U.S. SECURITIES AND EXCHANGE
COMMISSION Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2007
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Concierge Technologies, Inc.
(Exact name of registrant as specified in its charter)
Nevada 333-38838 95-4442384
------ --------- ----------
(state of (Commission File Number) (IRS Employer
incorporation) I.D. Number)
22048 Sherman Way, Suite 301
Canoga Park, CA 91303
(818) 610-0310
----------------------------------------------------
(Address and telephone number of registrant's principal
executive offices and principal place of business)
Securities registered under Section 12(b) of the Exchange Act:
Title of each class: None.
Name of each exchange on which registered: None.
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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. [ X ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act. Yes [X] No [ ]
State issuer's revenues for its most recent fiscal year: None.
State 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, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days: $1,423,420 computed by reference to the
$0.0115 average of the bid and asked price of the Company's Common Stock on
September 27, 2007.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 177,322,777 shares of Common
Stock, $0.001 par value, on September 12, 2007.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(3) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The list
documents should be clearly described for identification purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990). None.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
TABLE OF CONTENTS
Page
----
Item 1. Description of Business .................................... 1
Business Development ....................................... 1
Business of Concierge ...................................... 2
Number of Employees ........................................ 3
Item 2. Description of Property .................................... 3
Facilities ................................................. 4
Item 3. Legal Proceedings .......................................... 4
Item 4. Submission of Matters to a Vote of Security
Holders ........................................... 4
Item 5. Market for Common Equity and Related Stockholder
Matters ........................................... 5
Holders .................................................... 5
Dividends .................................................. 5
Penny Stock Regulations .................................... 6
The Penny Stock Suitability Rule .................. 6
The Penny Stock Disclosure Rule ................... 7
Effects of the Rule ............................... 8
Recent Sales of Unregistered Securities .................... 8
Item 6. Management's Discussion and Analysis or
Plan of Operations .................................9
Plan of Operations for the Next Twelve Months................9
Liquidity ..................................................10
Off-Balance Sheet Arrangements..............................11
Item 7. Financial Statements .......................................12
Item 8. Changes in and Disagreements With Accountants On
Accounting and Financial Disclosure ...............34
Item 8A. Controls and Procedures ....................................34
Item 8B. Other Information ..........................................34
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance with
Section 16(a) of the Exchange Act .................34
Audit Committee and Audit Committee
Financial Expert ..................................36
Code of Ethics .............................................36
Compliance with Section 16(a) of the Exchange Act ..........37
Item 10. Executive Compensation .....................................37
Long-Term Compensation .....................................38
Item 11. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters.....38
i
Item 12. Certain Relationships and Related Transactions .............39
Item 13. Exhibits ...................................................39
Item 14. Principal Accountant Fees and Services .....................40
Signatures ...................................................................42
ii
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business Development
Concierge Technologies, Inc. was incorporated in California on August 18,
1993 as "Fanfest, Inc." On August 29, 1995 its name was changed to Starfest,
Inc., and on March 20, 2002 its name was changed to "Concierge Technologies,
Inc."
Pursuant to a Stock Purchase Agreement (the "Purchase Agreement") dated
March 6, 2000 between MAS Capital, Inc., an Indiana corporation, the controlling
shareholder of MAS Acquisition XX Corp. ("MAS XX"), an Indiana corporation, and
Starfest, approximately 96.83 percent (8,250,000 shares) of the outstanding
shares of common stock of MAS Acquisition XX Corp. were exchanged for $100,000
and 150,000 shares of common stock of Starfest in a transaction in which
Starfest became the parent corporation of MAS XX.
At the time of this transaction, the market price of Starfest's common
stock was $1.50 bid at closing on March 7, 2000 on the OTC Bulletin Board.
Accordingly, the consideration Starfest paid for the 96.83 percent interest was
valued at $325,000. Concierge loaned to Starfest the $100,000 cash portion of
the consideration evidenced by a no-interest, demand note. Michael Huemmer, the
president of Starfest, loaned to Starfest the 150,000 shares of common stock of
Starfest that was the stock portion of the consideration.
Upon execution of the Purchase Agreement and the subsequent delivery of
$100,000 cash and 150,000 shares of common stock of Starfest on March 7, 2000,
to MAS Capital Inc., pursuant to Rule 12g-3(a) of the General Rules and
Regulations of the Securities and Exchange Commission, Starfest became the
successor issuer to MAS Acquisition XX Corp. for reporting purposes under the
Securities and Exchange Act of 1934 and elected to report under the Act
effective March 7, 2000.
MAS XX had no business, no assets, and no liabilities at the time of the
transaction. Starfest entered into the transaction solely for the purpose of
becoming the successor issuer to MAS Acquisition XX Corp. for reporting purposes
under the 1934 Exchange Act. Prior to this transaction, Starfest was preparing
to register its common stock with the Commission in order to avoid being
delisted by the OTC Bulletin Board. By engaging in the Rule 12g-3(a)
transaction, Starfest avoided the possibility that its planned registration
statement with the Commission would not be fully reviewed by the Commission's
staff before an April 2000 deadline, which would result in Starfest's common
stock being delisted on the OTC Bulletin Board.
An agreement of merger was entered into between Starfest and Concierge,
Inc., a Nevada corporation, on January 26, 2000. The proposed merger was
submitted to the shareholders of each of Starfest and Concierge pursuant to a
Form S-4 Prospectus-Proxy Statement filed with the Commission.
1
As described in Starfest's Form 8-K filed on April 2, 2002 with the
Commission (Commission File No. 000-29913), the shareholders of Starfest and
Concierge did approve the merger, and the merger was legally effected on March
20, 2002.
Pursuant to the agreement of merger between Starfest and
Concierge,
o Starfest was the surviving corporation,
o The shareholders of Concierge received pro rata for their shares
of common stock of Concierge, 99,957,713 shares of common stock
of Starfest in the merger, and all shares of capital stock of
Concierge were cancelled,
o The fiscal year-end of the corporation was changed to June 30,
o The officers and directors of Concierge became the officers and
directors of Starfest, and
o The name of Starfest was changed to "Concierge Technologies,
Inc."
Business of Concierge Technologies
Concierge had developed a software application designed to retrieve and
"read" email utilizing a text-to-speech routine that was branded as the Personal
Communications Attendant or "PCA". During the past year the Company has
abandoned its efforts to market the PCA and has elected to enter the field of
wireless communications and, more specifically, broadband high-speed Internet
access based on unlicensed wireless fidelity, or "WiFi" technologies.
On May 5, 2004 we acquired all of the outstanding and issued shares of
Planet Halo, a privately held Nevada corporation. Planet Halo's assets include
intellectual property related to the industrial design, mechanical design,
operation and know-how to market a wireless, hand-held, cellular phone with
integrated QWERTY keypad, color screen and voice activation software. The
device, known as the "Halo", had been advanced to the beta-test phase and there
exists four working prototypes. In addition to the Halo, Planet Halo also has an
exclusive North American license to exploit a wireless gateway that acts as the
interface between wireless devices, including the Halo, and the Internet. The
gateway, branded as "Halomail", uses secure socket layer technology for
encrypted financial transactions, email access, desktop synchronization, HTML,
XML, SHTML, WAP and other Web-based functions that are enabled on devices
running the Halomail software client. Through its subsidiary, Planet Halo,
Concierge has begun its strategy of designing, constructing and operating
wireless networks. As the infrastructure is placed into operation the Company
plans to exploit its Halomail application license by deploying the service
across its wireless networks.
On June 5, 2007 Planet Halo launched its first wireless broadband network
designed for subscription access to the Internet. Planet Halo intends to
construct and operate additional networks initially in California and Ohio
utilizing a MESH network technology.
2
Governmental Approval of Principal Products. No governmental approval is
required in the U.S. for Concierge's products.
Government Regulations. There are governmental regulations in the U.S. that
apply to Concierge's use of the electromagnetic spectrum, however no license or
approvals are required.
Dependence on Major Customers and Suppliers. Concierge does not anticipate
that it will be dependent on any major customers or suppliers.
Seasonality. There should be no seasonal aspect to Concierge's business
other than possible increased sales anticipated in the summer months associated
with increased vacation travel and the desire for remote communications by
Internet users.
Research and Development. Concierge expended no funds on research and
development in 2007.
Environmental Controls. Concierge is subject to no environmental controls
or restrictions that require the outlay of capital or the obtaining of a permit
in order to engage in business.
Patents, Trademarks, Copyrights and Intellectual Property. Concierge has
trademarked its Personal Communications Attendant. It has no patents on the
product. Planet Halo has trademarked the names "Halo", "Halomail", and "Planet
Halo". Patent applications are pending on certain aspects of the Halo device and
software applications that enable certain of its functionality. The know-how
centered around the programming, low-level drivers, key board matrix, operating
system interface and certain other aspects of the Halo device, including its
industrial design, are considered a valued intellectual property of Planet Halo.
Number of Employees
On June 30, 2007, we employed no persons full time and no persons part
time.
ITEM 2. DESCRIPTION OF PROPERTY
We own no plants or real property. Investment in the wireless
infrastructure equipment of Planet Halo is approximately $30,000.
3
Facilities
Our office facilities are co-located with those of our chief executive
officer, David Neibert, at 22048 Sherman Way, Suite 301, Canoga Park, CA 91303.
We have no lease and currently pay no rent. In the event we are able to secure
the additional funds required to further our business plan, the shared office
space consisting of approximately 880 square feet, including furniture and
fixtures, can be leased by us for the amount of $1,235 per month on a one-year
lease. Should additional space be needed, there is ample office space available
in the vicinity at competitive prices.
Planet Halo has no separate office facilities.
ITEM 3. LEGAL PROCEEDINGS
On May 6, 2002, a default judgment was awarded to Brookside Investments Ltd
against, jointly and severally, our company, Allen E. Kahn, and The Whitehall
Companies in the amount of $135,000 plus interest and legal fees. Concierge did
not defend against the complaint by Brookside, which alleged that Brookside was
entitled to a refund of its investment as a result of a breach of contract.
Brookside had entered into a subscription agreement with Concierge, Inc. that
called for, among other things, the pending merger between Starfest and
Concierge to be completed within 180 days of the investment. The merger was not
completed within 180 days and Brookside sought a refund of its investment, which
Concierge was unable to provide.
As of September 12, 2007, Brookside has not attempted to enforce its
judgment. As of September 12, 2007, we are unable to pay the amount of the
judgment and have no assets available to Brookside for liquidation in settlement
of the judgment.
Neither Concierge Technologies nor any of its property is the subject of
any other pending legal proceedings or any proceeding that a governmental
authority is contemplating.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In an effort to improve the corporate vehicle to better accommodate a
merger or acquisition, the decision was made by the directors to re-domesticate
the corporation in the State of Nevada. During the month of May 2005 a vote
regarding the move to Nevada was solicited from a group of shareholders
comprising a majority. A majority vote in favor was received and an Information
Statement was subsequently sent to all shareholders detailing the action.
On October 5, 2006 the Articles of Merger were filed with the State of
California and Concierge Technologies, Inc., a California corporation, merged
with a wholly-owned subsidiary, also named Concierge Technologies, Inc., a
Nevada corporation. The Nevada corporation is the surviving corporation in the
merger. The charters of the two corporations are essentially identical, and the
transaction was effected as no more than a change of domicile from California to
Nevada.. There are no changes to the bylaws, the number of shares outstanding,
or the restrictions applicable to trading in the company stock that would not
otherwise exist as if the company had not completed its move to Nevada.
4
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our Common Stock presently trades on the OTC Bulletin Board. The high and
low bid prices, as reported by the OTC Bulletin Board, are as follows for fiscal
years ended June 30, 2006 and 2007. The quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions.
High Low
---- ---
Calendar 2005:
3rd Qtr. 0.019 0.0006
4th Qtr 0.010 0.0005
Calendar 2006
1st Qtr. 0.012 0.006
2nd Qtr. 0.016 0.010
3rd Qtr. 0.011 0.005
4th Qtr 0.019 0.005
Calendar 2007
1st Qtr. 0.015 0.005
2nd Qtr. 0.021 0.002
3rd Qtr. 0.022 0.006
Holders
On June 30, 2007 there were approximately 334 holders of record of our
common stock.
Dividends
We have had no earnings and have declared no dividends on our capital
stock. Under California law, a company - such as our company - can pay dividends
only
o from retained earnings, or
o if after the dividend is made,
o its tangible assets would equal at least 11/4 times its
liabilities, and
o its current assets would at least equal its current
liabilities, or
o if the average of its earnings before income taxes and
before interest expenses for the last two years was less
than the average of its interest expenses for the last two
years, then its current assets must be equal to at least
11/4 times its current liabilities.
5
The directors' strategy on dividends is to declare and pay dividends only
from retained earnings and when the directors deem it prudent and in the best
interests of the company to declare and pay dividends.
Penny Stock Regulations
Our common stock trades on the OTC Bulletin Board at a price less than $5 a
share and is subject to the rules governing "penny stocks."
A "penny stock" is any stock that:
o sells for less than $5 a share.
o is not listed on an exchange or authorized for quotation on The
Nasdaq Stock Market, and
o is not a stock of a "substantial issuer." We are not now a
"substantial issuer" and cannot become one until we have net
tangible assets of at least $2 million.
There are statutes and regulations of the Securities and Exchange
Commission (the "Commission") that impose a strict regimen on brokers that
recommend penny stocks.
The Penny Stock Suitability Rule
--------------------------------
Before a broker-dealer can recommend and sell a penny stock to a new
customer who is not an institutional accredited investor, the broker-dealer must
obtain from the customer information concerning the person's financial
situation, investment experience and investment objectives. Then, the
broker-dealer must "reasonably determine" (1) that transactions in penny stocks
are suitable for the person and (2) that the person, or his advisor, is capable
of evaluating the risks in penny stocks.
After making this determination, the broker-dealer must furnish the
customer with a written statement setting forth the basis for this suitability
determination. The customer must sign and date a copy of the written statement
and return it to the broker-dealer.
Finally the broker-dealer must also obtain from the customer a written
agreement to purchase the penny stock, identifying the stock and the number of
shares to be purchased.
The above exercise delays a proposed transaction. It causes many
broker-dealer firms to adopt a policy of not allowing their representatives to
recommend penny stocks to their customers.
The Penny Stock Suitability Rule, described above, and the Penny Stock
Disclosure Rule, described below, do not apply to the following:
6
o transactions not recommended by the broker-dealer,
o sales to institutional accredited investors,
o transactions in which the customer is a director, officer,
general partner, or direct or indirect beneficial owner of more
than 5 percent of any class of equity security of the issuer of
the penny stock that is the subject of the transaction, and
o transactions in penny stocks by broker-dealers whose income from
penny stock activities does not exceed five percent of their
total income during certain defined periods.
The Penny Stock Disclosure Rule
-------------------------------
Another Commission rule - the Penny stock Disclosure Rule - requires a
broker-dealer, who recommends the sale of a penny stock to a customer in a
transaction not exempt from the suitability rule described above, to furnish the
customer with a "risk disclosure document." This document is set forth in a
federal regulation and contains the following information:
o A statement that penny stocks can be very risky, that investors
often cannot sell a penny stock back to the dealer that sold them
the stock,
o A warning that salespersons of penny stocks are not impartial
advisers but are paid to sell the stock,
o The statement that federal law requires the salesperson to tell
the potential investor in a penny stock -
o the "offer" and the "bid" on the stock, and
o the compensation the salesperson and his firm will receive
for the trade,
o An explanation that the offer price and the bid price are the
wholesale prices at which dealers are willing to sell and buy the
stock from other dealers, and that in its trade with a customer
the dealer may add a retail charge to these wholesale prices,
o A warning that a large spread between the bid and the offer price
can make the resale of the stock very costly,
o Telephone numbers a person can call if he or she is a victim of
fraud,
o Admonitions -
o to use caution when investing in penny stocks,
o to understand the risky nature of penny stocks,
7
o to know the brokerage firm and the salespeople with whom one
is dealing, and
o to be cautious if ones salesperson leaves the firm.
Finally, the customer must be furnished with a monthly statement including
prescribed information relating to market and price information concerning the
penny stocks held in the customer's account.
Effects of the Rule
-------------------
The above penny stock regulatory scheme is a response by the Congress and
the Commission to known abuses in the telemarketing of low-priced securities by
"boiler shop" operators. The scheme imposes market impediments on the sale and
trading of penny stocks. It has a limiting effect on a stockholder's ability to
resell a penny stock.
Our shares likely will trade below $5 a share on the OTC Bulletin Board and
be, for some time at least, shares of a "penny stock" subject to the trading
market impediments described above.
Recent Sales of Unregistered Securities; Outstanding Stock Options
Our company sold the following shares of its common stock during the last
three years without registering the shares:
------------------------ ------------------ --------------------------- --------------------------- ------------------
Value of
Date No. of Shares Name of Purchaser Type of Consideration Consideration
------------------------ ------------------ --------------------------- --------------------------- ------------------
November 1, 2006 5,000,000 Ryan Consult Ltd Services $ 25,000
------------------------ ------------------ --------------------------- --------------------------- ------------------
June 22, 2007 3,003,003 Marc Angell Cash $ 10,000
------------------------ ------------------ --------------------------- --------------------------- ------------------
June 22, 2007 3,003,003 Douglas Angell Cash $ 10,000
------------------------ ------------------ --------------------------- --------------------------- ------------------
June 22, 2007 3,003,003 Paul Angell Cash $ 10,000
------------------------ ------------------ --------------------------- --------------------------- ------------------
June 22, 2007 3,003,003 Ryan Angell Cash $ 10,000
------------------------ ------------------ --------------------------- --------------------------- ------------------
June 22, 2007 3,003,003 Michael Phelps Cash $ 10,000
------------------------ ------------------ --------------------------- --------------------------- ------------------
June 22, 2007 3,003,003 Jacquie Carter Cash $ 10,000
------------------------ ------------------ --------------------------- --------------------------- ------------------
June 22, 2007 3,003,003 Ryan White Cash $ 10,000
------------------------ ------------------ --------------------------- --------------------------- ------------------
June 22, 2007 3,003,003 Wiles Trust Cash $ 10,000
------------------------ ------------------ --------------------------- --------------------------- ------------------
June 22, 2007 3,003,003 Starmaker Products LLC Cash $ 10,000
------------------------ ------------------ --------------------------- --------------------------- ------------------
June 22, 2007 3,003,003 920280 Alberta Ltd Cash $ 10,000
------------------------ ------------------ --------------------------- --------------------------- ------------------
All of the above sales were made pursuant to the exemption from
registration provided by the Commission's Regulation D, Rule 506. All purchasers
were either accredited investors or, if not, were provided copies of the
company's recent filings with the Commission including financial statements
meeting the requirements of the Commission's Item 310 of Regulation S-B. All
purchasers were provided the opportunity to ask questions of Concierge's
management.
No equity of Concierge is subject to outstanding options or warrants to
purchase, or securities convertible into, equity of the company.
8
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with
the financial statements and the accompanying notes thereto and is qualified in
its entirety by the foregoing and by more detailed financial information
appearing elsewhere. See "Financial Statements."
Plan of Operation for the Next Twelve Months
Our plan of operation for the next twelve months is to expand the business
of Planet Halo by doing the following:
o constructing additional wireless networks, implementing an
advertising campaign, and acquiring paying subscribers to the
service,
o develop and maintain a comprehensive web presence through an
Internet-based portal designed for social networking and local
advertising,
o partner with synergistic companies engaged in exploitation of
wireless services using similar technologies,
o engage the assistance of our directors and outside consultants to
aggressively pursue financing options and possible acquisition
targets in the field of wireless communications.
On April 6, 2004, our company signed a definitive agreement to acquire the
privately-held company, Planet Halo, in a cash-free stock transaction. On April
20, 2004 the companies completed the necessary documentation to effect the
acquisition. On May 5, 2004 Concierge Technologies instructed its transfer agent
to issue the purchase price in shares of common stock to the shareholders of
Planet Halo. The transaction was officially closed and the shares considered
issued as of May 5, 2004.
Planet Halo is a development-stage company that has developed a prototype,
hand-held, wireless Internet appliance named the "Halo". In addition to the Halo
device Planet Halo also has an exclusive license to deploy a proprietary
wireless gateway in North America. The gateway, named "Halomail", provides a
secure interface for wireless access to the Internet, and to the worldwide web.
Users of the Halo or other wireless devices may use Halomail as their email
client, a secure connection for monetary transactions, browse the worldwide web,
connect to their own Intranets, and essentially use the gateway as a secure
on-ramp to the Internet in much the same way as a wired connection operates.
Planet Halo currently lacks the funds to put either of these two devices into
commercial application. Therefore, the Company has elected to pursue a wireless
Internet access opportunity with its available funds, thereby leaving the
possibility of deploying the Halomail gateway over its proprietary
infrastructure at some point in the future.
Planet Halo operates its wireless network in Marina del Rey through a
service agreement with Ohio based Wireless Village. Wireless Village provides
technical support, customer service, subscription billing service and strategic
9
planning consultation. In addition, Wireless Village and Planet Halo have
partnered on a web portal designed for Internet users local to a specific area,
notably Marina del Rey, CA. Each of the future Planet Halo markets will have
their own local portal for social networking. The portals offer chat rooms,
games, local news, local advertising, local events and postings by local
businesses intended only for residents and visitors to the area. Planet Halo
hopes to gain advertising revenue from the portal as well as increased awareness
in the community that translates into heightened subscription levels.
On June 17, 2002, David W. Neibert became our President and Chief
Operations Officer. Upon assuming that role, he moved the general accounting and
administrative offices of our company to a co-location with his firm, The Wallen
Group. On April 18, 2007 Mr. Neibert accepted the position of chief executive
officer. We do not currently pay rent and have no lease for the facilities being
provided by Mr. Neibert.
As of June 30, 2007, we had no employees and no significant fixed overhead
other than leased wireline circuits, consulting fees paid for services provided
to Planet Halo, the variable cost of web hosting, legal and professional fees,
fees charged by our transfer agent and minimum tax payments. We have a limited
amount of office fixtures, furniture and computer equipment acquired with the
Planet Halo transaction. We have deployed approximately $30,000 worth of radio
and computer infrastructure equipment to remote locations as required to operate
the Planet Halo wireless network. Our CEO, the president of Planet Halo, and our
directors are continuing to provide services without cash compensation; however,
on July 19, 2006 Chairman Allen Kahn polled the directors and received a
unanimous vote in favor of issuing Five Million (5,000,000) shares of stock to
compensate Ryan Consultants Ltd, a Jersey, UK corporation, which has provided
the services of David Neibert for the previous two years, incurred expenses on
our behalf without seeking reimbursement, and performed other supportive roles
in our fund raising efforts. On November 1, 2006 the shares were issued to Ryan
Consultants. The stock issuance was not deemed to be in payment for any specific
fee, reimbursement for any specific expense, or in creation of any specific
obligation for performance, but rather an acknowledgement of support and
continuing efforts for the indeterminate future. There are no guarantees that
Mr. Neibert will continue to act as our Chief Operating Officer, or that Ryan
Consultants will continue to compensate Mr. Neibert if he chooses to continue to
perform his fiduciary duties, or that he will continue in his capacity without
compensation.
Liquidity
Our primary source of operating capital has been funding sourced through
insiders or shareholders under the terms of unsecured promissory notes. In
several instances we have sold shares of our common stock in exchange for cash.
The amount of borrowed funds and funds from equity sales has been sufficient to
pay the cost of legal and accounting fees as necessary to maintain a current
reporting status with the Securities and Exchange Commission. However,
sufficient funds have been unavailable to significantly pay down other
commercial and vendor accounts payable. We have also been unable to pay salaries
to our officers and several of our outside consultants who had performed
services during the past and present fiscal years.
10
Although our management is continuing to provide services to the Company
for the near term without cash compensation, we will still require additional
funding to maintain the corporation. With the acquisition of Planet Halo there
are added demands for operating capital if we are to continue to construct the
wireless networks. The Company has been aggressively pursuing financing for the
funding of the wireless project. Until such time as definitive agreements are
reached with investors, any form of financing remains speculative. If the
financing is not available, Planet Halo may not be able to proceed with its
planned development of wireless networks. In the event financing is not
completed, our funds will be exhausted at some point and continuing operations
may be impossible without increased operating profits from the existing wireless
network infrastructure.
Off-Balance Sheet Arrangements
Our company has not entered into any transaction, agreement or other
contractual arrangement with an entity unconsolidated with us under which we
have
o an obligation under a guarantee contract,
o a retained or contingent interest in assets transferred to the
unconsolidated entity or similar arrangement that serves as
credit, liquidity or market risk support to such entity for such
assets,
o an obligation, including a contingent obligation, under a
contract that would be accounted for as a derivative instrument,
or
o an obligation, including a contingent obligation, arising out of
a variable interest in an unconsolidated entity that is held by,
and material to, us where such entity provides financing,
liquidity, market risk or credit risk support to, or engages in
leasing, hedging, or research and development services with, us.
Contractual obligations
The following table sets forth, as of the end of the latest fiscal year-end
balance sheet, information with respect to our known contractual obligations.
----------------------------------- -------------------------------------------------------------------------------------
Payments Due-by Period
----------------------------------- -------------------------------------------------------------------------------------
Contractual Less Than More Than
Obligations Total 1 Year 1-3 Years 3-5 Years 5 Years
----------------------------------- ---------------- ------------------ ---------------- ---------------- ---------------
Long-Term Debt Obligations None
----------------------------------- ---------------- ------------------ ---------------- ---------------- ---------------
Capital Lease Obligations None
----------------------------------- ---------------- ------------------ ---------------- ---------------- ---------------
Operating Lease Obligations None
----------------------------------- ---------------- ------------------ ---------------- ---------------- ---------------
Other Long-Term Liabilities
Reflected on Our Balance Sheet
under GAAP None
----------------------------------- ---------------- ------------------ ---------------- ---------------- ---------------
----------------------------------- ---------------- ------------------ ---------------- ---------------- ---------------
Total None
----------------------------------- ---------------- ------------------ ---------------- ---------------- ---------------
11
ITEM 7. FINANCIAL STATEMENTS INDEX
The financial statements of the company appear as follows:
Report of Independent Registered Public Accounting Firm .............13
Consolidated Balance Sheet, June 30, 2007 ...........................14
Consolidated Statements of Operations, Years Ended June 30,
2007 and 2006 and the Period from
September 20, 1996 (Inception) to June 30, 2007 ............15
Statements of Changes in Stockholders' Equity (Deficit),
September 20, 1996 (Inception) to June 30, 2007 ............16
Consolidated Statements of Cash Flows, Years Ended June 30,
2007 and 2006 and the Period from
September 20, 1996 (Inception) to June 30, 2007 ............20
Notes to Financial Statements .......................................21
12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Concierge Technologies, Inc.
We have audited the accompanying consolidated balance sheet of Concierge
Technologies, Inc. and subsidiary (a development stage company) as of June 30,
2007 and the related statements of operations, stockholders' deficit and cash
flows for each of the two years in the period ended June 30, 2007 and for the
period from September 20, 1996 (inception), to June 30, 2007. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits of these statements in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Concierge
Technologies, Inc., and subsidiary as of June 30, 2007 and the results of its
operations, stockholders deficit and cash flows for each of the two years in the
period ended June 30, 2007 and from September 20, 1996 (inception), to June 30,
2007, in conformity with accounting principles generally accepted in the United
States of America.
The Company's consolidated financial statements are prepared using the 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. The Company's has not earned any revenue since its inception and has
accumulated deficit of $3,871,095 at June 30, 2007 including a net income of
$38,214 during the year ended June 30, 2007. These factors as discussed in Note
4 to the financial statements, raises substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 4. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Kabani & Company, Inc.
--------------------------
KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS
Los Angeles, California
September 26, 2007
13
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
CONSOLIDATED BALANCE SHEET
June 30, 2007
ASSETS
CURRENT ASSETS:
Cash & cash equivalents $ 15,060
Due from related party 23,350
-----------
Total current assets 38,411
Property and Equipment, net 30,163
-----------
Total Assets $ 68,573
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 258,506
Notes payable - related parties 142,500
-----------
Total current liabilities 401,007
STOCKHOLDERS' DEFICIT:
Preferred stock, par value $.001 per share; 10,000,000
shares authorized; none issued --
Common stock, $.001 par value; 190,000,000 shares
authorized; issued and outstanding 177,322,777 177,323
Additional paid in capital 3,361,337
Deficit accumulated during the development stage (3,871,095)
-----------
Total stockholders' deficit (332,434)
-----------
$ 68,573
===========
The accompanying notes are an integral part of these
audited financial statements
14
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006
AND FOR THE PERIOD FROM SEPTEMBER 20, 1996 (INCEPTION) TO JUNE 30, 2007
For The Period From
September 20, 1996
For the Years Ended June 30, (Inception) to June 30,
2007 2006 2007
------------- ------------- -------------
NET REVENUE $ -- $ -- $ --
COSTS AND EXPENSES
Product Launch Expenses -- -- 1,077,785
Impairment of Assets -- -- 988,443
General & Administrative Expenses 88,129 42,980 1,559,999
------------- ------------- -------------
TOTAL COSTS AND EXPENSES 88,129 42,980 3,626,227
------------- ------------- -------------
OTHER INCOME (EXPENSES)
Income 54 28 167
Adjustment of over accrued expenses 150,123 -- 150,123
Settlement Income/(Loss) -- -- 52,600
Loss on debt settlement (23,033) -- (23,033)
Litigation Settlement -- -- (135,000)
------------- ------------- -------------
TOTAL OTHER INCOME 127,144 28 44,857
------------- ------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES 39,014 (42,952) (3,581,371)
Provision of Income Taxes 800 1,600 11,200
------------- ------------- -------------
NET INCOME (LOSS) $ 38,214 $ (44,552) $ (3,592,571)
============= ============= =============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING, BASIC AND DILUTED 146,252,309 142,292,747
============= =============
*BASIC AND DILUTED EARNINGS (LOSS) PER SHARE $ 0.00 $ (0.00)
============= =============
The accompanying notes are an integral part of these
audited financial statements
* Weighted average number of shares used to compute basic and diluted loss per
share is the same as the effect of dilutive securities are anti dilutive.
15
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006
AND FOR THE PERIOD FROM SEPTEMBER 20, 1996 (INCEPTION) TO JUNE 30, 2007
Common Stock
--------------------------------------------
Number of Par Additional Shares Accumulated
shares value paid in capital to be isssued Deficit
------------ ------------ ------------ ------------ ------------
Common Stock issued for cash
through June 30, 1997 176,306 $ 1,763 $ 106,162 -- $ --
Common stock issued for services
through June 30, 1997 621,545 6,215 -- -- --
Net loss through June 30, 1997 -- -- -- -- (96,933)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 1997 797,851 7,978 106,162 -- (96,933)
Common Stock issued for cash
in the year ended June 30, 1998 137,475 1,375 194,650 -- --
Common stock issued for services
in the year ended June 30, 1998 22,550 226 -- -- --
Net loss for the year ended
June 30, 1998 -- -- -- -- (283,891)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 1998 957,876 9,579 300,812 -- (380,824)
Common Stock issued for cash
in the year ended June 30, 1999 208,000 -- -- -- --
Common stock issued for services
in the year ended June 30, 1999 450 -- -- -- --
Net loss for the year ended
June 30, 1999 -- -- -- -- (89,919)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 1999 1,166,326 9,579 300,812 -- (470,743)
Acquisition and retirement of
Common shares (262,000) (2,620) -- -- --
Common Stock issued for cash
in the year ended June 30, 2000 117,184 -- -- -- --
Common stock issued for services
in the year ended June 30, 2000 354,870 -- -- -- --
Post acquisition stock subscription
funds received net of costs &
expenses of $79,710 -- -- -- -- --
Net loss for the year ended
June 30, 2000 -- -- -- -- (986,986)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2000 1,376,380 6,959 300,812 -- (1,457,729)
Post acquisition stock subscription
funds received -- -- -- -- --
Net loss for the year ended
June 30, 2001 -- -- -- -- (544,080)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2001 1,376,380 6,959 300,812 -- (2,001,809)
16
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006
AND FOR THE PERIOD FROM SEPTEMBER 20, 1996 (INCEPTION) TO JUNE 30, 2007
(continued)
Common Stock
Stockholders' Advance Subject to
deficit Subscriptions Contingency
------------ ------------ ------------
Common Stock issued for cash
through June 30, 1997 $ 107,925 $ -- $ --
Common stock issued for services
through June 30, 1997 6,215 -- --
Net loss through June 30, 1997 (96,933) -- --
------------ ------------ ------------
Balance at June 30, 1997 17,207 -- --
Common Stock issued for cash
in the year ended June 30, 1998 196,025 -- --
Common stock issued for services
in the year ended June 30, 1998 226 -- --
Net loss for the year ended
June 30, 1998 (283,891) -- --
------------ ------------ ------------
Balance at June 30, 1998 (70,433) -- --
Common Stock issued for cash
in the year ended June 30, 1999 -- -- 60,996
Common stock issued for services
in the year ended June 30, 1999 -- -- 4
Net loss for the year ended
June 30, 1999 (89,919) -- --
------------ ------------ ------------
Balance at June 30, 1999 (160,352) -- 61,000
Acquisition and retirement of
Common shares (2,620) -- --
Common Stock issued for cash
in the year ended June 30, 2000 -- -- 202,061
Common stock issued for services
in the year ended June 30, 2000 -- -- 3,549
Post acquisition stock subscription
funds received net of costs &
expenses of $79,710 -- 1,175,790 --
Net loss for the year ended
June 30, 2000 (986,986) -- --
------------ ------------ ------------
Balance at June 30, 2000 (1,149,958) 1,175,790 266,610
Post acquisition stock subscription
funds received -- 487,500 --
Net loss for the year ended
June 30, 2001 (544,080) -- --
------------ ------------ ------------
Balance at June 30, 2001 (1,694,038) 1,663,290 266,610
17
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006
AND FOR THE PERIOD FROM SEPTEMBER 20, 1996 (INCEPTION) TO JUNE 30, 2007
(continued)
Common Stock
--------------------------------------------
Number of Par Additional Shares Accumulated
shares value paid in capital to be isssued Deficit
------------ ------------ ------------ ------------ ------------
Recapitalization upon merger 118,681,333 113,099 (300,812) -- (278,527)
Stock subscription received for
500,000 shares -- -- -- 29,983 --
Stock issued for services 2,532,581 119,031 -- -- --
Stock to be issued for services-
3,275,472 shares -- -- -- 153,947 --
Adjustment to paid in capital
on merger -- (116,499) 116,499 -- --
Net loss for the year ended
June 30, 2002 -- -- -- -- (478,229)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2002 122,590,294 122,590 116,499 183,930 (2,758,565)
Stock issued for subscription
received in prior year 500,000 500 29,483 (29,983) --
Stock issued for services included
in the prior year 3,275,472 3,275 150,672 (153,947) --
Forfeiture of stock subscription -- -- 10,000 -- --
Cancellation of over issued shares
on recapitalization (73,017) -- -- -- --
Net loss for the year ended
June 30, 2003 -- -- -- -- (47,272)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2003 126,292,749 126,365 306,654 -- (2,805,837)
Adjustment to par value -- (72) 72 -- --
Issuance of shares for cash 2,000,000 2,000 18,000 -- --
Issuance of shares for services 4,000,000 4,000 212,000 -- --
Issuance of shares for acquisition
of Planet Halo 9,999,998 10,000 490,000 -- --
Net loss for the year ended
June 30, 2004 -- -- -- -- (514,639)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2004 142,292,747 142,293 1,026,726 -- (3,320,476)
Reclassify contingent liabilities
to Additional Paid In-Capital -- -- 1,929,900 -- --
Net loss for the year ended
June 30, 2005 -- -- -- -- (544,284)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2005 142,292,747 142,293 2,956,626 -- (3,864,761)
Loans converted to Paid in Capital -- -- 281,708 -- --
Net loss for the year ended
June 30, 2006 -- -- -- -- (44,552)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2006 142,292,747 142,293 3,238,334 -- (3,909,313)
Issuance of shares for services 5,000,000 5,000 30,000 -- --
Issuance of shares for cash 27,027,027 27,027 62,973 -- --
Issuance of shares for debt
settlement 3,003,003 3,003 30,030 -- --
Net income for the year ended
June 30, 2007 -- -- -- -- 38,214
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2007 177,322,777 $ 177,323 $ 3,361,337 -- $ (3,871,095)
============ ============ ============ ============ ============
18
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006
AND FOR THE PERIOD FROM SEPTEMBER 20, 1996 (INCEPTION) TO JUNE 30, 2007
(continued)
Common Stock
Stockholders' Advance Subject to
deficit Subscriptions Contingency
------------ ------------ ------------
Recapitalization upon merger (466,240) -- --
Stock subscription received for
500,000 shares 29,983 -- --
Stock issued for services 119,031 -- --
Stock to be issued for services-
3,275,472 shares 153,947 -- --
Adjustment to paid in capital
on merger -- -- --
Net loss for the year ended
June 30, 2002 (478,229) -- --
------------ ------------ ------------
Balance at June 30, 2002 (2,335,546) 1,663,290 266,610
Stock issued for subscription
received in prior year -- -- --
Stock issued for services included
in the prior year -- -- --
Forfeiture of stock subscription 10,000 -- --
Cancellation of over issued shares
on recapitalization -- -- --
Net loss for the year ended
June 30, 2003 (47,272) -- --
------------ ------------ ------------
Balance at June 30, 2003 (2,372,818) 1,663,290 266,610
Adjustment to par value -- -- --
Issuance of shares for cash 20,000 -- --
Issuance of shares for services 216,000 -- --
Issuance of shares for acquisition
of Planet Halo 500,000 -- --
Net loss for the year ended
June 30, 2004 (514,639) -- --
------------ ------------ ------------
Balance at June 30, 2004 (2,151,457) 1,663,290 266,610
Reclassify contingent liabilities
to Additional Paid In-Capital 1,929,900 (1,663,290) (266,610)
Net loss for the year ended
June 30, 2005 (544,284) -- --
------------ ------------ ------------
Balance at June 30, 2005 (765,841) -- --
Loans converted to Paid in Capital 281,708 -- --
Net loss for the year ended
June 30, 2006 (44,552) -- --
------------ ------------ ------------
Balance at June 30, 2006 (528,686) -- --
Issuance of shares for services 35,000 -- --
Issuance of shares for cash 90,000 -- --
Issuance of shares for debt
settlement 33,033 -- --
Net income for the year ended
June 30, 2007 38,214 -- --
------------ ------------ ------------
Balance at June 30, 2007 $ (332,434) $ -- $ --
============ ============ ============
The accompanying notes are an integral part of these
audited financial statements
19
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006
AND FOR THE PERIOD FROM SEPTEMBER 20, 1996 (INCEPTION) TO JUNE 30, 2007
September 20, 1996
June 30, June 30, (inception) to
2007 2006 June 30, 2007
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 38,214 $ (44,552) $(3,592,571)
Adjustments to reconcile net loss to net cash used in
operating activities:
Impairment of asset -- -- 742,643
Depreciation and amortization 308 -- 13,463
Stock issued for services 35,000 -- 531,352
Loss on settlement of debts 23,033 -- 23,033
Adjustment of over accrued expenses (150,123) -- (150,123)
Decrease in current assets:
Prepaid expense -- -- (245,800)
Increase (decrease) in current liabilities:
Accrued expenses 5,653 6,005 324,097
---------- ---------- ----------
Net cash used in operating activities (47,915) (38,547) (2,353,906)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash received on acquisition of subsidiary -- -- 2,912
Note receivable - related party -- -- (100,000)
Acquisition of equipment (30,471) -- (43,381)
---------- ---------- ----------
Net cash used in investing activities (30,471) -- (140,469)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Due from related party (23,190) 3,531 (23,350)
Proceeds from Issuance of Shares 90,000 -- 677,007
Proceeds from stock subscription forfeited -- -- 10,000
Proceeds from advance subscriptions -- -- 1,772,983
Costs and expenses of advance subscriptions -- -- (79,710)
Proceeds from (payments to) related party loans 22,749 38,251 152,500
---------- ---------- ----------
Net cash provided by financing activities 89,559 41,782 2,509,430
---------- ---------- ----------
NET INCREASE IN CASH & CASH EQUIVALENTS 11,178 3,235 15,060
CASH & CASH EQUIVALENTS, BEGINNING BALANCE 3,882 648 --
---------- ---------- ----------
CASH & CASH EQUIVALENTS, ENDING BALANCE $ 15,060 $ 3,882 $ 15,060
========== ========== ==========
The accompanying notes are an integral part of these
audited financial statements
20
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Concierge Technologies, Inc., (the "Company"), a California corporation, was
incorporated on August 18, 1993 as Fanfest, Inc. In August 1995 the Company
changed its name to Starfest, Inc. During 1998, the Company was inactive, just
having minimal administrative expenses. During 1999 the Company attempted to
pursue operations in the online adult entertainment field. There were no
revenues from this endeavor. On March 20, 2002, the Company changed its name to
Concierge Technologies, Inc.
In March 2000, the Company acquired approximately 96.83 percent (8,250,000
shares) of the common stock of MAS Acquisition XX Corp. (MAS XX) for $314,688.
This amount was expensed in March 2000 as at the time of the acquisition, MAS XX
had no assets or liabilities and was inactive. On March 21, 2002, the Company
consummated a merger with Concierge, Inc.
Concierge, Inc. ("CI") was a development stage enterprise incorporated in the
state of Nevada on September 20, 1996. The CI had undertaken the development and
marketing of a new technology, a unified messaging product "The Personal
Communications Attendant" ("PCA(TM)"). "PCA(TM)" will provide a means by which
the user of Internet e-mail can have e-mail messages spoken to him/her over any
touch-tone telephone or wireless phone in the world. To-date, the Company has
not earned any revenue.
On April 6, 2004 the Company entered into a Stock Purchase Agreement with Planet
Halo, Inc. (PHI) whereby, the Company purchased all of the outstanding and
issued shares of PHI in exchange for 10 million shares of the Company's common
stock valued at $500,000. On May 5, 2004 the Company issued the shares on a
ratio of 8.232 shares of its common stock to each share of PHI stock to the
former shareholders of PHI. The existing PHI shares were then retired and
cancelled. The Company is now the sole shareholder of PHI, a Nevada corporation.
On May 5, 2004 the President of PHI was officially appointed to the Board of
Directors of the Company along with one other PHI named appointee (Note 12).
PHI is a development stage company in the wireless telecommunications industry
and plans to design, construct, and operate wireless networks providing
subscribers with access to the Internet and related services. Planet Halo also
retains an exclusive North America license to a proprietary integrated wireless
gateway interface to the Internet named "Halomail", which the company plans to
implement across its developing wireless networks.
During the 4th quarter of the fiscal year 2007 Planet Halo was provided funding
by Concierge in order to begin operations as a wireless Internet service
provider. Planet Halo purchased network infrastructure equipment, entered into a
lease agreement for radio site locations, entered into a consulting agreement
with a third party vendor providing technical support and services, installed
equipment and began operations on June 5, 2007 in Marina del Rey, California.
The accounting policies of the Company are in accordance with generally accepted
accounting principles and conform to the standards applicable to development
stage companies.
21
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying condensed consolidated financial statements include the
accounts of Concierge Technologies, Inc. (parent) and its wholly owned
subsidiary, Planet Halo, Inc. All significant inter-company transactions and
accounts have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS
The Company considers all liquid investments with a maturity of three months or
less from the date of purchase that are readily convertible into cash to be cash
equivalents.
USE OF ESTIMATES
The preparation of financial statements is in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
PROPERTY & EQUIPMENT
Property and equipment are recorded at cost. Depreciation is computed using the
straight-line method over useful lives of 3 years. The cost of assets sold or
retired and the related amounts of accumulated depreciation are removed from the
accounts in the year of disposal. Any resulting gain or loss is reflected in
current operations. Expenditures for maintenance and repairs are charged to
expense as incurred.
IMPAIRMENT OF LONG LIVED-ASSETS
Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets and supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the accounting and reporting provisions of APB Opinion No.
30, "Reporting the Results of Operations for a Disposal of a Segment of a
Business." The Company periodically evaluates the carrying value of long-lived
assets to be held and used in accordance with SFAS 144. SFAS 144 requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amounts. In
that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair market value of the long-lived assets. Loss on
long-lived assets to be disposed of is determined in a similar manner, except
that fair market values are reduced for the cost of disposal. Based on its
review, the Company believes that, as of June 30, 2007, there were no
significant impairments of its long-lived assets used in operations.
22
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INCOME TAXES
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred income taxes are recognized for the
tax consequences in future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at each period end based
on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
BASIS AND DILUTED NET LOSS PER SHARES
Net loss per share is calculated in accordance with the Statement of financial
accounting standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128
superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per
share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period.
STOCK-BASED COMPENSATION
Effective July 1, 2006, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 123-R, "Share-Based Payment" ("SFAS 123-R"), which requires
the measurement and recognition of compensation expense for all share-based
payment awards made to employees and directors, including stock options based on
their fair values. SFAS 123-R supersedes Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25"), which the Company
previously followed in accounting for stock-based awards.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of financial accounting standard No. 107, Disclosures about fair value
of financial instruments, requires that the Company disclose estimated fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.
23
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR
OBTAINED FOR INTERNAL USE
The Company accounts for the costs of computer software developed or obtained
for internal use in accordance with Statement of Position 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use." The
Company capitalizes costs of materials, consultants, and payroll and
payroll-related costs for employees incurred in developing internal-use computer
software. These costs are included with "Computer equipment and software." Costs
incurred during the preliminary project and post-implementation stages are
charged to general and administrative expense.
RESEARCH AND DEVELOPMENT
Expenditures for software development costs and research are expensed as
incurred. Such costs are required to be expensed until the point that
technological feasibility is established. The period between achieving
technological feasibility and the general availability of such software has been
short. Consequently, costs otherwise capitalizable after technological
feasibility is achieved are generally expensed because they are insignificant.
REVENUE RECOGNITION
Revenue is recognized when earned. The Company's revenue recognition policies
are in compliance with all applicable accounting regulations, including American
Institute of Certified Public Accountants (AICPA) Statement of Position (SOP)
97-2, Software Revenue Recognition, SOP 98-9, Modification of SOP 97-2 and Staff
accounting bulletin (SAB) 104. Revenue from license programs is recorded when
the software has been delivered and the customer is invoiced. Revenue from
packaged product sales to and through distributors and resellers is recorded
when related products are shipped. The Company does not charge monthly service
fee, instead charges only one-time purchase price and the option of buying
upgrades at a fixed fee based on fair value of the upgrade. When the revenue
recognition criteria required for distributor and reseller arrangements are not
met, revenue is recognized as payments are received. Costs related to
insignificant obligations, which include telephone support for certain products,
are accrued. Provisions are recorded for returns, concessions and bad debts.
Cost of revenue includes direct costs to produce and distribute product and
direct costs to provide online services, consulting, product support, and
training and certification of system integrators. Research and development costs
are expensed as incurred. The company did not earn any revenue in the years
ended June 30, 2007 and 2006.
ADVERTISING
The Company expenses advertising costs as incurred.
RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform to the current
period presentation.
24
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. RECENT PRONOUNCEMENTS
In February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAF No. 140, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities". SFAS No. 155, permits fair value remeasurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of SFAS No. 133, establishes a
requirement to evaluate interest in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. This statement is effective for all financial instruments acquired
or issued after the beginning of the Company's first fiscal year that begins
after September 15, 2006. Management is currently evaluating the effect of
adoption of this statement on the financial statements.
In March 2006 FASB issued SFAS 156 'Accounting for Servicing of Financial
Assets' this Statement amends FASB Statement 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. This Statement:
1. Requires an entity to recognize a servicing asset or servicing liability
each time it undertakes an obligation to service a financial asset by
entering into a servicing contract.
2. Requires all separately recognized servicing assets and servicing
liabilities to be initially measured at fair value, if practicable.
3. Permits an entity to choose 'Amortization method' or 'Fair value
measurement method' for each class of separately recognized servicing
assets and servicing liabilities.
4. At its initial adoption, permits a one-time reclassification of
available-for-sale securities to trading securities by entities with
recognized servicing rights, without calling into question the treatment of
other available-for-sale securities under Statement 115, provided that the
available-for-sale securities are identified in some manner as offsetting
the entity's exposure to changes in fair value of servicing assets or
servicing liabilities that a servicer elects to subsequently measure at
fair value.
5. Requires separate presentation of servicing assets and servicing
liabilities subsequently measured at fair value in the statement of
financial position and additional disclosures for all separately recognized
servicing assets and servicing liabilities.
This Statement is effective as of the beginning of the Company's first fiscal
year that begins after September 15, 2006. Management is currently evaluating
the effect of adoption of this statement on the financial statements.
25
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In September 2006, FASB issued SFAS 157 `Fair Value Measurements'. This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practice. This Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The management is currently
evaluating the effect of this pronouncement on financial statements.
In September 2006, FASB issued SFAS 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 overfunded or underfunded 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 or changes in unrestricted net assets
of a not-for-profit organization. This Statement also improves financial
reporting by requiring an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. An employer with publicly traded equity securities is required to
initially recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of the fiscal year ending
after December 15, 2006. An employer without publicly traded equity securities
is required to recognize the funded status of a defined benefit postretirement
plan and to provide the required disclosures as of the end of the fiscal year
ending after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes to
financial statements for a fiscal year ending after December 15, 2006, but
before June 16, 2007, unless it has applied the recognition provisions of this
Statement in preparing those financial statements:
a. A brief description of the provisions of this Statement
b. The date that adoption is required
c. The date the employer plans to adopt the recognition provisions of
this Statement, if earlier.
The requirement to measure plan assets and benefit obligations as of the date of
the employer's fiscal year-end statement of financial position is effective for
fiscal years ending after December 15, 2008. The management is currently
evaluating the effect of this pronouncement on financial statements.
In February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted subject to
specific requirements outlined in the new Statement. Therefore, calendar-year
companies may be able to adopt FAS 159 for their first quarter 2007 financial
statements.
26
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The new Statement allows entities to choose, at specified election dates, to
measure eligible financial assets and liabilities at fair value that are not
otherwise required to be measured at fair value. If a company elects the fair
value option for an eligible item, changes in that item's fair value in
subsequent reporting periods must be recognized in current earnings. FAS 159
also establishes presentation and disclosure requirements designed to draw
comparison between entities that elect different measurement attributes for
similar assets and liabilities. The management is currently evaluating the
effect of this pronouncement on financial statements.
4. GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate continuation of the
Company as a going concern. However, the Company did not earn any revenue during
the year ended June 30, 2007. The Company has accumulated deficit of $3,871,095
and a net income of $38,214 during the year ended June 30, 2007. The continuing
losses have adversely affected the liquidity of the Company. Losses are expected
to continue for the immediate future. The Company faces continuing significant
business risks, which includes but not limited to, its ability to maintain
vendor and supplier relationships by making timely payments when due.
In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying 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 or amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.
Management has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern. Management devoted considerable effort
from inception through the year ended June 30, 2007, towards (i) obtaining
additional equity (ii) management of accrued expenses and accounts payable (iii)
initiation of the business strategies of the Planet Halo subsidiary and (vi)
searching for a suitable strategic partner.
Management believes that the above actions will allow the Company to continue
operations through the next fiscal year.
5. DUE FROM RELATED PARTY
Concierge Technologies, Inc. has no bank account in its own name. Wallen Group,
a consulting company headed by the C.E.O. and director of the Company, maintains
an administrative account for the Company. A balance due from Wallen Group was
$23,350 as of June 30, 2007.
27
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Following is the summary of accounts payable and accrued expenses as of June 30,
2007.
Accounts payable $ 86,646
Accrued interest 34,560
Accrued litigation 135,000
Other Accrual 1,500
Provision for income tax 800
---------
Total $ 258,506
During the year ended June 30, 2007, the Company adjusted over accrued expenses
amounting $150,123 and recorded it under other income.
7. NOTES PAYABLE - RELATED PARTIES
Notes payable consisted of the following at June 30,
2007
----
Notes payable to shareholder, interest rate of 8%, unsecured
and payable on October 1, 2006 (past due) 35,000
Notes payable to director/shareholder, non-interest bearing
unsecured and payable on demand 8,500
Notes payable to shareholder, interest rate of 10%, unsecured,
and payable on July 31, 2004 (past due) 5,000
Notes payable to shareholder, interest rate of 10%, unsecured
and payable on October 1, 2004 (past due) 28,000
Notes payable to shareholder, interest rate of 8%, unsecured
and payable on October 1, 2004 (past due) 14,000
Notes payable to director/shareholder, interest rate of 8%,
unsecured and payable on September 1, 2004 (past due) 3,500
Notes payable to shareholder, interest rate of 8%, unsecured
and payable on October 1, 2005 (past due) 20,000
Notes payable to director/shareholder, interest rate of 8%,
unsecured and payable on February 1, 2006 (past due) 5,000
28
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes payable to director/shareholder, interest rate of 8%,
unsecured and payable on June 1, 2006 (past due) 5,000
Notes payable to director/shareholder, interest rate of 8%,
unsecured and payable on February 1, 2006 (past due) 2,500
Notes payable to director/shareholder, interest rate of 6%,
Unsecured and payable on September 1, 2007 1,000
Notes payable to shareholder, interest rate of 8%, unsecured
and payable on November 1, 2007 15,000
--------
Total Notes Payable $142,500
========
The Company has recorded interest expenses, amounting to $11,024 and $9,652 for
the years ended June 30, 2007 and 2006, respectively.
8. INCOME TAXES
No provision was made for Federal income tax since the Company has significant
net operating loss carry forward. Through June 30, 2007, the Company incurred
net operating losses for tax purposes of approximately $3,591,000. The net
operating loss carry forward may be used to reduce taxable income through the
year 2026. Net operating loss for carry forwards for the State of California is
generally available to reduce taxable income through the year 2016. The
availability of the Company's net operating loss carryforward is subject to
limitation if there is a 50% or more positive change in the ownership of the
Company's stock.
The net deferred tax asset balance, due to net operating income/loss
carryforwards as of June 30, 2007 and 2006 were approximately $1,436,000 and
$1,452,000 respectively. A 100% valuation allowance has been established against
the deferred tax assets, as the utilization of the loss carryforwards cannot
reasonably be assured.
The components of the net deferred tax asset are summarized below:
June 30, 2007 June 30, 2006
------------- -------------
Deferred tax asset $1,436,000 $1,452,000
Valuation allowance (1,436,000) (1,452,000)
----------- -----------
$ - $ -
29
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a reconciliation of the provision for income taxes at the U.S.
federal income tax rate to the income taxes reflected in the Consolidated
Statements of Operations:
June 30, June 30,
2007 2006
-------- --------
Tax expense (credit) at statutory rate - federal 34% (34)%
State tax expense net of federal tax 6 (6)
Changes in valuation allowance (40) 40
Tax expense at actual rate -- --
Income tax expense consisted of the following:
June 30, 2007 June 30, 2006
-------- --------
Current tax expense:
Federal $ -- $ --
State 800 1,600
-------- --------
Total current $ 800 $ 1,600
Deferred tax:
Federal $(13,300) $ 14,600
State (2,300) 2,500
-------- --------
Total deferred tax asset $(15,600) $ 17,100
Valuation allowance 15,600 (17,100)
Net deferred tax asset -- --
-------- --------
Tax expense $ 800 $ 1,600
9. COMMON STOCK
There were no issuances of common stock during the year ended June 30, 2006.
The Company issued Five Million (5,000,000) shares of common stock to Ryan
Consultants Ltd, a Jersey, UK corporation, on November 1, 2006. Ryan Consultants
Ltd provided various services on behalf of Concierge, including due diligence
for Planet Halo and its planned wireless network in the U.K. The Compensation
expense amounting $35,000 was calculated based upon the fair market value of the
freely trading shares as quoted on OTCBB.
During December 2006 the board of directors agreed to sell shares of common
stock at a price of $0.00333 per share to a group of individuals known to Marc
Angell. There was no commission paid and no public solicitation for the
investment. Pursuant to the board instructions, and the executed subscription
agreements, $100,000 was raised in increments of $10,000 for each of 9 investors
and one conversion of an outstanding note for $10,000. The investors resided in
the states of California, Washington, and Virginia where the company filed the
appropriate form D. $50,000 of the funds were raised in the 3rd quarter and
recorded as advanced subscriptions, with the remaining $40,000 raised during the
30
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4th quarter. The initial $50,000 booked in advanced subscriptions was converted
to equity along with the remaining $50,000 during June 2007. Subsequently,
27,027,027 shares of common stock were issued to investors collectively. The
newly issued shares are unregistered and are subject to the restrictions under
rule 144 and rule 145.
On June 22, 2007, the Company issued 3,003,003 shares of common stock to settle
$10,000 Notes payable to Jacquie Carter. The shares were recorded at fair value
on the date of settlement.
10. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
The Company prepares its statements of cash flows using the indirect method as
defined under the Financial Accounting Standard No. 95.
The Company paid $0 for interest and $0 for income tax during the year ended
June 30, 2007.
The Company settled note payable of $10,000 by issuing 3,003,003 shares excluded
from the statement of cash flows.
During the twelve months ended June 30, 2006, the Company paid all tax
liabilities outstanding with the Franchise Tax Board of the State of California
for the fiscal years ended June 30, 2003, 2004 and 2005, including all
calculated penalties and interest, totaling $3,322.97.
The amount reserved for income tax in the accompanying financial statements as
been appropriately adjusted to reflect the current status.
11. LITIGATION
On May 6, 2002, a default judgment was awarded to Brookside Investments Ltd
against, jointly and severally, Concierge, Inc, Allen E. Kahn, and The Whitehall
Companies in the amount of $135,000 plus legal fees. The Company did not defend
against the complaint by Brookside, which alleged that Brookside was entitled to
a refund of their investment as a result of a breach of contract. Brookside had
entered into a subscription agreement with Concierge, Inc., which called for,
among other things, the pending merger between Starfest and Concierge to be
completed within 180 days of the investment. The merger was not completed within
180 days and Brookside sought a refund of their investment, which Concierge was
unable to provide. The Company has accrued the judgment amount of $135,000 in
the year 2002 as litigation settlement in the accompanying financial statements.
This amount is included in accrued expenses as of June 30, 2007.
31
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. ACQUISITION & IMPAIRMENT OF INTANGIBLE ASSET
On April 6, 2004 the Company and Planet Halo entered into Stock Purchase
agreement whereby, when consummated, the Company would purchase all of the
outstanding and issued shares of Planet Halo in exchange for 10 Million shares
of the Company's common stock valued at $500,000. On April 20, 2004 all of the
conditions of the acquisition were met apart from the issuance of the shares. On
May 5, 2004, the Company issued the shares on a ratio of 8.232 shares of the
Company to each share of Planet Halo stock. The shares were issued directly to
the shareholders of Planet Halo. The existing Planet Halo shares were retired
and cancelled. The Company is now a sole shareholder of Planet Halo, a Nevada
corporation. On May 5, 2004 the President of Planet Halo was officially
appointed to the Board of Directors of the Company along with one other Planet
Halo named appointee.
Planet Halo is a development stage company involved in the wireless
telecommunications industry through the design, manufacture, sale and
distribution of hardware and services that include a hand-held wireless Internet
appliance/cell phone known as the "Halo", and an integrated wireless gateway
interface to the Internet named "Halomail."
The purchase price was determined in arms-length negotiations between the
parties. The assets acquired in this acquisition include without limitation
computer hardware and goodwill. A summary of the Planet Halo assets acquired and
consideration for is as follows:
Allocated amount
----------------
Cash $ 2,912
Equipment, net 245
Goodwill 496,843
----------
$ 500,000
Consideration paid
------------------
10,000,000 shares of common stock $ 500,000
==========
The Company evaluates intangible assets, goodwill and other long-lived assets
for impairment, at least on an annual basis and whenever events or changes in
circumstances indicate that the carrying value may not be recoverable from its
estimated future cash flows. Recoverability of intangible assets, other
long-lived assets and, goodwill is measured by comparing their net book value to
the related projected undiscounted cash flows from these assets, considering a
number of factors including past operating results, budgets, economic
projections, market trends and product development cycles. If the net book value
of the asset exceeds the related undiscounted cash flows, the asset is
considered impaired, and a second test is performed to measure the amount of
impairment loss. Potential impairment of goodwill is being evaluated in
accordance with SFAS No. 142. The SFAS No. 142 is applicable to the financial
statements of the Company beginning July 1, 2002.
32
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On December 31, 2004, the Company evaluated the valuation of goodwill based upon
the performance and market value of the acquisition. The Company determined the
goodwill is impaired and recorded the impairment of $496,843 in the accompanying
financial statements.
The Company evaluated value of its prepaid expenses during the year ended June
30, 2004 and based upon uncertainness surrounding the utilization of its
software for the "PCA" development, the Company has recorded an impairment of
the prepaid expense amounting $245,800.
13. FORMATION OF NEVADA SUBSIDIARY
On April 20, 2005, the Company formed a subsidiary corporation under the laws of
the State of Nevada. The subsidiary corporation, Concierge Technologies, Inc.
(Nevada) was formed for the purpose of re-domesticating the Company stock in the
State of Nevada and dissolving the California Corporation. The action was taken
pursuant to a vote in favor by a majority of shareholders of the Company. On
March 2, 2006, the Company filed articles of merger with the Secretary of State
in Nevada effectuating the merger of Concierge Technologies, Inc. of California
into the Nevada subsidiary. In order to consummate the merger, the Secretary of
State in California requires a Certificate of Tax Clearance from the Franchise
Tax Board. The delay in acquiring the tax clearance caused for the Nevada
Corporation to become inactive. On September 22, 2006 the Franchise Tax Board
issued the tax clearance certificate. On October 6, 2006 the tax clearance
certificate from California, and the other documents necessary to reactivate
Concierge Technologies, Inc. in Nevada, were filed in the respective states. The
Secretary of State of California has acknowledged receipt of the tax clearance
certificate and the merger documents and the Articles of Merger were filed with
the State of California on October 5, 2006. Concierge Technologies, Inc. is now
a Nevada corporation.
14. SUBSEQUENT EVENTS
On September 15, 2007 Concierge entered into a binding Memorandum of
Understanding with privately held Wireless Village wherein the terms and
conditions were set forth providing for the purchase of Wireless Village by
Concierge in a stock-for-stock exchange. The proposed transaction is subject to
final definitive documentation, successful completion of due diligence,
approvals of the respective boards of directors and regulatory approval.
33
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The principal independent accountant of the company or any significant
subsidiary has not resigned, declined to stand for re-election, or been
dismissed by the company during the periods for which financial statements are
included herein.
ITEM 8A. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. The Company carried out
an evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures as of the end of the period covered by this
report. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective and provide reasonable assurances that the information
the Company is required to disclose in the reports it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time period required by the Commission's rules and forms. Further,
the Company's officers concluded that its disclosure controls and procedures are
also effective to ensure that information required to be disclosed in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to its management, including its chief executive officer and chief
financial officer, to allow timely decisions regarding required disclosure.
There were no significant changes in the Company's internal control over
financial reporting during the period covered by this report that have
materially affected, or are reasonably likely to materially affect our internal
controls over financial reporting.
ITEM 8B. OTHER INFORMATION
On October 5, 2006 the registrant, Concierge Technologies, Inc., a
California corporation, merged with a wholly-owned subsidiary, also named
Concierge Technologies, Inc., a Nevada corporation. The Nevada corporation is
the surviving corporation in the merger. The charters of the two corporations
are essentially identical, and the transaction was effected as no more than a
change of domicile from California to Nevada. The Articles of Incorporation of
the Nevada corporation and the Articles of Merger were filed as Exhibits 3.7 and
3.8 to Form 10-KSB FYE 06-30-06.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
Set forth below are the names, and terms of office of each of the
directors, executive officers and significant employees of Concierge
Technologies at June 30, 2007 and a description of the business experience of
each.
34
-------------------------------------------------------------------------------
Office Held Term of
Person Offices Since Office
------------------ -------------------------------------- ----------- ---------
------------------ -------------------------------------- ----------- ---------
David W. Neibert C.E.O. and Director 2007 2008
------------------ -------------------------------------- ----------- ---------
James E. Kirk Secretary and Director 1996 2008
------------------ -------------------------------------- ----------- ---------
Samuel Wu Director 2002 2008
------------------ -------------------------------------- ----------- ---------
Allen E. Kahn Chairman, CFO and Director 1996 2008
------------------ -------------------------------------- ----------- ---------
Patrick Flaherty Director 2002 2008
------------------ -------------------------------------- ----------- ---------
Marc Angell Director and President of Planet Halo 2004 2008
------------------ -------------------------------------- ----------- ---------
Pat Rodden Director 2004 2008
------------------ -------------------------------------- ----------- ---------
Allen E. Kahn: Mr. Kahn entered the computer industry as a Systems Engineer with
IBM and subsequently held a series of technical, sales, marketing and management
positions with other multi-billion dollar corporations before becoming President
and CEO of two companies marketing data communications hardware and software. He
has extensive experience in voice technology, optical character recognition,
data communications and other technical elements of the PCA, which he conceived.
Mr. Kahn is an honors graduate of the University of Texas at El Paso and pursued
postgraduate studies in Business Administration at UTEP and California State
University, Long Beach.
David W. Neibert: Mr. Neibert has been the President and a director of Concierge
Technologies since June 17, 2002 and CEO of Concierge since April 2007. Mr.
Neibert is also the president of The Wallen Group, a general partnership
providing consulting services to wireless communications companies and other
high technology firms in development stages. Prior to founding The Wallen Group,
Mr. Neibert served as the president of Roamer One and as a director and
executive vice president of business development of their publicly traded parent
company Intek Global Corporation. Intek Global Corporation manufactured, sold
and distributed radio products (under the names "Midland", "Securicor Wireless",
"Linear Modulation Technologies", and others) globally to the consumer,
government and commercial markets and operated a nationwide land mobile radio
network in the U.S. known as Roamer One. Intek Global Corporation was
subsequently acquired by its majority shareholder, Securicor plc of Sutton
Surrey, England. Mr. Neibert reported to offices located in Los Angeles, CA,
Kansas City, MO, New York City, NY, and Sutton Surrey, England during period
from 1992 - 1998 before locating The Wallen Group in Canoga Park, CA.
Patrick Flaherty: Mr. Flaherty has been in the technology related business for
over 30 years. During the last five years, he has been president of Manhattan
Resources, a consulting company specializing in Network Communications and
Storage Management. In late 1999 he became Senior Vice President of Concierge,
Inc, and served in this position until March of 2002. Since April 2002, he has
resumed his consulting business and was elected to the board of Concierge
Technologies, Inc in September of 2002.
James E. Kirk, Esq.: Mr. Kirk is Corporate Secretary and General Counsel and has
served as a Director of Concierge, Inc. since inception. He is a graduate of
Wichita State University and holds LLB and JD degrees from the law school of
Washburn University. Mr. Kirk is an attorney in private practice in Albuquerque,
New Mexico.
35
Samuel C.H. Wu: With nearly 20 years of experience in engineering, banking and
finance; Mr. Wu has played a pivotal role in developing and managing national
and international business activity relationships for organizations in the
public and private sectors. He was a senior marketing/credit officer with the
Bank of America -World Banking Division in Tokyo, London and Hong Kong before
founding Woodsford Shipping & Trading Co., Ltd. Under Mr. Wu's guidance,
Woodsford has become a preeminent firm in the area's import/export and financial
markets. He has been actively involved in the affairs of Concierge since its
inception. Mr. Wu is fluent in English, Japanese and a number of Chinese
dialects. He is a graduate of the University of California, Berkeley, where he
received his BSEE in electronics and computer sciences and MBA. He has also
taken advanced studies in manufacturing, quality assurance and community
medicine.
Marc Angell: Mr. Angell is the founder and President of Planet Halo and has
operated the company since its inception in 2000. Prior to founding Planet Halo,
and from the period 1997 through 1999, Mr. Angell was the founder, majority
shareholder and CEO of Angellcom, a supplier and distributor of one-way paging
devices in the U.S. During the early 1990s Mr. Angell was also involved in the
land mobile radio business as a license holder and manager of 220MHz radio
systems. Mr. Angell conceptualized, designed and marketed both the one-way
pagers for Angellcom and the Halo device for Planet Halo. He was elected to the
board of directors of Concierge simultaneous with the acquisition of Planet
Halo.
Pat Rodden: Mr. Rodden has nearly two decades of unique experience developing
products and strategies for leading consumer, sports, recreation and electronics
companies. Rodden is a founding partner, director and head of operations for
Fiori whose expertise has built the company into a leading consumer technology
research and design firm that has garnered more than 25 international awards
over the past three years alone, many on behalf of Fortune 500 companies. Prior
to founding Fiori in 1994, Mr. Rodden held various product development and
program director positions at Virtual Vision, Precor, Paccar and Hughes. He
graduated from California State University, Chico in 1984 with a B.S. in
Mechanical Engineering.
There are no family relationships between the directors and officers. There
are no significant employees of Concierge who are not described above.
Audit Committee and Audit Committee Financial Expert
Our directors serve as our audit committee. There is no financial expert
serving on the audit committee. We have no financial expert serving on the audit
committee, because we have no assets of substantial value and have had only
limited business activities during the current year.
Code of Ethics
We have adopted a Code of Ethics that applies to our chief executive
officer, chief financial officer, and - should we acquire such - principal
accounting officer or controller or persons performing similar functions. A copy
36
of the Code of Ethics was filed as an exhibit to the Form 10-KSB annual report
for FY 06-30-2004.
Compliance with Section 16 (a) of the Exchange Act
Section 16(a) Beneficial Ownership Reporting Compliance. Based solely upon
a review of Forms 3, 4 and 5 and amendments thereto furnished to us with respect
to our fiscal year ended June 30, 2007 and written representations furnished to
us from persons subject to Section 16(a) filing requirements, there are two
persons that have failed to file, or have filed late, the necessary forms as
required for such period, as follows:
--------------- -------------- --------------------- ------------------
No. of Late No. of Transactions Failures to File a
Person Reports Not Timely Reported Required Form
--------------- -------------- --------------------- ------------------
--------------- -------------- --------------------- ------------------
Allen Kahn 4 3
--------------- -------------- --------------------- ------------------
Marc Angell 3 3
--------------- -------------- --------------------- ------------------
ITEM 10. EXECUTIVE COMPENSATION
The following information concerns the compensation of our chief executive
officer and our chief operations officers for the last three completed fiscal
years. No other executive officers or individuals received total annual salary
and bonus that exceeded $100,000 during the last three completed fiscal years.
Name of Chief Shares of
Executive Officer Year Cash Salary Common Stock Awarded
David Neibert 2007 0 0
Allen Kahn 2007 0 0
David Neibert 2006 0 0
Allen Kahn 2006 0 0
David Neibert 2005 0 0
Allen Kahn 2005 0 0
Other than as stated above, no cash or stock compensation, deferred
compensation or long-term incentive plan awards were issued or granted to our
management during or with respect to the period ended June 30, 2007. Further, no
member of management has been granted any option or stock appreciation rights;
accordingly, no tables relating to such items have been included within this
Item.
There are no employment contracts, compensatory plans or arrangements with
respect to any director or executive officer which would in any way result in
payments to any such person because of his or her resignation, retirement or
other termination of employment, any change in control, or a change in the
person's responsibilities following a change in control.
37
Long-Term Compensation
We have no long-term compensation plans or employment agreements with any
of our officers or directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The table below sets forth the ownership, as of September 12, 2007 of
each individual known to management to be the beneficial owner of more than five
percent of the company's common stock, by all directors, and named executive
officers, individually and as a group.
Name and Address of Amount Percent of
Beneficial Owner Owned Class
------------------------------------ ----------------------- ------------------
Allen E. Kahn 14,766,902 8.3%
7547 W. Manchester Ave., No. 325
Los Angeles, CA 90045
Samuel C.H. Wu 20,855,437 11.8%
1202 Tower 1, Admiralty Centre
18 Harcourt Road
Hong Kong, China
Polly Force Co., Ltd. 10,805,680 (1) 6.1%
1202 Tower 1, Admiralty Centre
18 Harcourt Road
Hong Kong, China
Marc Angell 9,214,003 5.2%
1575 Spinnaker Dr
Suite 204A
Ventura, CA 93001
Fiori Product Development 411,612 (2) (2)
411 SW Second Ave.
Third Floor
Portland, OR 97204
F. Patrick Flaherty 3,376,775 (4) 1.9%
637 29th Street
Manhattan Beach, CA 90266
James E. Kirk 3,383,291 1.9%
1401 Kirby, N.E.
Albuquerque, NM 87112
David W. Neibert 1,539,100 (3)
24028 Clarington Drive
West Hills, CA 91304
Officers and Directors
as a Group (7 persons) 53,547,120 30.2%
38
(1) Mr. Samuel C. H. Wu is the beneficial owner of these shares and 1,620,852
shares held by Link Sense through his presence on their respective Boards
of Directors.
(2) Mr. Rodden is a beneficial owner of these shares through his presence on
the Board of Directors and his shareholdings in Fiori Product Development,
Inc. These shares represent less than one percent.
(3) Less than one percent.
(4) Mr. Flaherty had earlier reported beneficial ownership of 1,350,710 shares
originally issued to his adult children for which he now disclaims
beneficial ownership.
There are no agreements between or among any of the shareholders that would
restrict the issuance of shares in a manner that would cause any change in
control of the company. There are no voting trusts, pooling arrangements or
similar agreements in the place between or among any of the shareholders, nor do
the shareholders anticipate the implementation of such an agreement in the near
future.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no transactions during the past two years, or proposed
transactions, to which Concierge Technologies was or is to be a party, in which
any director, executive officer, nominee for election as a director, any
security holder named in Item 10 above and any immediate family member of any of
the foregoing persons had or is to have a direct or indirect material interest.
ITEM 13. EXHIBITS
The following exhibits are filed as part of this Form 10-KSB:
Exhibit No. Description
----------- -----------
2 - Stock Purchase Agreement of March 6, 2000 between
Starfest, Inc. and MAS Capital, Inc.*
3.1 - Certificate of Amendment of Articles of
Incorporation of Starfest, Inc. and its earlier
articles of incorporation.*
3.2 - Bylaws of Concierge, Inc., which became the Bylaws
of Concierge Technologies upon its merger with
Starfest, Inc. on March 20, 2002.*
3.5 - Articles of Merger of Starfest, Inc. and
Concierge, Inc. filed with the Secretary of State
of Nevada on March 1, 2002.**
3.6 - Agreement of Merger between Starfest, Inc. and
Concierge, Inc. filed with the Secretary of State
of California on March 20, 2002.**
3.7 - Articles of Incorporation of Concierge
Technologies, Inc. filed with the Secretary of
State of Nevada on April 20, 2005.+
39
3.8 - Articles of Merger between Concierge Technologies,
Inc., a California corporation, and Concierge
Technologies, Inc., a Nevada corporation, filed
with the Secretary of State of Nevada on March 2,
2006 and the Secretary of State of California on
October 5, 2006.+
10.1 - Agreement of Merger between Starfest, Inc. and
Concierge, Inc.*
14 - Code of Ethics for CEO and Senior Financial
Officers.***
31 - Certification of Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31.1 - Certification of Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32 - Certification of Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.1 - Certification of Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
*Previously filed with Form 8-K12G3 on March 10, 2000; Commission File
No. 000-29913, incorporated herein.
**Previously filed with Form 8-K on April 2, 2002; Commission File No.
000-29913, incorporated herein.
***Previously filed with Form 10-KSB on October 13, 2004; Commission
File No. 000-29913, incorporated herein.
+Previously filed with Form 10-KSB FYE 06-30-06 on October 13, 2006;
Commission File No. 000-29913, incorporated herein.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees. Our principal independent accountant billed us, for each of the
last two fiscal years, the following aggregate fees for its professional
services rendered for the audit of our annual financial statements and review of
financial statements included in our Form 10-QSB reports or other services
normally provided in connection with statutory and regulatory filings or
engagements for those two fiscal years:
40
Fiscal Year ended June 30, 2007 $27,500
Fiscal Year ended June 30, 2006 $25,000
Audit-Related Fees. Our principal independent accountant billed us, for
each of the last two fiscal years, the following aggregate fees for assurance
and related services reasonably related to the performance of the audit or
review of our financial statements and not reported above under "Audit Fees":
Fiscal Year ended June 30, 2007 $-0-
Fiscal Year ended June 30, 2006 $-0-
Tax Fees. Our principal independent accountant billed us, for each of the
last two fiscal years, the following aggregate fees for professional services
rendered for tax compliance, tax advice and tax planning:
Fiscal Year ended June 30, 2007 $-0-
Fiscal Year ended June 30, 2006 $-0-
All Other Fees. Our principal independent accountant billed us, for each of
the last two fiscal years, the following aggregate fees for products and
services provided by it, other than the services reported in the above three
categories:
Fiscal Year ended June 30, 2007 $-0-
Fiscal Year ended June 30, 2006 $-0-
Pre-Approval of Audit and Non-Audit Services. The Audit Committee requires
that it pre-approve all audit, review and attest services and non-audit services
before such services are engaged.
41
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONCIERGE TECHNOLOGIES, INC.
Date: October 10, 2007 By /s/ David W. Neibert
----------------------------------
David W. Neibert, President
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Date: October 10, 2007 /s/ David W. Neibert
--------------------------------------
David W. Neibert, C.E.O. and Director
Date: October 10, 2007 /s/ Allen E. Kahn
--------------------------------------
Allen E. Kahn, Chief Financial Officer
and Director
Date: October 10, 2007 /s/ F.P. Flaherty
--------------------------------------
F. Patrick Flaherty, Director
Date: October 10, 2007 /s/ James E. Kirk
--------------------------------------
James E. Kirk, Secretary and Director
Date: October 10, 2007 /s/ Samuel C.H. Wu
--------------------------------------
Samuel C.H. Wu, Director
Date: October 10, 2007 /s/ Marc Angell
--------------------------------------
Marc Angell, Director
Date: October 10, 2007 /s/ Pat Rodden
--------------------------------------
Pat Rodden, Director
42
CONCIERGE TECHNOLOGIES, INC.
Commission File No. 000-29913
Index to Exhibits to Form 10-KSB 06-30-07
The following exhibits are filed, by incorporation by reference, as part of this
Form 10-KSB:
Exhibit No. Description
----------- -----------
2 - Stock Purchase Agreement of March 6, 2000 between
Starfest, Inc. and MAS Capital, Inc.*
3.1 - Certificate of Amendment of Articles of
Incorporation of Starfest, Inc. and its earlier
articles of incorporation.*
3.2 - Bylaws of Concierge, Inc., which became the Bylaws
of Concierge Technologies upon its merger with
Starfest, Inc. on March 20, 2002.*
3.5 - Articles of Merger of Starfest, Inc. and
Concierge, Inc. filed with the Secretary of State
of Nevada on March 1, 2002.**
3.6 - Agreement of Merger between Starfest, Inc. and
Concierge, Inc. filed with the Secretary of State
of California on March 20, 2002.**
3.7 - Articles of Incorporation of Concierge
Technologies, Inc. filed with the Secretary of
State of Nevada on April 20, 2005.+
3.8 - Articles of Merger between Concierge Technologies,
Inc., a California corporation, and Concierge
Technologies, Inc., a Nevada corporation, filed
with the Secretary of State of Nevada on March 2,
2006 and the Secretary of State of California on
October 5, 2006.+
10.1 - Agreement of Merger between Starfest, Inc. and
Concierge, Inc.*
14 - Code of Ethics for CEO and Senior Financial
Officers.***
31 - Certification of Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
1
31.1 - Certification of Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32 - Certification of Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.1 - Certification of Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
*Previously filed with Form 8-K12G3 on March 10, 2000; Commission File
No. 000-29913, incorporated herein.
**Previously filed with Form 8-K on April 2, 2002; Commission File No.
000-29913, incorporated herein.
***Previously filed with Form 10-KSB on October 13, 2004; Commission
File No. 000-29913, incorporated herein.
+Previously filed with Form 10-KSB FYE 06-30-06 on October 13, 2006;
Commission File No. 000-29913, incorporated herein.
2