acquisition was an arm's length transaction and has been accounted for
using the purchase method.


                                     F-13



                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

l. Newly Adopted Pronouncements

Accounting Changes and Error Corrections

In May 2005, the FASB issued FASB Statement No. 154, "Accounting Changes
and Error Corrections." This new standard replaces APB Opinion No. 20,
"Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes
in Interim Financial Statements," and represents another step in the FASB's
goal to converge its standards with those issued by the IASB. Among other
changes, Statement 154 requires that a voluntary change in accounting
principle be applied retrospectively with all prior period financial
statements presented on the new accounting principle, unless it is
impracticable to do so. Statement 154 also provides that (1) a change in
method of depreciating or amortizing a long-lived non-financial asset be
accounted for as a change in estimate (prospectively) that was effected by
a change in accounting principle, and (2) correction of errors in
previously issued financial statements should be termed a "restatement."
The new standard is effective for accounting changes and correction of
errors made in fiscal years beginning after December 15, 2005. Early
adoption of this standard is permitted for accounting changes and
correction of errors made in fiscal years beginning after June 1, 2005 .
The adoption of this statement in 2006 did not have a material impact on
the Company's consolidated financial position or results of operations.

Accounting for Uncertainty in Income Taxes

In June 2006, the FASB issued Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109,"
("FIN 48"). The interpretation prescribes a recognition threshold and
measurement attribute for the financial  statement recognition and
measurement of a tax position taken or expected to be taken in a tax
return. It also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. The Company is currently evaluating the impact of FIN 48 on its
consolidated results of operations and financial position but has not yet
determined or reasonably estimated the impact as of December 31, 2006. The
Company is required to adopt this interpretation effective January 1, 2007.

Accounting for Certain Hybrid Financial Instruments

In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
Hybrid Financial Instruments an Amendment of FASB Statements No. 133 and
No. 140."  This Statement amends FASB Statements No. 133, accounting for
Derivative Instruments and Hedging Activities, and No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities.  This statement resolves issues addressed in Statement 133
Implementation Issued No. D1, "Application of Statement 133 to Beneficial
Interests in Securitized Financial Assets."  The adoption of SFAS No. 155
did not have an impact on the Company's consolidated financial statements.


                                     F-14


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

l. Newly Adopted Pronouncements (continued)

Accounting for Servicing of Financial Assets

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets - an amendment of FASB Statement No. 140" ("SFAS No.
156"). This Statement amends SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," with
respect to the accounting for separately recognized servicing assets and
servicing liabilities. SFAS No. 156 requires that an entity recognize a
servicing asset or servicing liability each time it undertakes an
obligation to service a financial asset by entering into a servicing
contract and that the separately recognized servicing asset or servicing
liability be initially measured at fair value, if practicable. This
Statement is effective as of the beginning of the first fiscal year that
begins after September 15, 2006. The adoption of this statement in 2007 is
not expected to have a material impact on the Company's consolidated
financial position or results of operations.

Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"). This statement defines fair value, establishes a
framework for measuring fair value in U.S. GAAP and expands disclosures
about fair value measurements. This statement does not require any new fair
value measurements. The effective date of this statement is for fiscal
years beginning after November 15, 2007, and interim periods within those
fiscal years. The Company is currently evaluating the impact, if any, of
the adoption of SFAS No. 157.

Employers' Accounting for Defined Benefit Pension and Other Postretirement
Plans

In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans an Amendment of FASB
Statements No. 87, 88, 106 and 132(R)."  This statement improves financial
reporting by requiring an employer to recognize the over-funded or
under-funded status of a defined benefit postretirement plan (other than a
multiemployer plan) as an asset or liability in its statement of financial
position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity
of changes in unrestricted net assets of a not-for-profit organization.
The adoption of SFAS No. 158 did not have an impact on the Company's
consolidated financial statements.


                                     F-15


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

l. Newly Adopted Pronouncements (continued)

Considering the Effects of Prior Year Misstatements When Quantifying
Current Year Misstatements

In September 2006, the Securities and Exchange Commission, or the SEC,
released Staff Accounting Bulletin, or SAB, No. 108, Considering the
Effects of Prior Year Misstatements When Quantifying Current Year
Misstatements, or SAB No. 108, to address diversity in practice regarding
consideration of the effects of prior year errors when quantifying
misstatements in current year financial statements. The SEC staff concluded
that registrants should quantify financial statement errors using both a
balance sheet approach and an income statement approach and evaluate
whether either approach results in quantifying a misstatement that, when
all relevant quantitative and qualitative factors are considered, is
material. SAB No. 108 states that if correcting an error in the current
year materially affects the current year's income statement, the prior
period financial statements must be restated. SAB No. 108 is effective for
fiscal years ending after November 15, 2006. The adoption of SAB No. 108 in
the fourth quarter of 2006 did not have a material impact on our
consolidated financial statements.

The Fair Value Option for Financial Assets and Financial Liabilities

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities, or SFAS No. 159. SFAS No. 159
permits entities to choose to measure many financial instruments and
certain other items at fair value. The objective of the guidance is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets
and liabilities differently without having to apply complex hedge
accounting provisions. SFAS No. 159 is effective as of the beginning of the
first fiscal year that begins after November 15, 2007. Early adoption is
permitted as of the beginning of the fiscal year beginning on or before
November 15, 2007, provided the provisions of SFAS No. 157 are applied. We
will adopt SFAS No. 159 on January 1, 2008. We are evaluating SFAS No. 159
and have not yet determined the impact the adoption, if any, will have on
our consolidated financial statements.



                                     F-16


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

m. Derivative Financial Instruments

The Company's derivative financial instruments consist of embedded
derivatives related to the convertible notes entered into on August 31,
2004, since the notes are not conventional convertible debt (see Note 5).
The embedded derivatives include the conversion feature, monthly payment
options, variable interest features, call options, liquidated damages
clauses in the registration rights agreement and certain default
provisions. The accounting treatment of derivative financial instruments
requires that the Company records the derivatives and related warrants at
their fair values as of the inception date of the agreement and at fair
value as of each subsequent balance sheet date.

In addition, under the provisions of EITF Issue No. 00-19, "Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock," as a result of entering into the convertible debt,
the Company is required to classify all other non-employee stock options as
warrants and derivative liabilities and mark them to market at each
reporting date (see Note 5).

Conversion-related derivatives were valued using the Binomial Option
Pricing Model.  The interest rate adjustment provision was valued using
discounted cash flows and probability analysis.  Options and warrants were
valued using the Black-Sholes model.  The following assumptions were used
in valuing the derivative and warrant liabilities as of December 31:

<Table>
<Caption>

                                          2006             2005
                                    --------------   --------------
<S>                                 <C>              <C>
Risk-free interest rate              4.70 - 4.85 %    4.35 - 4.36 %
Volatility                                   200 %            238 %
Expected dividend yield                        0 %              0 %
</Table>

The valuation of the conversion derivatives also considered probability
analysis related to trading volume restrictions.

Any change in fair value of these instruments will be recorded as
non-operating, non-cash income or expense at each reporting date. If the
fair value of the derivatives is higher at the subsequent balance sheet
date, we will record a non-operating, non-cash charge. If the fair value of
the derivatives is lower at the subsequent balance sheet date, we will
record non-operating, non-cash income. The derivative and warrant
liabilities are recorded as liabilities in the consolidated balance sheet.


                                     F-17

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

n. Fair Value of Financial Instruments

The Company's financial instruments consist of cash and cash equivalents,
accounts receivable, accounts payable, accrued expenses, notes payable and
convertible debt. Pursuant to SFAS No. 107, "Disclosures About Fair Value
of Financial Instruments," the Company is required to estimate the fair
value of all financial instruments at the balance sheet date. The Company
considers the carrying values of its financial instruments in the financial
statements to approximate their fair values.

o. Concentrations of Credit Risk

The Company extends credit to its customers based upon its assessment of
their credit worthiness and generally does not require collateral.
Approximately 99% of the Company's revenue comes from the State of
California for the years ended December 31, 2006 and 2005, respectively.
Accounts receivable from the State of California totaled $1,295,186 and
$705,680 as of December 31, 2006 and 2005, respectively.

The Company also had $841,219 on deposit with a financial institution at
December 31, 2005. Such deposits were not insured beyond the federally
insured limit of $100,000 per account.

p. Beneficial Conversion Feature

The Company has adopted Emerging Issues Task Force ("EITF") Issue No. 98-5,
"Accounting for Convertible Securities with Beneficial Conversion Features
or Contingently Adjustable Conversion Ratios", and EITF Issue No. 00-27,
"Application of EITF Issue No. 98-5 to Certain Convertible Instruments."
The Company incurred debt whereby the convertible feature of the debt
provides for a rate of conversion that is below market value. This feature
is recorded by the Company as a beneficial conversion feature pursuant to
EITF Issue No. 98-5 and 00-27.

q. Fixed assets

Property and equipment are recorded at cost less accumulated depreciation.
Depreciation on property and equipment is calculated using the
straight-line method based on the estimated useful lives of the assets.

Useful lives as follows:

     Computer equipment                                        3 years
     Furniture and fixtures                                  5-7 years

Expenditures for repairs and maintenance are expensed as incurred.
Expenditures for major renewals and betterments that extend the useful
lives of existing property and equipment are capitalized and depreciated.
Upon retirement or disposition of property and equipment, any resulting
gain or loss is recognized in the consolidated statement of operations.
Depreciation expense for the years ended December 31, 2006 and 2005 was $0
and $1,649, respectively. At December 31, 2005, the Company recorded a loss
on disposition of assets totaling $1,062 for the remaining book value of
assets previously recorded. Accordingly, property and equipment at December
31, 2005 was $0.  The Company did not have any fixed asset additions during
the year ended December 31, 2006.


                                     F-18


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 2 - GOING CONCERN

The Company's consolidated financial statements are prepared using
generally accepted accounting principles applicable to a going concern
which contemplates the realization of assets and liquidation of liabilities
in the normal course of business. We had $617,813 in accumulated deficit at
December 31, 2006 as well as a net loss of $866,452.  These factors
combined, raise substantial doubt about the Company's ability to continue
as a going concern. Management has taken various steps to revise its
operating and financial requirements, which it believes will be sufficient
to provide the Company with the ability to continue its operations for the
next twelve months.

In view of the matters described above, recoverability of a major portion
of the recorded asset amounts shown in the accompanying consolidated
balance sheet is dependent upon continued operations of the Company, which
in turn is dependent upon the Company's ability to raise additional
capital, obtain financing and to succeed in its future operations. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.

NOTE 3 - RELATED PARTY TRANSACTIONS

As part of the Spinoff Agreement as described in Note 1 and Note 7, 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 8,283,334 shares to Monarch Bay Capital Group, LLC,
beneficially owned by David Walters, our Chairman and Chief Financial
Officer, in connection with the Company's acquisition of DCII.

An amount of $22,800 was owed to Mr. Moore at December 31, 2005 for
services rendered to SDG. This amount was non-interest bearing, unsecured,
and due on demand.  The Company repaid this amount in March 2006.


                                     F-19


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 3 - RELATED PARTY TRANSACTIONS (Continued)

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 $350,000 and $170,000 (including $40,000
outstanding as of December 31, 2004) during the years ended December 31,
2006 and 2005, respectively, related to the Contractor Agreements.  Amounts
owed by the Company totaled $0 and $110,000 at December 31, 2006 and 2005,
respectively.

The Company also paid $25,000 to both Mr. Moore and Mr. Walters during 2006
for other consultation services which were outside of the scope of the
Independent Contractor Agreements described above.

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, our Chairman and Chief Financial Officer, and Keith Moore,
our director, each are members of, and each beneficially owns 50% of the
ownership interests in, MBMC. Under the chief financial officer services
agreement with 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.  To date, no services have been
provided under this agreement, accordingly, no amounts were paid to MBMC
and/or accrued as of and for the year ended December 31, 2006.  The Company
expects that services provided under this agreement will commence in March
2007.

On December 20, 2006, MBMC loaned $95,000 to DCII at 10% per annum.  The
principal balance of loan was repaid in full on December 28, 2006 and
accrued interest expense totaled $208 as of December 31, 2006.  On February
5, 2007, MBMC loaned $125,000 to DCII at 10% per annum.  The principal
balance of the loan was repaid in full on February 8, 2007.  On February 5,
2007, MBMC also loaned $70,000 to the Company at 10% per annum.  The
principal balance of the loan was repaid in full on February 15, 2007.

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

                                     F-20


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 3 - RELATED PARTY TRANSACTIONS (Continued)

In December 2006, DCI made two payments totaling $33,502 to vendors on
behalf of Solana Technologies, Inc. ("STI").  At the time of the payments,
David Walters, our Chairman and Chief Financial Officer, was Chairman and
Chief Executive Officer of STI and beneficially owned a majority of the
outstanding common stock of STI.  The amounts were non-interest bearing.
The Company received payment in full in December 2006.  On January 2, 2007,
the Company purchased office equipment totaling $1,244 from STI.

On August 4, 2006, DCI borrowed $150,000 from BounceGPS, Inc. ("BounceGPS")
at 10% per annum.  At the time of the loan, David Walters, our Chairman and
Chief Financial Officer, was the Chairman and Chief Executive Officer of
the parent company of BounceGPS and beneficially owned a majority of the
outstanding common stock of such parent company.  The principal balance was
repaid in full on September 11, 2006.  On October 4, 2006, the Company
borrowed $18,000 from the same related company.  The principal balance was
repaid in full on October 11, 2006.  On October 5, 2006, DCII borrowed
$95,000 from the same related company.  The principal balance was repaid in
full on October 11, 2006.  DCII also borrowed $220,000 during late October
and early November 2006 from the same related company.  The entire
outstanding balance of $220,000 was repaid on November 8, 2006.  Interest
payments of $636 were made during 2006 and accrued interest totaled $1,899
as of December 31, 2006.

During 2006, DCI and DCII paid $1,361 and $27,395, respectively, to
DataLogic International, Inc. for various services including accounting,
payroll, human resource, and other administrative duties.  Mr. Moore, our
Director, is the Chairman and  Chief Executive Officer of DataLogic
International, Inc.

As discussed in Note 6, 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 2005.


                                     F-21


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 4 - NOTES PAYABLE
<Table>
<Caption>
                                                                  December 31,
                                                               2006          2005
                                                           ------------  ------------
  <S>                                                      <C>           <C>
  Note payable to the former owner of Abundant Nursing
   Inc. interest at 7% per annum, principal and interest
   payments of $5,841 due monthly, matures on October
   1, 2009, secured by the stock of Abundant Nursing,
   Inc. (see Note below).                                  $   179,678   $   235,074
  Note payable to the former owner of Drug Consultants
   Inc. interest at 7% per annum, principal and interest
   due March 6, 2006, secured by a Stock Pledge Agreement
   (See Stock Pledge Agreement below).                               -       200,000
  Note payable to an individual, non-interest bearing,
   principal due on demand, unsecured.                               -        30,000
  Note payable to an individual, non-interest bearing,
   principal due on demand, unsecured.                               -        65,000
                                                           ------------  ------------
  Total notes payable                                          179,678       530,074
  Less: current portion                                        (59,401)     (350,394)
                                                           ------------  ------------
  Long-term portion of notes payable                       $   120,277   $   179,680
                                                           ============  ============
</Table>
The aggregate principal maturities of notes payable are as follows:
<Table>
<Caption>
                                              Years ending December 31,      Amount
                                     -----------------------------------------------
                                     <S>                              <C>
                                                     2007              $     59,401
                                                     2008                    63,695
                                                     2009                    56,582
                                                     Thereafter                 -
                                                                       -------------
                                                         Total         $    179,678
                                                                       =============
</Table>

Note: The Company also entered into a Security Agreement ("Security
Agreement") with Marathon (as described in Note 1), whereby the Company
pledged to Marathon 20,000,000 (222,222 post-split) shares of its common
stock as collateral ("Collateral") to secure its performance and payment of
the promissory note payable originally entered into as part of the
Company's purchase of Abundant. The Company will be in default under the
Security Agreement upon the failure to pay any principal or interest of the
Abundant Note when due. Upon default, Marathon is able to retain the
Collateral and apply the consideration received from the Collateral against
any principal and interest due.

                           Stock Pledge Agreement
                           ----------------------
Pursuant to the acquisition of DCI and the above promissory note, the
Company entered into a Stock Pledge Agreement whereby DCII pledged to the
former DCI shareholder 51% of the stock of DCI ("DCI Stock") held by DCII
to secure the full and prompt payment and performance by DCII of the
Promissory Note.  DCII fully repaid this Promissory Note during the year
ended December 31, 2006.
                                     F-22

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 5 - CALLABLE SECURED CONVERTIBLE NOTES

On August 31, 2004, the Company entered into a securities purchase
agreement with four accredited investors for the sale of secured
convertible notes having an aggregate principal amount of $700,000, a 10%
annual interest rate (payable quarterly), and a term of two years.  The
Company also agreed to sell warrants to purchase up to an aggregate of
7,777 shares of Common Stock at $40.50 per share.  The Company only sold
$500,000 principal amount of secured convertible notes under the 2004
agreement.  As a result, the Company sold to the investors warrants to
purchase up to an aggregate of 5,556 shares of our Common Stock at $40.50
per share.   The investors have agreed to purchase the remaining $200,000
commitment under the terms of our 2005 securities purchase agreement with
the investors.

On November 4, 2005, the Company entered into an additional securities
purchase agreement with the same accredited investors, for the sale of
secured convertible notes having an aggregate principal amount of
$3,000,000, an 8% annual interest rate (payable quarterly), and a term of
three years.  We also agreed to sell warrants to purchase up to an
aggregate of 166,667 shares of our Common Stock at $9.00 per share.

As of December 31, 2006 the Company had issued under the two securities
purchase agreements dated August 31, 2004 and November 4, 2005:

  -   $3,075,000 aggregate principal amount of secured convertible notes,
  -   Warrants to purchase 5,556 shares of our Common Stock at $40.50 per
      shares, and
  -   Warrants to purchase 143,056 shares of our Common Stock at $9.00 per
      share, and
  -   Warrants to purchase 166,667 shares of our Common Stock at $4.50 per
      share (due to an amendment discussed below).

Stock warrants issued and outstanding during the year ended December 31,
2006 and 2005 are as follows:
<Table>
<Caption>
                                                                    Average
                                                                   Exercise
                                                       Common         Price
                                                       Shares     Per Share
                                                 ------------  ------------
     <S>                                         <C>           <C>
     Warrants outstanding, December 31, 2004           5,556   $     40.50
                                                 ============
     Warrants issued                                 119,445          9.00
     Warrants exercised                                  -             -
                                                 ------------
     Warrants outstanding, December 31, 2005         125,001         10.40
                                                 ============
     Warrants issued                                 190,278          5.06
     Warrants exercised                                  -             -
                                                 ------------
     Warrants outstanding, December 31, 2006         315,279          7.18
                                                 ============
</Table>
                                     F-23

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 5 - CALLABLE SECURED CONVERTIBLE NOTES (Continued)

As mentioned above, the investors are required to purchase an additional
$200,000 principal amount of secured convertible notes and warrants to
purchase 2,222 shares of our Common Stock at $40.50 per share as well as an
additional $425,000 principal amount of secured convertible notes and
warrants to purchase 23,611 shares of our Common Stock at $9.00 per share
five days following the date that the registration statement for the resale
of the shares of common stock issuable upon conversion of the secured
convertible notes and exercise of the warrants is declared effective by the
Securities and Exchange Commission and if other conditions are satisfied,
including: (i) the Company's representations and warranties contained in
the 2005 securities purchase agreement being true and correct in all
material respects on the date when made and as of the date of such
purchase; (ii) the Company having performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
the 2005 agreement; (iii) there being no litigation, statute, rule,
regulation, executive order, decree, ruling or injunction that has been
enacted, entered, promulgated or endorsed by or in any court or government
authority of competent jurisdiction or any self-regulatory organization
having requisite authority which prohibits the transactions contemplated by
the 2005 agreement; (iv) no event having occurred which could reasonably be
expected to have a material adverse effect on the Company; and (v) the
shares of Common Stock issuable upon conversion of the secured convertible
notes and exercise of the warrants having been authorized for quotation on
the OTC Bulletin Board and trading in our Common Stock on the OTC Bulletin
Board having not been suspended by the Securities and Exchange Commission
or the OTC Bulletin Board.

On November 1, 2006, we obtained an amendment to the 2005 securities
purchase agreement extending the date by which the Company must obtain the
effectiveness of the registration statement covering the resale of the
shares of our Commons Stock issuable upon conversion of the secured
convertible notes and the exercise of the warrants to April 30, 2007 (or
May 25, 2007 if the Company is making a good faith effort to respond to the
Securities and Exchange Commission's comments) in exchange for issuing
warrants to purchase 166,667 shares of our Common Stock at $4.50 per share
to the holders of the secured convertible notes.

On March 29, 2007, we obtained an amendment extending the date by which
the Company must obtain the effectiveness of the registration statement
covering the resale of the shares of our Commons Stock issuable upon
conversion of the secured convertible notes and the exercise of the
warrants to October 31, 2007 (or November 25, 2007 if the Company is
making a good faith effort to respond to the Securities and Exchange
Commission's comments).  See Note 11 "Subsequent Events" for further
discussion.


                                     F-24


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 5 - CALLABLE SECURED CONVERTIBLE NOTES (Continued)

In connection with the 2005 securities purchase agreement, we entered into
a security agreement, whereby we granted the investors a continuing, first
priority security interest in the Company's general assets including all of
the Company's:

  -   Goods, including without limitations, all machinery, equipment,
      computers, motor vehicles, trucks, tanks, boats, ships, appliances,
      furniture, special and general tools, fixtures, test and quality
      control devices and other equipment of every kind and nature and
      wherever situated;
  -   Inventory (except that the proceeds of inventory and accounts
      receivable);
  -   Contract rights and general intangibles, including, without
      limitation, all partnership interests, stock or other securities,
      licenses, distribution and other agreements, computer software
      development rights, leases, franchises, customer lists, quality
      control procedures, grants and rights, goodwill, trademarks, service
      marks, trade styles, trade names, patents, patent applications,
      copyrights, deposit accounts, and income tax refunds;
  -   Receivables including all insurance proceeds, and rights to refunds
      or indemnification whatsoever owing, together with all instruments,
      all documents of title representing any of the foregoing, all rights
      in any merchandising, goods, equipment, motor vehicles and trucks
      which any of the same may represent, and all right, title, security
      and guaranties with respect to each receivable, including any right
      of stoppage in transit; and
  -   Documents, instruments and chattel paper, files, records, books of
      account, business papers, computer programs and the products and
      proceeds of all of the foregoing and the Company's intellectual
      property.

Additionally, we entered into an intellectual property security agreement
with the investors, whereby we granted them a security interest in all of
the Company's software programs, including source code and data files, then
owned or thereafter acquired, all computers and electronic processing
hardware, all related documentation, and all rights with respect to any
copyrights, copyright licenses, intellectual property, patents, patent
licenses, trademarks, trademark licenses or trade secrets.

The notes include certain features that are considered embedded derivative
financial instruments, such as the conversion feature, a variable interest
rate feature, events of default and a liquidated damages clause, which have
been recorded at their fair value. These features are described below, as
follows:

  -   The notes conversion feature;
  -   Interest on the notes is subject to downward adjustment based on our
      common stock price;
  -   The registration rights agreement includes a penalty provision based
      on any failure to meet and/or maintain registration requirements for
      shares issuable under the conversion of the notes or exercise of the
      warrants; and
  -   The notes contain certain events of default, wherein we may be
      required to pay a default interest rate above the normal rate.


                                     F-25

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 5 - CALLABLE SECURED CONVERTIBLE NOTES (Continued)

Because the convertible notes are not conventional convertible debt, the
Company is also required to record the related warrants at their fair
values.  During the year ended December 31, 2005, the value of the
derivative and warrant liabilities decreased by $1,674,440 and $67,709,
respectively, which is reflected as a component of other income in the
accompanying consolidated statements of operations.  During the year ended
December 31, 2006, the value of the derivative and warrant liabilities
decreased by $513,913 and $26,665, respectively.

The debt discount is being first offset to the extent of the long-term
portion of the convertible debt and then from the current portion of the
convertible debt on the consolidated balance sheet and will be amortized
over the life of the debt. The Company has recorded amortization expense of
$821,942 and $108,480 for the years ended December 31, 2006 and 2005,
respectively.

The following table summarizes the Company's convertible notes payable by
maturity dates at December 31, 2006

<Table>
<Caption>
                                                        Less Debt
                                          Principal      Discount      Amount
                                        ------------  ------------  ------------
<S>                                <C>  <C>           <C>           <C>
Year Ending December 31,           2007           -             -             -
                                   2008 $ 2,650,000   $ 1,460,004   $ 1,189,996
                                   2009     425,000        67,348       357,652
                                        ------------  ------------  ------------
Total Notes Payable by Maturity Date    $ 3,075,000   $ 1,527,352   $ 1,547,648
                                        ============  ============  ============
</Table>

Additional material terms of the 2005 securities purchase agreement, the
secured convertible notes and the warrants are described below:

Conversion and Conversion Price
-------------------------------
The secured convertible notes are convertible into our Common Stock, at the
investors' option, at the lower of (i) $0.90 or (ii) 50% of the average of
the three lowest intraday trading prices for the Common Stock on a
principal market for the 20 trading days before but not including the
conversion date.  Accordingly, there is in fact no limit on the number of
shares into which the notes may be converted.

The conversion price is adjusted after major announcements by the Company.
In the event the Company makes a public announcement that the Company
intends to consolidate or merge with any other corporation  (other  than  a
merger  in  which the Company is the surviving or continuing  corporation
and its capital stock is unchanged) or sell or transfer all or
substantially all of the assets of the Company or any person, group or
entity (including the Company) publicly announces a tender offer to
purchase 50%  or  more of the Company's Common Stock (or any other takeover
scheme) then  the conversion price will be equal to the lower of the
conversion price that would be effect on the date the announcement is made
or the current conversion price at the time the secured convertible note
holders wish to convert.
                                     F-26



                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 5 - CALLABLE SECURED CONVERTIBLE NOTES (Continued)

The secured convertible notes also provide anti-dilution rights, whereby
the conversion price shall be adjusted in the event that the Company issues
or sells any shares of Common Stock for no consideration or consideration
less than the average of the last reported sale prices for the shares of
the Common Stock on the OTC Bulletin Board for the five trading days
immediately preceding such date of issuance or sale.  The conversion price
is also proportionately increased or decreased in the event of a reverse
stock split or forward stock split, respectively.  The conversion price is
also adjusted in the event the Company effects a consolidation, merger or
sale of substantially all its assets (which may also be treated as an event
of default) or if the Company declares or makes any distribution of its
assets (including cash) to holders of its Common Stock, as provided in the
secured convertible notes.

If a note holder gives the Company a notice of conversion relating to the
secured convertible notes and the Company is unable to issue such note
holder the shares of Common Stock underlying the secured convertible note
within five days from the date of receipt of such notice, the Company is
obligated to pay the note holder $2,000 for each day that the Company is
unable to deliver such Common Stock underlying the secured convertible
note.

The secured convertible notes contain a provision whereby no note holder is
able to convert any part of the notes into shares of the Company's Common
Stock, if such conversion would result in beneficial ownership by the note
holder and its affiliates of more than 4.99% of the Company's then
outstanding shares of Common Stock.

In addition, we have the right under certain circumstances described below
under "Company Call Option and Prepayment Rights" to prevent the note
holders from exercising their conversion rights during any month after a
month in which we have exercised certain prepayment rights.

Company Call Option and Prepayment Rights
-----------------------------------------
Each secured convertible note contains a call option in favor of the
Company, whereby as long as no event of default under the note has
occurred, the Company has a sufficient number of authorized shares reserved
for issuance upon full conversion of the secured convertible notes and our
Common Stock is trading at or below $0.90 per share (subject to adjustment
in the secured convertible note), the Company has the right to prepay all
or a portion of the note.  The prepayment amount is equal to the total
amount of principal and accrued interest outstanding under the note, and
any other amounts which may be due to the note holders, multiplied by 130%.

In the event that the average daily trading price of our Common Stock for
each day of any month is below $0.90, the Company may at its option prepay
a portion of the outstanding principal amount of the secured convertible
notes equal to 104% of the principal amount thereof divided by thirty-six
plus one month's interest on the secured convertible notes, or the amount
of the remaining principal and interest, whichever is less.  No note holder
is entitled to convert any portion of the secured convertible notes during
any month after the month on which the Company exercises this prepayment
option.

                                     F-27



                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 5 - CALLABLE SECURED CONVERTIBLE NOTES (Continued)

Events of Default
-----------------
Upon an event of default under the secured convertible notes, and in the
event the note holders give the Company a written notice of default, an
amount equal to 130% of the amount of the outstanding secured convertible
notes and interest thereon shall become immediately due and payable or
another amount as otherwise provided in the notes.  Events of default under
the secured convertible notes include the following:

  -   failure to pay any amount of principal or interest on the notes;
  -   failure to issue shares to the selling stockholders upon conversion
      of the notes, and such failure continues for ten days after
      notification by the note holders;
  -   failure to obtain effectiveness of the registration statement
      covering the resale of the shares of our Commons Stock issuable upon
      conversion of the secured convertible notes and the exercise of the
      warrants on or before April 30, 2007 (or May 25, 2007 if the Company
      is making a good faith effort to respond to the Securities and
      Exchange Commission's comments), or an effective registration
      statement covering such shares ceases to be effective for any ten
      consecutive days or any twenty days in any twelve month period;
  -   breaches by the Company of any of the convents contained in the
      notes;
  -   breaches by the Company of any representations and warranties made
      in the 2005 securities purchase agreement or any related document;
  -   appointment by the Company of a receiver or trustee or makes an
      assignment for the benefit of creditors;
  -   filing of any judgment against the Company for more than $50,000;
  -   bringing of bankruptcy proceedings against the Company and such
      proceedings are not stayed within sixty days of such proceedings
      being brought; or
  -   delisting of the Common Stock from the OTC Bulletin Board or
      equivalent replacement exchange.

Stock Purchase Warrants
-----------------------
The warrants expire five years from their date of issuance.  The warrants
include anti-dilution rights, whereby the exercise price of the warrants
shall be adjusted in the event that the Company issues or sells any shares
of the Company's Common Stock for no consideration or consideration less
than the average of the last reported sale prices for the shares of the
Company's Common Stock on the OTC Bulletin Board for the five trading days
immediately preceding such date of issuance or sale.  The exercise price of
the warrants are also proportionately increased or decreased in the event
of a reverse stock split or forward stock split, respectively.  The
exercise price is also adjusted pursuant to the warrants in the event the
Company effects a consolidation, merger or sale of substantially all of its
assets and/or if the Company declares or makes any distribution of its
assets (including cash) to holders of its common stock as a partial
liquidating dividend, as provided in the warrants.


                                     F-28


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 5 - CALLABLE SECURED CONVERTIBLE NOTES (Continued)

The warrants also contain a cashless exercise, whereby after February 2,
2006, and if a registration statement covering the warrants is not
effective, the warrant holders may convert the warrants into shares of the
Company's restricted Common Stock.  In the event of a cashless exercise
under the warrants, in lieu of paying the exercise price in cash, the
selling stockholders can surrender the warrant for the number of shares of
Common Stock determined by multiplying the number of warrant shares to
which it would otherwise be entitled by a fraction, the numerator of which
is the difference between (i) the average of the last reported sale prices
for the Company's Common Stock on the OTC Bulletin Board for the five
trading days preceding such date of exercise and (ii) the exercise price,
and the denominator of which is the average of the last reported sale
prices for the Company's Common Stock on the OTC Bulletin Board for the
five trading days preceding such date of exercise .  For example, if the
selling stockholder is exercising 100,000 warrants with a per warrant
exercise price of $0.75 per share through a cashless exercise when the
average of the last reported sale prices for the Company's Common Stock on
the OTC Bulletin Board for the five trading days preceding such date of
exercise is $2.00 per share, then upon such cashless exercise the warrant
holder will receive 62,500 shares of the Company's Common Stock.

Registration Rights Agreement
-----------------------------
We also entered into a registration rights agreement with the investors
that grants the investors demand registration rights with respect to 200%
of the Common Stock underlying the secured convertible notes and 200% of
the Common Stock underlying the warrants. The Company will be subject to
the payment of certain damages in the event that it does not satisfy its
obligations including its obligation to have a registration statement with
respect to the Common Stock underlying the secured convertible notes and
warrants declared effective by the Securities and Exchange Commission on or
prior to April 30, 2007; in the event that after the registration statement
is declared effective, sales of the Company's securities cannot be made
pursuant to the registration statement; and in the event that the Company's
Common Stock is not listed on the OTC Bulletin Board or the NASDAQ, New
York of American stock exchanges.  The damages are equal to 0.02 times the
number of months (prorated for partial months) that any such event occurs
(subject to adjustment as provided in the registration rights agreement).

Side Letter Agreement
---------------------
We entered into a side letter agreement with the investors on November 10,
2005.  The Side Letter Agreement provided that in consideration for the
November 2005 sale of the secured convertible  notes, the investors agreed
that the face amount of the $500,000 of secured convertible notes issued to
the investors in August 2004 and the $200,000 in secured convertible notes
which remained to be issued under the 2004 securities purchase agreement
upon the effectiveness of a registration statement covering such secured
convertible notes shall be included in the amount advanced to the Company
under the November 2005 secured convertible notes.  The side letter
agreement also provided that the terms of the 2005 securities purchase
agreement shall supercede the prior 2004 securities purchase agreement and
that all interest, penalties, fees, charges or other obligations accrued or
owed by the Company to the investors pursuant to the 2004 securities

                                     F-29

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 5 - CALLABLE SECURED CONVERTIBLE NOTES (Continued)

purchase agreement are waived, provided that in the event of any material
breach of the 2005 securities purchase agreement by the Company, which
breach is not cured within five days of receipt by the Company of written
notice of such breach, the novation of the 2004 securities purchase
agreement and the waiver of the prior obligations thereunder shall be
revocable by the selling stockholders and all such prior obligations shall
be owed as if the 2004 securities purchase agreement was never superceded.

NOTE 6 - FACTORING AND SECURITY AGREEMENT

On November 8, 2005, DCII and DCI entered into a Factoring and Security
Agreement to sell accounts receivables to Systran Financial Services
Corporation ("Systran").  The purchase price for each invoice sold is the
face amount of the invoice less a discount of 1.5%.

On July 24, 2006, the Factoring Agreement was amended and under the terms
of the amendment a fee equal to prime plus 1.50% shall be charged on a
daily basis based upon total of invoices purchased by Systran that remain
unpaid and outstanding, less the deposit held by Systran.   Further, the
purchase price for each invoice sold was amended to be the face amount of
the invoice less a discount of 0.65%.  Additionally, a one time fee of
0.50% on all invoices that remain unpaid from the date sold shall be
incurred on the 91st day from the date sold.

All accounts sold are with recourse by Systran.  Systran may defer making
payment to DCII of a portion of the purchase price payable for all accounts
purchased which have not been paid up to 10.0% of such accounts (reserve).
All of DCII's and DCI's accounts receivable are pledged as collateral under
this agreement.  In addition, 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 2005.  The initial term is for thirty six months and will automatically
renew for an additional twelve months at the end of the term, unless the
Company gives thirty days written notice of its intention to terminate the
Factoring Agreement. The amount advanced to the Company by Systran at
December 31, 2006 and 2005 totals $579,780 and $335,132, respectively.
These amounts are being shown as a liability in the accompanying financial
statements as a factoring liability.

                                     F-30

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 7 - LOSS ON DISCONTINUED OPERATIONS AND DISPOSITION OF SUBSIDIARY

As previously discussed, effective December 15, 2005, the Tudemes, the
former controlling shareholders of the Company and the Company entered into
a Spinoff Agreement which provided for (1) the transfer of the corporate
names, business, operations, assets, properties, intellectual properties,
trademarks, service marks, trade names, uniform resource locators,
telephone numbers, and goodwill of the Company and its subsidiaries (other
than DCII and DCI), together with the operating business of Abundant, to be
placed into to a newly-formed Delaware corporation wholly-owned by the
Company, (2) the acquisition and cancellation by the Company from the
Tudemes of their outstanding shares of capital stock of the Company,
totaling 35,691,200 (396,569 post-split) shares, (3) the assumption and
release by the Company and its subsidiaries and the Tudemes of certain
liabilities, and (4) the sale to the Tudemes of all of the outstanding
capital stock of Marathon, and the payment to the Tudemes of $80,441 for
amounts owed to the Tudemes and other creditors by the Company, of which
$50,000 was paid prior to December 31, 2005. Pursuant to this transaction,
the Company recorded a loss on discontinued operations as follows:

<Table>
<Caption>
                                                             For the
                                                           Year Ended
                                                          December 31,
                                                              2005
                                                          ------------
     <S>                                                  <C>
     REVENUES                                             $   321,991

     OPERATING EXPENSES
       Cost of revenues                                       225,988
       General and administrative                              64,179
       Depreciation and amortization                            3,796
       Bad debt expense                                         4,239
                                                          ------------
          Total Operating Expenses                            298,202
                                                          ------------
     INCOME FROM OPERATIONS                                    23,789

     OTHER INCOME (EXPENSE)
       Interest expense                                       (39,614)
                                                          ------------
          Total Other Income (Expense)                        (39,614)
                                                          ------------
     NET LOSS FROM DISCONTINUED OPERATIONS                $   (15,825)
                                                          ============
</Table>
                                     F-31

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 7 - LOSS ON DISCONTINUED OPERATIONS AND DISPOSITION OF SUBSIDIARY
(Continued)

In addition, the Company recorded a loss on the disposition of subsidiary
related to the above transaction totaling $699,616 for the year ended
December 31, 2005. The loss represents the excess of assets over
liabilities disposed of in the spinoff, as follows:


Net assets disposed of in the subsidiary spinoff         $    976,744
Net liabilities released in the subsidiary spinoff           (277,128)
                                                         -------------
Net loss on disposition of subsidiary                    $    699,616
                                                         =============

NOTE 8 - COMMITMENTS  AND CONTINGENCIES

On January 19, 2006, Community Capital Bank filed a complaint in the
Supreme Court of the State of New York (Kings County) against the Company,
Macdonald S. Tudeme (our former CEO) and Marguerite Tudeme (our former
Secretary). The complaint seeks payment of three loans made by Community
Capital Bank having a total outstanding principal amount of $202,527.67
plus unpaid interest. The Company believes that the Community Capital Bank
loans were made to MTM, a former subsidiary that was disposed of on
December 15, 2005 as part of the disposition of Marathon (as described in
Note 1), and are guaranteed by the Tudemes. As a result, the Company does
not believe it is obligated to repay any amounts due under the Community
Capital Bank loans.

On January 25, 2006, the Company received notice from the Internal Revenue
Service (the "IRS") that the IRS had concluded that the Company's
subsidiary (DCI) was a third-party payer to and thus employer of a
pharmacist who provided services to DCI's client, the California Department
of Corrections.  Although the IRS notice applies only to the case of the
individual pharmacist, if unchanged, it could require DCI to classify other
pharmacists and nurses in its registry who provide services to DCI's
clients as employees of DCI.  Accordingly, compensation payable to such
pharmacists and nurses would be subject to federal income tax withholding,
Federal Insurance Contributions Act (FICA) tax, and Federal Unemployment
Tax Act (FUTA) tax.   This result would have a material adverse effect on
the Company's business, financial condition and results of operations.  The
Company disagrees with the conclusion of the IRS notice, believes that the
pharmacist in question was properly classified as an independent contractor
and is in the process of contesting the conclusion of the IRS.

On June 5, 2006, Phillip Evans, a former contractor of DCI, filed a
complaint in the Superior Court of California (Riverside County) against
DCI.  The complaint alleges, among other things, libel and unfair business
practices, and seeks general special and punitive damages of $2,170,000.
The Company believes the claims are without merit and is contesting the
suit.


                                     F-32

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 9 - ACQUISITIONS

On November 7, 2005, the Company acquired the business and certain related
assets of Drug Consultants, Inc. ("DCI"), a California corporation.  DCI
furnishes personnel to perform a range of pharmacy, nursing and other
health care services in support of the operations of government and
commercial facilities, including its largest client, the State of
California. DCI was formed in 1977 and is located in Irvine, California.
The purchase price of $1,800,000 was satisfied by the Company paying
$1,600,000 in cash and a $200,000 pursuant to a secured promissory note.
The acquisition was an arm's length transaction and has been accounted for
using the purchase method.

The following table summarizes the estimated fair value of the assets
acquired and liabilities assumed at the date of acquisition. The purchase
price allocation is based upon management's best estimate of the relative
fair values of the identifiable assets acquired and liabilities assumed.

<Table>
<S>                                                  <C>
Net assets acquired:
 Accounts receivable                                 $ 1,401,560
 Goodwill                                              1,245,481
                                                     ------------
 Net assets acquired                                   2,647,041

Net liabilities assumed:
 Accounts payable and accrued expenses               $   722,987
 Notes payable                                           124,054
                                                     ------------
 Net liabilities assumed                                 847,041

 Consideration paid                                    1,800,000
                                                     ------------
</Table>

Pro Forma Results

The unaudited pro-forma consolidated financial statements give effect to
the acquisition by Monarch of DCII pursuant to a reverse takeover effective
November 4, 2005, and the subsequent acquisition of DCI by DCII effective
November 7, 2005.  The unaudited pro forma consolidated financial
statements have been prepared by management using the accounting principles
disclosed in the consolidated financial statements of the Company as of and
for the period ended September 30, 2005 as if the acquisition had occurred
on January 1, 2005.

                                     F-33


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 9 - ACQUISITIONS (continued)

The unaudited pro forma consolidated statement of operations for the year
ended December 31, 2004 is based on the unaudited financial statements as
if the acquisition had occurred on January 1, 2004.  The unaudited pro
forma combined financial statements are not necessarily indicative of the
results of operations that would have been realized for the period
presented, nor do they purport to project the results of operations for any
future periods.  The unaudited pro forma financial statements should be
read in conjunction with the consolidated financial statements of the
Company as of and for the periods ended December 31, 2004 and September 30,
2005.

<Table>
<Caption>
                                                         (Unaudited)
                                               ----------------------------
                                                For the Year        For the
                                               Ended Dec 31,   Period Ended
                                                        2004  Sept 30, 2005
                                               -------------  -------------
<S>                                            <C>            <C>
Revenue                                        $   6,647,053  $   7,049,314
                                               =============  =============
Gross Profit                                   $   1,359,726  $   1,875,317
                                               =============  =============
Operating Loss                                 $ (2,490,552)  $   (653,480)
                                               =============  =============
Net Loss                                       $ (3,285,010)  $ (1,073,180)
                                               =============  =============
Net Loss per Common Share - Basic / Diluted    $     (0.004)  $     (0.001)
                                               =============  =============
</Table>

NOTE 10 - STOCK BASED COMPENSATION

On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004),
"Share-Based Payment" ("SFAS 123(R)") which establishes standards for the
accounting for transactions in which an entity exchanges its equity
instruments for goods or services, primarily focusing on accounting for
transactions where an entity obtains employee services in share-based
payment transactions.  SFAS No. 123(R) requires a public entity to measure
the cost of employee services received in exchange for an award of equity
instruments, including stock options, based on the grant-date fair value of
the award and to recognize it as compensation expense over the period the
employee is required to provide service in exchange for the award, usually
the vesting period.  SFAS 123(R) supersedes Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" for
periods beginning in fiscal 2006.  In March 2005, the Securities and
Exchange Commission issued SAB No. 107 relating to SFAS 123(R). The Company
has applied the provisions of SAB 107 in its adoption of SFAS 123(R).

                                     F-34


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 10 - STOCK BASED COMPENSATION (Continued)

The Company adopted SFAS 123(R) using the modified prospective transition
method, which requires the application of the accounting standard as of
January 1, 2006, the first day of the Company's fiscal year 2006. The
Company's consolidated financial statements for the year ended December 31,
2006 reflect the impact of SFAS 123(R).  In accordance with the modified
prospective transition method, the Company's consolidated financial
statements for prior periods have not been restated to reflect, and do not
include, the impact of SFAS 123(R).

SFAS 123(R) requires companies to estimate the fair value of share-based
payment awards on the date of grant using an option-pricing model.  The
value of the portion of the award that is ultimately expected to vest is
recognized as expense over the requisite service periods in the Company's
consolidated statement of operations.  Prior to the adoption of SFAS
123(R), the Company accounted for stock-based awards to employees and
directors using the intrinsic value method in accordance with APB Opinion
No. 25 as allowed under SFAS No. 123, "Accounting for Stock-Based
Compensation."  Under the intrinsic value method, no stock-based
compensation expense had been recognized in the Company's consolidated
statements of operations, other than as related to option grants to
employees and consultants below the fair market value of the underlying
stock at the date of grant.

Stock-based compensation expense recognized during the period is based on
the value of the portion of share-based payment awards that is ultimately
expected to vest during the period.  Stock-based compensation expense
recognized in the Company's consolidated statement of operations for the
year ended December 31, 2006 included compensation expense for share-based
payment awards granted prior to, but not yet vested as of December 31, 2005
based on the grant date fair value estimated in accordance with the pro
forma provisions of SFAS No. 123 and compensation expense for the
share-based payment awards granted subsequent to December 31, 2005 based on
the grant date fair value estimated in accordance with the provisions of
SFAS 123(R). As stock-based compensation expense recognized in the
consolidated statement of operations for the year ended December 31, 2006
is based on awards ultimately expected to vest, it has been reduced for
estimated forfeitures. SFAS 123(R) requires forfeitures to be estimated at
the time of grant and revised, if necessary, in subsequent periods if
actual forfeitures differ from those estimates.  The estimated average
forfeiture rate for the year ended December 31, 2006, of approximately 0%
was based on historical forfeiture experience.  The estimated pricing term
of option grants for the year ended December 31, 2006 was 5.0 years.  In
the Company's pro forma information required under SFAS 123(R) for the
periods prior to fiscal 2006, the Company accounted for forfeitures as they
occurred.

SFAS 123(R) requires the cash flows resulting from the tax benefits
resulting from tax deductions in excess of the compensation cost recognized
for those options to be classified as financing cash flows.  Due to the
Company's loss position, there were no such tax benefits during the year
ended December 31, 2006.  Prior to the adoption of SFAS 123(R), those
benefits would have been reported as operating cash flows had the Company
received any tax benefits related to stock option exercises.

                                     F-35

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 10 - STOCK BASED COMPENSATION (Continued)

The fair value of stock-based awards to employees and directors is
calculated using the Black-Scholes option pricing model, even though this
model was developed to estimate the fair value of freely tradable, fully
transferable options without vesting restrictions, which differ
significantly from the Company's stock options.  The Black-Scholes model
also requires subjective assumptions, including future stock price
volatility and expected time to exercise, which greatly affect the
calculated values.  The expected term of options granted is derived from
historical data on employee exercises and post-vesting employment
termination behavior.  The risk-free rate selected to value any particular
grant is based on the U.S Treasury rate that corresponds to the pricing
term of the grant effective as of the date of the grant.  The expected
volatility is based on the historical volatility of the Company's stock
price.  These factors could change in the future, affecting the
determination of stock-based compensation expense in future periods.

Valuation and Expense Information under SFAS 123(R)

The weighted-average fair value of stock-based compensation is based on the
single option valuation approach.  Forfeitures are estimated and it is
assumed no dividends will be declared.  The estimated fair value of
stock-based compensation awards to employees is amortized using the
straight-line method over the vesting period of the options.

The fair value calculations are based on the following assumptions:

<Table>
<Caption>
                                               2006                2005
                                          --------------     ---------------
<S>                                       <C>                <C>
Risk-free interest rate                   4.47% - 5.12%       4.01% - 4.54%
Expected life of the options                   5.00 yrs            5.00 yrs
Expected volatility                         461% - 497%         419% - 497%
Expected dividend yield                              0                   0
</Table>

The following table summarizes stock-based compensation expense related to
stock options and employee stock purchase plan purchases under SFAS 123(R)
for the years ended December 31, 2006 and 2005 which was allocated as
follows:

<Table>
<Caption>
                                               Year Ended December 31, 2005
                                               ----------------------------
                                                                APB Opinion
                                               SFAS No. 123R         No. 25
                                               -------------  -------------
<S>                                            <C>            <C>
Net income (loss)                              $    299,231   $    299,231
                                               =============  =============
Net income (loss) per share                    $       0.03   $       0.03
                                               =============  =============
</Table>

<Table>
<Caption>
                                               Year Ended December 31, 2006
                                              -----------------------------
                                                                APB Opinion
                                               SFAS No. 123R         No. 25
                                               -------------  -------------
<S>                                            <C>            <C>
Net income (loss)                              $   (866,452)  $   (744,232)
                                               =============  =============
Net income (loss) per share                    $      (0.09)  $      (0.08)
                                               =============  =============
</Table>


                                     F-36


                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 10 - STOCK BASED COMPENSATION (Continued)

A summary of option activity under the Company's stock equity plans during
the year ended December 31, 2006 is as follows:

<Table>
<Caption>
                                                                Weighted
                                                                 Average
                                                    Weighted   Remaining    Aggregate
                                      Number of     Average  Contractual    Intrinsic
                                     Shares (In     Exercise    Term (in    Value (In
                                     Thousands)       Price       Years)   Thousands)
                                     ----------   ---------- -----------   ----------
<S>                                  <C>          <C>        <C>           <C>
Outstanding at December 31, 2005            92        $0.72
   Granted                                 840        $0.62
   Forfeited                                 -        $0.00
   Exercised                                 -        $0.00
                                     ----------   ----------
Outstanding at December 31, 2006           932        $0.63        4.29   $      590
                                     ==========   ========== ===========  ===========
Vested and expected to vest
 at December 31, 2006                      342    $    0.64        4.51   $      218
                                     ==========   ========== ===========  ===========
Exercisable at December 31, 2006           342    $    0.64        4.51   $      218
                                     ==========   ========== ===========  ===========
</Table>

The per share weighted average fair value of options granted during the
years ended December 31, 2006 and 2005 were $0.27 and $0.72, respectively.
The total intrinsic value of options exercised during the years ended
December 31, 2006 and 2005 was $ 0 and $ 0, respectively, as there we no
options exercised during those periods.  As of December 31, 2006, total
unrecognized forfeiture adjusted compensation costs related to nonvested
stock options was $171,067, which is expected to be recognized as an
expense over a weighted average period of approximately 1.7 years.

Prior to fiscal 2006, the weighted-average fair value of stock-based
compensation to employees was based on the single option valuation
approach. Forfeitures were recognized as they occurred and it was assumed
no dividends would be declared.

                                     F-37

                  MONARCH STAFFING, INC. AND SUBSIDIARIES
                  (Formerly MT Ultimate Healthcare Corp.)

Notes to the Consolidated Financial Statements December 31, 2006 and 2005

NOTE 10 - STOCK BASED COMPENSATION (Continued)

The estimated fair value of stock-based compensation awards to employees
was amortized using the straight-line method over the vesting period of the
options.

Pro forma results are as follows:
<Table>
<Caption>
                                                         For the year ended
                                                          December 31, 2005
                                                         ------------------
     <S>                                                 <C>
     Net income - as reported                            $        299,231

     Stock-based employee compensation
      expense included in reported net
      income (loss), net of tax                                          -

     Total stock-based employee
      compensation expense determined
      under fair-value-based method for
      all rewards, net of tax                                        2,760
                                                         ------------------
     Pro forma net income                                $         296,471
                                                         ==================
     Net income per share:
      Basic and diluted, as reported                     $            0.03
                                                         ==================
      Basic and diluted, pro forma                       $            0.03
                                                         ==================
</Table>

NOTE 11 - SUBSEQUENT EVENTS

On February 5, 2007, MBMC loaned $125,000 to DCII at 10% per annum.  The
principal balance of the loan was repaid in full on February 8, 2007.  On
February 5, 2007, MBMC also loaned $70,000 to the Company at 10% per annum.
The principal balance of the loan was repaid in full on February 15, 2007.
See Note 3 for further discussion on related party transactions.

On March 29, 2007, the Company obtained an amendment to the 2005 securities
purchase agreement whereby interest payments are payable at the same time
the corresponding principal balance is due and payable, whether at maturity
or upon acceleration or by prepayment.  In addition, the amendment extended
the date by which the Company must obtain the effectiveness of the
registration statement covering the resale of the shares of our Common
Stock issuable upon conversion of the secured convertible notes and the
exercise of the warrants to October 31, 2007 (or November 25, 2007 if the
Company is making a good faith effort to respond to the Securities and
Exchange Commission's comments).   See Note 5 for further discussion.

                                     F-38

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

On May 16, 2005, the Company's Board of Directors accepted the resignation
of Clyde Bailey P.C., its independent auditors, due to health and other
personal reasons; thus dismissing and terminating the engagement of Clyde
Bailey P.C. as its independent auditor.

Clyde Bailey P.C. submitted audit reports on the Company's financial
statements for the year ended December 31, 2004. The submitted audit
reports did not contain any adverse opinions, disclaimers of opinions or
other modifications or qualifications. Clyde Bailey P.C. did not, during
the applicable periods, advise the Company of any of the enumerated items
described in Item 304(a) (1) of Regulation S-K.

The decision to change accountants was recommended and approved by the
Board of Directors of the Company.

During the fiscal year ended December 31, 2004 and the period from January
1, 2005 through the date of dismissal and termination of the engagement of
Clyde Bailey P.C., there were no disagreements with Clyde Bailey P.C. on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of Clyde Bailey P.C., would have caused Clyde
Bailey P.C. to make reference thereto in, or in connection with, his
reports on financial statements for the years or such interim period.

On June 10, 2005 the Company's Board of Directors ratified the engagement
of Chisholm Bierwolf & Nilson, LLC, as its auditors. The Company authorized
Clyde Bailey P.C. to fully respond to any and all inquiries of Chisholm
Bierwolf & Nilson, LLC, concerning the finances and previously performed
audits of the Company.

During the two most recent fiscal years prior to the date of engagement,
and the subsequent interim period prior to engaging Chisholm Bierwolf &
Nilson, LLC, neither the Company (nor someone on the Company's behalf)
consulted the newly engaged accountant regarding any matter.

The Company engaged Corbin & Company LLP to act as its independent
auditors, effective November 8, 2005, for DCII for the year ended December
31, 2005. The Company's principal accountant, Chisholm, Bierwolf & Nilson,
LLC, acted as its independent auditors for the Company and all subsidiaries
during 2006.

During the Company's two most recent fiscal years and any subsequent
interim period prior to engaging Corbin & Company LLP, the Company has not
consulted Corbin & Company LLP regarding either: (i) the application of
accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the
Company's financial statements, and Corbin & Company LLP did not provide
either a written report or oral advice to the Company that Corbin & Company
LLP concluded was an important factor considered by the Company in reaching
a decision as to the accounting, auditing or financial reporting issue; or
(ii) any matter that was either the subject of a disagreement or a
reportable event, each as defined in Item 304 of Regulation S-K. Corbin &
Company LLP has not provided due diligence services in connection with
proposed and/or consummated investment transactions by the Company and its
affiliates.

                                     78

On February 1, 2006, the Company engaged Chisholm, Bierwolf & Nilson, LLC,
its independent registered public accounting firm, to re-audit its
financial statements for the years ended December 31, 2003 and 2004. This
decision was based on; (i) action taken by the Public Company Accounting
Oversight Board ("PCAOB") revoking the registration of the Company's prior
independent auditor, Clyde Bailey, P.C., due to violations of PCAOB rules
and auditing standards and (ii) as part of its analysis of comments made by
the staff of the SEC during it's review of a registration statement filed
by the Company.

ITEM 8A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain "disclosure controls and procedures," as such term is defined
in Rules  13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934
(the "Exchange Act"), designed to ensure information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized, and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, and
that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our Disclosure
Committee and management, including our Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures, as required
by the Exchange Act Rules  13a-15(b) and 15d-15(b).

Based on that evaluation, our Chief Executive Officer and our Chief
Financial Officer concluded that, as of December 31, 2006, our disclosure
controls and procedures were not effective, due to the identification of
the material weaknesses in internal control over financial reporting
described below.  Notwithstanding the material weaknesses described below,
management believes the consolidated financial statements included in this
report fairly present, in all material respects, our financial condition,
results of operations and cash flows for the periods presented.

Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a control deficiency, or combination of control
deficiencies, that results in a more than remote likelihood that a material
misstatement of the annual or interim financial statements will not be
prevented or detected. In connection with the preparation of our 2006
consolidated financial statements, we have identified the following control
deficiencies, which represent material weaknesses in the Company's internal
control over financial reporting as of December 31, 2006:

  -   We did not maintain a sufficient complement of personnel with an
      appropriate level of accounting knowledge, experience, and training
      in the application of U.S. generally accepted accounting principles
      commensurate with our existing financial reporting requirements and
      the requirements we face as a public company. Accordingly,
      management has concluded that this control deficiency constitutes a
      material weakness, and that it contributed to the following material
      weakness.

  -   We did not maintain effective controls with respect to reviewing and
      authorizing related party transactions.  Specifically, our control
      procedures did not prevent the Company from making payments on
      behalf of other related parties.  Accordingly, management has
      concluded that this control deficiency constitutes a material
      weakness.
                                     79

Management's Remediation Initiatives

During the first half of 2007, we plan to remediate these material
weaknesses as follows:

  -   We assessed the organization of our accounting personnel and the
      technical expertise within the accounting function. We plan to
      appoint a new Chief Financial Officer in order to increase our depth
      of experience in generally accepted accounting principles and
      guidelines required by the Securities and Exchange Commission.

  -   We plan to add an independent director to the Company's board of
      directors.  This independent director will approve all related party
      transactions prior to occurring and ensure appropriate preventative
      controls are in place.

ITEM 8B. OTHER MATTERS

None.


                                 PART III.

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The directors and principal executive officers of the Company are as
specified on the following table:

NAME                AGE       POSITION
---------------------------------------------------------------------------
Joel Williams       51        Chief Executive Officer

David Walters       44        Chairman, President, Chief Financial Officer,
                              Treasurer and Director

Keith Moore         46        Secretary and Director


JOEL WILLIAMS has served as Chief Executive Officer since September 1,
2006.  Mr. Williams has been a senior executive of health care staffing
companies for the past 14 years. Most recently, he served as a divisional
President (2005-July 2006) and Senior Vice President (2003-2005) with
Supplemental Health Care, a privately held health care staffing company.
Previously, Mr. Williams was a senior executive at Staff Search Health
Care, a privately held healthcare staffing company, serving as Chief
Operating Officer (2000-2003) and Chief Financial Officer (1999-2000).
Prior to Staff Search Health Care, Mr. Williams held financial and
corporate development management positions with a variety of other health
care staffing and other companies.  He received an MBA from the University
of Houston and a B.A. in finance from the University of Texas.

DAVID WALTERS has served as President, Chief Financial Officer and
Treasurer since December 15, 2005. He served as Chief Executive Officer
from December 15, 2005 until September 1, 2006 and served as Executive Vice
President of the Company from November 4, 2005 to December 15, 2005. He has
been a Director of the Company since November 4, 2005 and currently is
Chairman of the Board.  Since January 2005, he has served as Chairman and
Chief Executive Officer of DCII, which since November 4, 2005, has been


                                     80

wholly owned by the Company. Since February 2000, he has served as a
managing member of Monarch Bay Capital Group, LLC, a consulting company
and, since March 2006,  as a managing member of Monarch Bay Management
Company, L.L.C., a consulting company.. Mr. Walters has extensive
experience in investment management, corporate growth development
strategies and capital markets. Mr. Walters earned a B.S. in Bioengineering
from the University of California, San Diego in 1985.  Mr. Walters also
serves as Chairman of the Board of Directors of Remote Dynamics, Inc. and
is a member of the Board of Directors of Precision Aerospace Components,
Inc.

KEITH MOORE has served as a Director of the Company since November 4, 2005
and has extensive experience in growing and financing technology and
service companies. Mr. Moore is Chairman and Chief Executive Officer of
DataLogic International, Inc., an information technology company, positions
he has held since January 2005. Since March 2006,  Mr. Moore has also
served as a managing member of Monarch Bay Management Company, L.L.C., a
consulting company.  From April 1999 to January 2005, Mr. Moore served as
Chairman and Chief Executive Officer of DCII which since November 4, 2005,
has been wholly owned by the Company. Mr. Moore received his Bachelors
degree in Finance from Eastern Michigan University in 1982 and his Masters
degree from Eastern Michigan University in Finance in 1984.  Mr. Moore is
also a member of the Board of Directors of Remote Dynamics, Inc.

Audit Committee and Financial Expert Disclosures

Section 301 of the Sarbanes-Oxley Act of 2003, and SEC regulations
implementing that provision require that public companies disclose a
determination by their Board of Directors as to the existence of a
financial expert on their audit committee and, if none is determined to
exist, that the Board of Directors has determined that no one serving on
its Board of Directors meets the qualification of a financial expert as
defined in the Sarbanes-Oxley Act and implementing regulations.

As of December 31, 2006, and as of the date of filing of this report, we
have not created any standing committees of the Board of Directors,
including an audit committee. Accordingly, our entire Board of Directors
serves as our audit committee. We also disclose that our Board has
determined that we have not, and we do not, possess on our Board of
Directors anyone who qualifies as an audit committee financial expert and,
unless and until one is identified and agrees to serve, we will continue to
rely on outside professional consultants who advise us with respect to
audit matters.

Changes to Procedures Regarding Nomination of Directors to the Board of
Directors

During our fiscal year ended December 31, 2006, there were no material
changes to the procedures by which our security holders may recommend
nominees to our board of directors.

Code of Ethics

We do not presently have a Code of Business Conduct and Ethics. We expect
to adopt such a Code prior to our annual meeting and will report the
adoption of a Code of Business Conduct and Ethics on Form 8-K promptly
thereafter.

Section 16(a) Beneficial Ownership Reporting Compliance

Based upon a review of the reports filed under Section 16 of the Securities
Exchange Act during the last fiscal year, all required reports were timely
filed, except that Joel Williams filed a late Form 3.
                                     81

ITEM 10. EXECUTIVE COMPENSATION

Any compensation received by officers, directors, and management personnel
of the Company will be determined from time to time by the Board of
Directors of the Company. Officers, directors, and management personnel of
the Company will be reimbursed for any out-of-pocket expenses incurred on
behalf of the Company.

The table set forth below summarizes the annual and long-term compensation
for services in all capacities to the Company paid to our most highly
compensated executive officers during the last two fiscal years.

<Table>
<Caption>

Name &                                         Stock    Option    All Other
Principal                  Salary             Awards    Awards      Compen-
Position           Year       ($)   Bonus ($)    ($)   ($) (4)   sation (5)     Total
----------------  -----  --------   --------- ------  --------  -----------  --------
<S>               <C>    <C>        <C>       <C>     <C>       <C>          <C>
Joel Williams (2)  2006  $ 49,846   $      -  $   -   $197,068  $        -   $246,914
 Chief Executive   2005  $     -    $      -  $   -   $     -   $        -   $     -
  Office

David Walters (3)  2006  $135,000   $      -  $   -   $     -   $   145,000  $280,000
 Chairman,         2005  $ 86,000   $      -  $   -   $     -   $   120,000  $206,000
 President, Chief
 Financial Officer,
 Treasurer and
 Director
</Table>

(1) Does not include perquisites and other personal benefits in amounts
less than 10% of the total annual salary and other compensation.

(2)  Joel Williams became Chief Executive Officer on September 1, 2006.

(3) David Walters became President, Chief Financial Officer and Treasurer
of the Company effective December 15, 2005. He served as Chief Executive
Officer from December 15, 2005 until September 1, 2006.  He had served as
Executive Vice President of the Company from November 4, 2005 to December
15, 2005. He has been a Director of the Company since November 4, 2005 and
currently is Chairman of the Board.

(4) Stock option awards were valued in accordance with SFAS 123 (R).  Refer
to Footnote 10 "Stock Based Compensation" of the Company's Financial
Statements.

(5) Mr. Walters entered into an Independent Contractor Agreement with DCII
on February 1, 2005 ("Contractor Agreement"). Mr. Walters' Contractor
Agreement provides for him to serve DCII in the capacity of Chief Executive
Officer. The Contractor Agreement was renewed on February 1, 2006 and
expires December 31, 2008.  The Contractor Agreement renews thereafter on
an annual basis unless terminated by either party. The Contractor Agreement
may be terminated upon the breach of a term of the 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 Agreement
contains confidentiality clauses and work for hire clauses. The Contractor
Agreement provides that Mr. Walters is not an employee of DCII. Mr. Walters
is entitled to be paid $10,000 per month under the Contractor Agreement.
The Company also paid $25,000 to Mr. Walters during 2006 for other
consultation services which were outside of the scope of the Independent
Contractor Agreement described above.
                                     82

Summary of Employment Agreements
--------------------------------
On March 21, 2006, we entered into an employment agreement with David
Walters, our Chairman and Chief Financial Officer (and Chief Executive
Officer until  September 1, 2006). The employment agreement has an initial
term of two years. The agreement provides for an initial payment of
$33,750, a base salary of $135,000 for the first year and $160,000 for the
second year, and a bonus on terms and conditions to be mutually agreed upon
by Mr. Walters and us. If the employment agreement is terminated by us
(other than for specified cause events), Mr. Walters will receive full
compensation and benefits for the remaining term of the agreement and one
year thereafter.

On September 1, 2006, we entered into an employment agreement with Joel
Williams, our Chief Executive Officer, with an initial term of two years.
The employment agreement provides for a base salary of $160,000 (subject to
performance-based adjustments) and a quarterly bonus equal to 5% of our
earnings before interest, taxes, depreciation and amortization.  If the
employment agreement is terminated by us (other than for specified cause
events), Mr. Williams will receive his full base salary for the remaining
term of the agreement.  Pursuant to the agreement, we will grant to Mr.
Williams options to purchase a total of 789,552 shares of our common stock.
The options will be granted in four equal tranches having exercise prices
equal to $0.25 per share, $0.50 per share, $0.75 per share and $1.00 per
share, respectively.  Each tranche will vest 20% upon grant and thereafter
10% for eight quarters with full vesting upon a change in control.

Option Grants in 2006
---------------------
The following table provides details regarding stock options granted in
2006 to our executive officers listed in the Summary Compensation Table
above:

<Table>
<Caption>
                     OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
                                    OPTIONS AWARDS

                           Number of         Number of
                          securities        securities
                          underlying        underlying
                         unexercised       unexercised        Option         Option
                           options           options         exercise      expiration
Name                   (#)Exercisable  (#)Unexercisable      price ($)        date
-------------------------------------------------------------------------------------
<S>                    <C>              <C>             <C>            <C>
Joel Williams                 59,216           138,172          $0.25       8/31/2011
Joel Williams                 59,216           138,172          $0.50       8/31/2011
Joel Williams                 59,216           138,172          $0.75       8/31/2011
Joel Williams                 59,216           138,172          $1.00       8/31/2011
                       -------------------------------
Total                        236,864           552,688
                       -------------------------------
</Table>

Options vested 20% upon grant and thereafter 10% for eight quarters with
full vesting upon a change in control.

                                     83

Director Compensation
---------------------
The following director compensation disclosure reflects all compensation
awarded to, earned by or paid to the directors below for the fiscal year
ended December 31, 2006.

<Table>
<Caption>
                             Fees Earned     Stock  Option      All Other
                              or Paid in    Awards  Awards   Compensation
Name (1)                      Cash($)(2)       ($)     ($)         ($)(3)   Total ($)
-------------------------------------------------------------------------------------
<S>                          <C>          <C>     <C>       <C>            <C>
Keith Moore                   $       -    $    -  $    -    $   145,000    $ 145,000
Director & Secretary
</Table>

(1)  David Walters, Chairman and Director and Chief Financial Officer,
     total compensation is reflected in "Summary Compensation Table" above.
(2)  The Company did not pay any fees for director services.
(3)  Mr. Moore entered into an Independent Contractor Agreement with DCII
     on February 1, 2005 ("Contractor Agreement"). Mr. Moore's Contractor
     Agreement provides for him to serve DCII in the capacity of Secretary
     and Director.  The Contractor Agreement was renewed on February 1,
     2006 and expires December 31, 2008.  The Contractor Agreement renews
     thereafter on an annual basis unless terminated by either party. The
     Contractor Agreement may be terminated upon the breach of a term of
     the 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 Agreement contains confidentiality clauses and
     work for hire clauses. The Contractor Agreement provides that Mr.
     Moore is not an employee of DCII.  Mr. Moore is entitled to be paid
     $10,000 per month under the Contractor Agreement.   The Company also
     paid $25,000 to Mr. Moore during 2006 for other consultation services
     which were outside of the scope of the Independent Contractor
     Agreement described above.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of March 22, 2007 by (i) each
person or entity known by the Company to be the beneficial owner of more
than 5% of the outstanding shares of common stock, (ii) each of the
Company's directors and named executive officers, and (iii) all directors
and executive officers of the Company as a group.


                                     84

<Table>
<Caption>

Name and Address                        Shares of Common Stock
of Beneficial Owners                    Beneficially Owned (1)
                                        ----------------------------
                                        Number              Percent
-------------------------------------   ------              -------
<S>                                     <C>                 <C>
David Walters                           4,141,667 (2)       42.0%
  30950 Rancho Viejo Rd #120
  San Juan Capistrano, CA  92675

Keith Moore                             4,141,667 (3)       42.0%
  30950 Rancho Viejo Rd #120
  San Juan Capistrano, CA  92675

Joel Williams                             315,821 (4)        3.2%
  30950 Rancho Viejo Rd #120
  San Juan Capistrano, CA  92675

Nite Capital, L.P.                        920,371 (5)        9.3%
  101 East Cook Avenue, Suite 201
  Libertyville, IL 60048

All officers and directors              8,599,155 (2)(3)(4)  86.3%
  as a group (3 people)
</Table>

(1) The number of shares of common stock owned are those "beneficially
owned" as determined under the rules of the Securities and Exchange
Commission, including any shares of common stock as to which a person has
sole or shared voting or investment power and any shares of common stock
which the person has the right to acquire within 60 days through the
exercise of any option, warrant or right.  As of March 22, 2007, there were
9,961,384 shares of common stock outstanding.
(2) Mr. Walters beneficially owns his shares through Monarch Bay Capital
Group, LLC, of which he is the sole member.
(3) Mr. Moore beneficially owns his shares through MEL Enterprises, Ltd.
(4)  Consists of 394,7766 shares of common stock issuable upon exercise of
stock options granted under the Company's Stock Incentive Plan.
(5) The general partner of Nite Capital, LP is Nite Capital LLC, a Delaware
limited liability company. Mr. Keith Goodman, a managing partner of Nite
Capital LLC, has voting and investment control with respect to the shares
of Common Stock beneficially owned by Nite Capital LP.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

On April 27, 1999, our Director, Keith Moore entered into a Working Capital
Line of Credit agreement, with DCII, on January 1, 2001, Mr. Moore entered
into a Working Capital Line of Credit agreement with DCII's wholly owned
subsidiary, SDG, and on February 1, 2005, our Chairman and Chief Financial
Officer, David Walters entered into a Working Capital Line of Credit
agreement, with DCII (each a "Line of Credit" and collectively the "Lines
of Credit").  Mr. Moore's Line of Credit agreements with DCII and SDG
terminated effective December 31, 2005.


                                     85

Mr. Walters' Line of Credit with DCII states that DCII shall pay him the
amount owing under the Line of Credit (up to $250,000) on December 31,
2006, plus any interest on the amounts outstanding as of the date the Line
of Credit was entered into at the rate of 10% per annum. Interest on the
Line of Credit is payable quarterly and becomes part of the principal
amount of the Line of Credit if unpaid at the end of each quarter. The
total amount outstanding under Mr. Walters' Line of Credit as of the date
of December 31, 2006 was $0. In the event of default under the Line of
Credit, which includes the failure of DCII to pay the Line of Credit when
due, DCII's filing for bankruptcy, or the deterioration of the financial
condition of DCII causing Mr. Walters to deem DCII insecure, the amount of
unpaid principal and interest shall bear interest at the rate of 13% per
annum until such time as it is paid. Mr. Walters' Line of Credit agreement
with DCII terminated on December 31, 2006.

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 8,283,334 shares to Monarch Bay Capital Group, LLC,
beneficially owned by David Walters, our Chairman and Chief Financial
Officer, in connection with the Company's acquisition of DCII.

An amount of $22,800 was owed to Mr. Moore at December 31, 2005 for
services rendered to SDG. This amount was non-interest bearing, unsecured,
and due on demand.  The Company repaid this amount in March 2006.

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 $350,000 and $170,000 (including $40,000
outstanding as of December 31, 2004) during the years ended December 31,
2006 and 2005, respectively, related to the Contractor Agreements.  Amounts
owed by the Company totaled $0 and $110,000 at December 31, 2006 and 2005,
respectively.

The Company also paid $25,000 to both Mr. Moore and Mr. Walters during 2006
for other consultation services which were outside of the scope of the
Independent Contractor Agreements described above.


                                     86

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, our Chairman and Chief Financial Officer, and Keith Moore,
our director, each are members of, and beneficially own 50% of the
ownership interests in, MBMC. Under the chief financial officer services
agreement with 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.  To date, no services have been
provided under this agreement, accordingly, no amounts were paid to MBMC
and/or accrued as of and for the year ended December 31, 2006.  The Company
expects that services provided under this agreement will commence in March
2007.

On December 20, 2006, MBMC loaned $95,000 to DCII at 10% per annum.  The
principal balance of loan was repaid in full on December 28, 2006 and
accrued interest expense totaled $208 as of December 31, 2006.  On February
5, 2007, MBMC loaned $125,000 to DCII at 10% per annum.  The principal
balance of the loan was repaid in full on February 8, 2007.  On February 5,
2007, MBMC also loaned $70,000 to the Company at 10% per annum.  The
principal balance of the loan was repaid in full on February 15, 2007.

In March 2006, DCII made a $7,500 payment to a vendor on behalf of Monarch
Bay Associates, L.L.C. ("MBA").  David Walters, our Chairman and Chief
Financial Officer, and Keith Moore, our director, each are members of, and
beneficially own 50% of the ownership interests in MBA.     The amount is
non-interest bearing and owed to the Company as of December 31, 2006.  The
Company received payment in full in March 2007.

In December 2006, DCI made two payments totaling $33,502 to vendors on
behalf of Solana Technologies, Inc. ("STI").  At the time of the payments,
David Walters, our Chairman and Chief Financial Officer, was Chairman and
Chief Executive Officer of STI and beneficially owned a majority of the
outstanding common stock of STI.  The amounts were non-interest bearing.
The Company received payment in full in December 2006.  On January 2, 2007,
the Company purchased office equipment totaling $1,244 from STI.

On August 4, 2006, DCI borrowed $150,000 from BounceGPS, Inc. ("BounceGPS")
at 10% per annum.  At the time of the loan, David Walters, our Chairman and
Chief Financial Officer, was the Chairman and Chief Executive Officer of
the parent company of BounceGPS and beneficially owned a majority of the
outstanding common stock of such parent company.  The principal balance was
repaid in full on September 11, 2006.  On October 4, 2006, the Company
borrowed $18,000 from the same related company.  The principal balance was
repaid in full on October 11, 2006.  On October 5, 2006, DCII borrowed
$95,000 from the same related company.  The principal balance was repaid in
full on October 11, 2006.  DCII also borrowed $220,000 during late October
and early November 2006 from the same related company.  The entire
outstanding balance of $220,000 was repaid on November 8, 2006.  Interest
payments of $636 were made during 2006 and accrued interest totaled $1,899
as of December 31, 2006

During 2006, DCI and DCII paid $1,361 and $27,395, respectively, to
DataLogic International, Inc. for various services including accounting,
payroll, human resource, and other administrative duties.  Mr. Moore, our
Director, is the Chairman and  Chief Executive Officer of DataLogic
International, Inc.


                                     87

On November 8, 2005, DCII and DCI entered into a Factoring and Security
Agreement to sell accounts receivables to Systran Financial Services
Corporation ("Systran").  All of DCII's and DCI's accounts receivable are
pledged as collateral under this agreement.  In addition, 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 2005.

We have entered into an indemnification agreement with each of Mr. Walters,
Mr. Moore and Joel Williams, our Chief Executive Officer. We will indemnify
them to the fullest extent permitted by law if they become a party to or
witness or other participant in, or are threatened to be made a party to or
witness or other participant in, any threatened, pending or completed claim
by reason of (or arising in part out of) any event or occurrence related to
the fact that they are or were a director, officer, employee, agent or
fiduciary of ours, or any subsidiary of ours, or they are or were serving
at our request as a director, officer, employee, agent or fiduciary of
another corporation, partnership, joint venture, trust or other enterprise,
or by reason of any action or inaction on their part while serving in such
capacity against any and all expenses, judgments, fines, penalties and
amounts paid in settlement and any federal, state, local or foreign taxes
imposed on them as a result of the actual or deemed receipt of any
indemnification payments made by us to or on their behalf. We are entitled
to reimbursement of any advance indemnification payments that we make to or
on their behalf if, when and to the extent that a disinterested director,
group of disinterested directors or independent legal counsel determines
that they would not be permitted to be so indemnified under applicable law.
We are not obligated to indemnify them for the following:

  -   Acts, omissions or transactions for which they are prohibited from
      receiving indemnification under applicable law.
  -   Claims initiated or brought voluntarily by them and not by way of
      defense, except for claims brought to establish or enforce a right
      to indemnification or in specific cases if our Board of Directors
      has approved the initiation or bringing of such claim, or as
      otherwise required under the Nevada Revised Statutes, regardless of
      whether they ultimately are determined to be entitled to such
      indemnification, advance expense payment or insurance recovery, as
      the case may be.
  -   Any proceeding instituted by them to enforce or interpret their
      indemnification agreement, if a court of competent jurisdiction
      determines that each of the material assertions made by either of
      them in such proceeding was not made in good faith or was frivolous.
  -   Violations of Section 16(b) of the Exchange Act or any similar
      successor statute.

As part of our focus on growing profitable operations, we decided to
discontinue and dispose of certain operations which we determined did not
demonstrate suitable growth or profitability prospects. On December 15,
2005, we completed the disposition of all of the outstanding capital stock
of Marathon Healthcare Corporation to Macdonald Tudeme and Marguerite
Tudeme, the former controlling shareholders of the Company. At the time of
the disposition, Marathon's assets included substantially all of the
corporate names, business, operations, assets, properties, intellectual
properties, trademarks, service marks, trade names, uniform resource
locators, telephone numbers, and good will of the Company and its
subsidiaries (other than DCII and DCI). These assets included all of the
operations of the Company's former operating subsidiaries MT Marketing Int.

                                     88

Corp and Abundant Healthcare, Inc. In exchange for all of the outstanding
capital stock of Marathon and a  payment to the Tudemes of $80,442, of
which $50,000 was paid as of December 31, 2006, the Company received from
the Tudemes 396,569 shares of the Company's Common Stock. In connection
with the disposition of Marathon, we also (a) assumed and released the
Tudemes from certain liabilities and (b) pledged to Marathon 222,223 shares
of our Common Stock as collateral to secure the performance and payment of
a promissory note in the amount of $257,038 payable to Lisa Stern
originally entered into as part of the Company's purchase of a former
operating subsidiary. If we fail to pay any principal of or interest on the
note when due, we will be in default of our obligations and Marathon will
be able to retain and sell the pledged Common Stock to satisfy our
obligations.

ITEM 13. EXHIBITS

The exhibits required by Item 601 of Regulation S-B are identified below
and attached hereto or incorporated by reference as noted in the list.

  3.1(1)       Articles of Incorporation
  3.2(2)       Articles of Amendment to Articles of Incorporation
  3.3(3)       Articles of Amendment to Articles of Incorporation
  3.4(4)       Articles of Amendment to Articles of Incorporation
  3.5(11)      Amended and Restated Bylaws
  4.1(11)      2005 Stock Incentive Plan.
  10.1(5)      Securities Purchase Agreement dated August 31, 2004
  10.2(5)      Callable Secured Convertible Note with AJW Partners, LLC,
               dated August 31, 2004
  10.3(5)      Callable Secured Convertible Note with AJW Offshore, Ltd.,
               dated August 31, 2004
  10.4(5)      Callable Secured Convertible Note with AJW Qualified
               Partners, LLC, dated August 31, 2004
  10.5(5)      Callable Secured Convertible Note with New Millennium
               Capital Partners II, LLC, dated August 31, 2004
  10.6(5)      Stock Purchase Warrant with AJW Partners, LLC, dated August
               31, 2004
  10.7(5)      Stock Purchase Warrant with AJW Offshore, Ltd., dated August
               31, 2004
  10.8(5)      Stock Purchase Warrant with AJW Qualified Partners, LLC,
               dated August 31, 2004
  10.9(5)      Stock Purchase Warrant with New Millennium Capital Partners
               II, LLC, dated August 31, 2004
  10.10(5)     Registration Rights Agreement dated August 31, 2004
  10.11(5)     Security Agreement dated August 31, 2004
  10.12(5)     Intellectual Property Security Agreement dated August 31,
               2004
  10.13(5)     Guarantee and Pledge Agreement dated August 31, 2004
  10.14(6)     Modification of Loan Agreement with SBA
  10.15(6)     Amended and Restated Note with SBA
  10.16(7)     Share Exchange and Reorganization Agreement with iTech
  10.17(7)     Securities Purchase Agreement (November 4, 2005)
  10.18(7)     Callable Secured Convertible Note with AJW Partners, LLC,
               dated November 4, 2005
  10.19(7)     Callable Secured Convertible Note with AJW Offshore, Ltd.,
               dated November 4, 2005
  10.20(7)     Callable Secured Convertible Note with AJW Qualified
               Partners, LLC, dated November 4, 2005
  10.21(7)     Callable Secured Convertible Note with New Millennium
               Capital Partners II, LLC, dated November 4, 2005
  10.22(7)     Stock Purchase Warrant with AJW Partners, LLC, dated
               November 4, 2005

                                     89

  10.23(7)     Stock Purchase Warrant with AJW Offshore, Ltd., dated
               November 4, 2005
  10.24(7)     Stock Purchase Warrant with AJW Qualified Partners, LLC,
               dated November 4, 2005
  10.25(7)     Stock Purchase Warrant with New Millennium Capital Partners
               II, LLC, dated November 4, 2005
  10.26(7)     Registration Rights Agreement, dated November 4, 2005
  10.27(7)     Intellectual Property Security Agreement, dated November 4,
               2005
  10.28(7)     Security Agreement, dated November 4, 2005
  10.29(7)     Spinoff Agreement
  10.30(7)     Security Agreement (with Marathon)
  10.31(7)     Stock Purchase Agreement (November 7, 2005 - with Drug
               Consultants, Inc.)
  10.32(7)     Secured Promissory Note with Drug Consultants
  10.33(7)     Stock Pledge Agreement with Drug Consultants
  10.34(7)     Factoring and Security Agreement (to sell accounts
               receivables to Systran Financial Services Corporation)
  10.35(13)    First Amendment to Factoring Agreement
  10.36(7)     Letter Agreement (states that the Company is not in default
               under 2005 securities purchase agreement unless defaults
               under 2004 securities purchase agreement)
  10.37(7)     Working Capital Line of Credit (DCII) with David Walters
  10.38(7)     Working Capital Line of Credit (DCII) with Keith Moore
  10.39(7)     Working Capital Line of Credit (SDG) with Keith Moore
  10.39(11)    Indemnification Agreement with David Walters
  10.40(11)    Indemnification Agreement with Keith Moore
  10.45(14)    Indemnification Agreement with Joel Williams
  10.41(8)     Amendment No. 1 to Securities Purchase Agreement
  10.42(11)    Amendment No. 2 to Securities Purchase Agreement
  10.42(14)    Amendment No. 3 to Securities Purchase Agreement
  10.42        Amendment No. 4 to Securities Purchase Agreement
  10.43(9)     Employment Agreement with David Walters
  10.44(9)     Letter Agreement with Monarch Bay Management Company
  10.48(14)    Employment Agreement with Joel Williams
  16.1(10)     Letter from Clyde Bailey P.C. dated June 20, 2005
  21.1         Subsidiaries of Registrant
  31.1         Certification of Principal Executive Officer pursuant to
               Rules 13a-14 and 15d-14 promulgated under the Securities
               Exchange Act of 1934
  31.2         Certification of Principal Financial Officer pursuant to
               Rules 13a-14 and 15d-14 promulgated under the Securities
               Exchange Act of 1934
  32.1         Certification of Chief Executive Officer and Chief Financial
               Officer pursuant to 18 U.S.C. Section 1350, as adopted
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1) Filed as Exhibits to the registration statement on Form 10-SB12G filed
on July 15, 2002, and incorporated herein by reference.
(2) Filed as an Exhibit to the report on Form 8-K filed on September 2,
2003, and incorporated herein by reference.
(3) Filed as an Exhibit to the report on Form 8-K filed on September 30,
2003, and incorporated herein by reference.
(4) Filed as an Exhibit to the report on Form 8-K filed on April 4, 2006,
and incorporated herein by reference.
(5) Filed as an Exhibit to the SB-2 Registration Statement filed on October
5, 2004, and incorporated herein by reference.
(6) Filed as Exhibits to the Company's SB-2/A Registration Statement filed
with the Securities and Exchange Commission on January 21, 2005, and
incorporated herein by reference.

                                     90

(7) Filed as Exhibits to the report on Form 8-K filed on November 14, 2005
and incorporated herein by reference.
(8) Filed as an Exhibit to the report on Form 8-K filed on February 24,
2006 and incorporated herein by reference.
(9) Filed as an Exhibit to the report on Form 8-K filed on March 27, 2006
and incorporated herein by reference.
(10) Filed as an Exhibit to the report on Form 8-K filed on June 21, 2005
and incorporated herein by reference.
(11) Filed as an Exhibit to the report on Form 10-KSB filed on May 19, 2006
and incorporated herein by reference.
(12) Filed as an Exhibit to the report on Form 10-QSB filed on August 9,
2006 and incorporated herein by reference.
(13) Filed as an Exhibit to the report on Form 8-K filed on September 7,
2006 and incorporated herein by reference.
(14) Filed as an Exhibit to the report on Form 10-QSB filed on November 14,
2006 and incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees
----------

  The aggregate fees billed in each of the fiscal years ended December 31,
2006 and 2005 for professional services rendered by the principal
accountant for the audit of our annual financial statements and review of
the financial statements included in our Form 10-KSB or services that are
normally provided by the accountant in connection with statutory and
regulatory filings or engagements for those fiscal years were $63,621 and
$40,000, respectively.

Audit Related Fees
------------------
  There were no fees billed for services reasonably related to the
performance of the audit or review of the financial statements outside of
those fees disclosed above under "Audit Fees" for fiscal years 2006 and
2005.

Tax Fees
--------
  For the fiscal years ended December 31, 2006 and December 31, 2005, our
principal accountants did not render any services for tax compliance, tax
advice, and tax planning work.

All Other Fees
--------------
  None.






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                                 SIGNATURES

  In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in San Juan Capistrano, California,
on March 30, 2007.


                              Monarch Staffing, Inc., a Nevada corporation

                              By: /s/  Joel Williams
                              --------------------------------------
                              Chief Executive Officer


     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
in San Juan Capistrano, California, as of the dates indicated.

NAME                          TITLE                         DATE


/s/ David Walters             Chief Financial Officer,      March 30, 2007
----------------------        and Chairman
David Walter

/s/ Keith Moore               Director and Secretary        March 30, 2007
----------------------
Keith Moore















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