U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
CONCIERGE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Commission File No. 333-38838
State of Incorporation: California
IRS Employer I.D. Number: 95-4442384
531 Main Street, #963
El Segundo, CA 90245
310-645-1582
-------------------------------------------------------
(Address and telephone number of registrant's principal
executive offices and principal place of business)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve 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 [ ]
As of May 13, 2002, there were 120,057,713 shares of the Registrant's
Common Stock, no par value, outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
2
CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
BALANCE SHEET
MARCH 31, 2002
(Unaudited)
ASSETS
------
CURRENT ASSETS:
Cash & cash equivalents $ 9,807
Prepaid Expenses 245,800
-----------
Total current assets 255,607
EQUIPMENT, NET 559
-----------
$ 256,166
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Accrued expenses $ 200,353
Loans Payable-related parties 293,208
-----------
Total current liabilities 493,561
SUBSCRIPTIONS RECEIVED FOR COMMON STOCK
SUBJECT TO CONTINGENCY 1,663,290
SHARES OF CONCIERGE, INC. ISSUED SUBJECT TO CONTINGENCY 266,610
STOCKHOLDERS' DEFICIT:
Preferred stock, par value $.001 per share;
10,000,000 shares authorized; none issued -
Common stock, par value $.001 per share;
190,000,000 shares authorized; issued and
outstanding 120,057,713 120,058
Shares to be issued 29,983
Deficit accumulated during the development stage (2,317,336)
-----------
Total stockholders' deficit (2,167,295)
-----------
$ 256,166
===========
The accompanying notes are an integral part of these financial statements.
3
CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
STATEMENTS OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 2002 & 2001 AND THE PERIOD FROM
SEPTEMBER 20, 1996 (INCEPTION) TO MARCH 31, 2002
(Unaudited)
SEPTEMBER 20,
1996 (INCEPTION)
2002 2001 TO MARCH 31, 2002
------------ ------------- -----------------
REVENUE $ - $ - $ -
COSTS AND EXPENSES
Product launch Expenses - 241,928 1,077,785
General & Administrative
Expenses 88,800 284,737 1,008,824
------------ ------------- -------------
TOTAL COSTS AND EXPENSES 88,800 526,665 2,086,609
------------ ------------- -------------
OPERATING LOSS (88,800) (526,665) (2,086,609)
Other income - settlement
income, net 52,600 - 52,600
------------ ------------- -------------
NET LOSS BEFORE INCOME TAXES (36,200) (526,665) (2,034,009)
Provision of Income Taxes 800 800 4,800
------------ ------------- -------------
NET LOSS $ (37,000) $ (527,465) $ (2,038,809)*
============ ============= =============
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING,
BASIC AND DILUTED 120,057,713 120,057,713
============ =============
BASIC AND DILUTED NET LOSS
PER SHARE $ (0.0003) $ (0.0044)
============ =============
* Deficit accumulated during the development stage per the Balance sheet as
of March 31, 2002 includes a charge of $278,527 to the deficit, related to
merger with Concierge, Inc.
Subscription received for common stock were not included in the computation
of diluted EPS because the effect of their exercise would be anti-dilutive.
The accompanying notes are an integral part of these financial statements.
4
CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 2002 & 2001 AND THE PERIOD FROM
SEPTEMBER 20, 1996 (INCEPTION) TO MARCH 31, 2002
(Unaudited)
SEPTEMBER 20,
1996 (INCEPTION)
2002 2001 TO MARCH 31, 2002
------------ ------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (37,000) $ (527,465) $ (2,038,809)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 1,551 1,808 12,351
Stock issued for services - - 7,374
Increase in current assets:
Prepaid Expenses - - (245,800)
Increase/(decrease) in current
liabilities:
Accrued expenses 25,078 (67,602) 15,821
------------ ------------ ------------
Net cash used in operating
activities (10,371) (593,259) (2,249,063)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property & equipment - - (12,910)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Shares - - 567,007
Proceeds from advance subscriptions 29,983 487,500 1,772,983
Costs and expenses of advance
subscriptions - - (79,710)
Proceeds from borrowings - 22,000 -
Proceeds from (repayments of)
related party loans (10,500) - 11,500
------------ ------------ ------------
Net cash provided by financing
activities 19,483 509,500 2,271,780
------------ ------------ ------------
NET INCREASE/(DECREASE) IN CASH 9,112 (83,759) 9,807
CASH, BEGINNING BALANCE 695 85,105 -
------------ ------------ ------------
CASH, ENDING BALANCE $ 9,807 $ 1,346 $ 9,807
============ ============ ============
The accompanying notes are an integral part of these financial statements.
5
CONCIERGE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Starfest, 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. (see note 10).
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 "). "PCA " 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.
The accounting policies of the Company are in accordance with generally accepted
accounting principles and conform to the standards applicable to development
stage companies.
Principles of Recapitalization
The accompanying financial statements for the period ended March 31, 2002 and
2001 include the accounts of the CI for the nine-month periods ended March 31,
2002 and 2001. The operations of the Company have been included with those of CI
since the date of consummation of the merger. For accounting purposes, the
transaction between the Company and CI has been treated as a recapitalization of
the Company, with CI as the accounting acquirer (reverse acquisition), and has
been accounted for in a manner similar to a pooling of interests.
Basis of Preparation
The accompanying Interim Condensed Financial Statements are prepared in
accordance with rules set forth in Retaliation SB of the Securities and Exchange
Commission. As said, these statements do not include all disclosures required
under generally accepted principles and should be read in conjunction with the
audited financial statements for the year ended June 30, 2001. In the opinion
of management, all adjustments consisting of normal reoccurring accruals have
been made to the financial statements. The results of operation for the nine
months ended March 31, 2002 are not necessarily indicative of the results to be
expected for the fiscal year ending June 30, 2002.
Reclassifications
Certain prior period amounts have been reclassified to conform with the current
period presentation.
2. RECENT PRONOUNCEMENTS
On July 20, 2001, the FASB issued SFAS No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." These statements make
significant changes to the accounting for business combinations, goodwill, and
intangible assets.
6
CONCIERGE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SFAS No. 141 establishes new standards for accounting and reporting requirements
for business combinations and will require that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001.
Use of the pooling-of-interests method will be prohibited. This statement is
effective for business combinations completed after June 30, 2001.
SFAS No. 142 establishes new standards for goodwill acquired in a business
combination and eliminates amortization of goodwill and instead sets forth
methods to periodically evaluate goodwill for impairment. Intangible assets with
a determinable useful life will continue to be amortized over that period. This
statement became effective January 1, 2002.
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations". SFAS 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. This Statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002.
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
was issued in August 2001. SFAS No. 144 is effective for fiscal years beginning
after December 15, 2001, and addresses financial accounting and reporting for
the impairment or disposal of long-lived assets. This statement 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 - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions," for the disposal of a segment of a business.
The adoption of above pronouncements did not materially impact the Company's
financial position or results of operations.
3. 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's did not earn any revenue
during the period ended March 31, 2002 and the Company has incurred net losses
from inception to March 31, 2002 of $2,317,336 including a net loss of $37,000
during the nine month period ended March 31, 2002. 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, including 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 period ended March 31, 2001, towards (i) obtaining
7
CONCIERGE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
additional equity (ii) management of accrued expenses and accounts payable (iii)
Development of the software "PCA " and (vi) evaluation of its distribution and
marketing methods.
Management believes that the above actions will allow the Company to continue
operations through the next twelve months.
4. PREPAID EXPENSES
The Company entered into software license agreements with two Delaware
Corporations. One Corporation granted permission to the Company to utilize its
software for the "PCA " development. The corporation was paid $202,500 as
initial non-refundable license fee and was considered to be pre-paid royalties.
The agreement calls for Concierge, Inc. to pay a royalty of $1.00 for the first
million units sold and $.75 for units greater than 1,000,000.
The second software license agreement granted the Company the rights to
incorporate its software in the Company's personal communication attendant
e-mail device. The corporation was paid $42,500 by Concierge, Inc. as a
non-refundable, advance royalty payment. The agreement calls for the Company to
pay a royalty of $1.10 for the first 100,000 units, thereafter $.85 per unit.
The Company amortizes the prepaid royalties by the amount which is the greater
of the amount computed using (a) the ratio that current gross revenues bear to
the total of current and anticipated future gross revenues or (b) the
straight-line method over the remaining estimated economic life. Per the
guideline under SFAS 86 "Accounting for the Costs of Computer Software to Be
Sold, Leased, or Otherwise Marketed", amortization shall start when the product
is available for general release to customers.
The term of licenses is five years from the date the Company begins shipping of
its product. The prepaid royalties will be amortized based on straight-line
method over five-year period from the date shipping begins.
5. NOTES PAYABLE - RELATED PARTIES
Notes payable to certain shareholders are non-interest bearing, unsecured and
due on demand.
6. INCOME TAXES
No provision was made for Federal income tax since the Company has significant
net operating loss carryforwards. Through March 31, 2002, the Company incurred
net operating losses for tax purposes of approximately $2,039,000. Differences
between financial statement and tax losses consist primarily of amortization
allowance, was immaterial at March 31, 2002. The net operating loss
carryforwards may be used to reduce taxable income through the year 2017. Net
operating loss for carryforwards for the State of California are generally
available to reduce taxable income through the year 2007. The availability of
the Company's net operating loss carryforwards are subject to limitation if
there is a 50% or more positive change in the ownership of the Company's stock.
The provision for income taxes consists of the state minimum tax imposed on
corporations.
The net deferred tax asset balance, due to net operating loss carryforwards, as
of March 31, 2002 and 2001 were approximately $816,000 and $580,000,
respectively. A 100% valuation allowance has been established against the
deferred tax assets, as the utilization of the loss carrytforwards cannot
reasonably be assured.
8
CONCIERGE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
7. SHARES OF CONCIERGE, INC. ISSUED SUBJECT TO CONTINGENCY
Concierge, Inc. (CI) issued 117,184 shares for cash totaling $202,061 and
354,870 shares for services of $3,549 during the year ended June 30, 2000. Since
December 1998, CI sold securities to persons in six states in the U. S. CI did
not file Form D or other filings in any of the states or with the SEC for such
shares and did not properly follow the requirements for complying with available
exemptions in each state. Accordingly, all such shares are subject to the
contingency that they may have been issued without the availability of an
exemption from registration under the Securities Act of 1933 and under the
securities laws of each of the six states. Therefore, CI has treated all such
shares issued since December 1998, as Common stock issued subject to
contingency. Total shares issued subject to contingency through March 31, 2002,
were 680,504 for cash and services amounting $266,610.
8. SUBSCRIPTIONS RECEIVED FOR COMMON STOCK SUBJECT TO CONTINGENCY
Concierge, Inc. (CI) entered into subscription agreements to issue "post merger"
shares in exchange for cash. Through December 31, 2000, CI had received advance
subscriptions for a gross amount of $1,255,500 before deducting associated costs
of $79,710, for 5,928,750 post merger shares. In the event the merger between CI
and the Company is not completed prior to November 31, 2000, the obligation of
the Company under this agreement may be satisfied by the issuance of shares in
the Company equivalent on a pro-rata basis to the number of shares in "post
merger" Corporation that are subject to this agreement.
As mentioned in Note 10, CI merged with the Company on March 20, 2002. The
Company filed a registration statement with the Securities and Exchange
Commission ("the Commission") on June 8, 2000 related to the proposed merger,
naming CI as the entity proposed to be merged into the Company. From July 1,
2000 through September 15, 2000, CI received additionally $487,500 as advance
subscription for 2,127,500 post merger shares in an offering intended to be
exempt from registration pursuant to the provisions of Section 4(2) of the
Securities Act of 1933 and of Regulation D, Rule 506 of the Commission. It is
possible, but not certain, that the filing of the registration statement by the
Company and the manner in which CI conducted the sale of the 2,127,500 post
merger shares of common stock constituted "general advertising or general
solicitation" by CI. General advertising and general solicitation are activities
that are prohibited when conducted in connection with an offering intended to be
exempt from registration pursuant to the provisions of Regulation D, Rule 506 of
the Commission. CI does not concede that there was no exemption from
registration available for this offering. Nevertheless, should the
aforementioned circumstances have constituted general advertising or general
solicitation, CI would be denied the availability of Regulation D, Rule 506 as
an exemption from the registration requirements of the Securities Act of 1933
when it sold the 2,127,500 post merger shares of common stock after June 8,
2000. Should no exemption from registration have been available with respect to
the sale of these shares, the persons who bought them would be entitled, under
the Securities Act of 1933, to the return of their subscription amounts if
actions to recover such monies should be filed within one year after the sales
in question. Accordingly, the amounts received by CI from the sale of these
shares are set apart from Stockholders' Equity as "Subscription received for
common stock subject to contingency" to indicate this contingency. The total
contingent liabilities related to such shares amounted to $1,929,900 ($2,009,610
less cost and expenses of $79,710) as of March 31, 2002.
9. SHARES TO BE ISSUED
During the three month period ended March 31, 2002, the Company received a net
amount of $29,983 for 500,000 shares of common stock at $.06 per share, to be
issued under a private placement. Through March 31, 2002, the Company has not
issued any shares for the subscription received.
9
CONCIERGE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
10. MERGER AGREEMENT
On January 26, 2000 the Company entered into an agreement of merger with
Concierge, Inc. (CI), a California Corporation. Under the agreement, the
outstanding 1,376,380 share of common stock of the CI were converted into
96,957,713 common stock of the Company on the basis of 70.444 shares of the
Company for each share outstanding of the CI. The 96,957,713 post merger shares
were distributed to the shareholders of CI on a pro-rata basis. For accounting
purposes, the transaction was treated as a recapitalization of the CI, with CI
as the accounting acquirer (reverse acquisition), and was accounted for in a
manner similar to a pooling of interests. The operations of the Company have
been included with those of the CI from the acquisition date. The Company had
minimal assets before the merger and did not have significant operations prior
to the merger. The merger was subject to approval by shareholders of both
companies and Securities and Exchange Commission. The merger was consummated on
March 20, 2002.
11. 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 income tax in the nine months periods ended March 31,
2002 and 2001. Total amount paid for income taxes from September 20, 1996
(inception) through March 31, 2002 amounted to $4,000. The Company paid $0 for
interest during the periods ended March 31, 2002 and 2001. Total amount paid for
interest from September 20, 1996 (inception) through March 31, 2002, amounted to
$4,227.
The Cash flow statements do not include effect of merger with CI.
12. COMMITMENT
The Company sub-leases office space in Los Angeles, California from Ardent, Ltd.
The term of the lease is 26 months with monthly payments of $1,542. The lease
expires on August 31, 2002. Rent was $15,935 and $7,823 for the nine month
periods ended March 31, 2002 and 2001, respectively.
Future minimum lease payments associated with the lease are as follow:
Twelve months ended March 31 Amount
-------------------------------- ------
2003 7,710
=====
10
Item 2. Plan of Operation
On March 20, 2002 the company merged with Concierge, Inc., a Nevada
corporation. The company was the surviving entity, but its name was changed to
Concierge Technologies, Inc. The company registered 96,957,713 shares of its
common stock with the Commission for the merger, and the outstanding capital
stock of Concierge, Inc. was converted into these 96,957,713 shares.
The company - renamed "Concierge Technologies, Inc." with a common stock
symbol now of "CNCG" - is now under the management of the officers and directors
of former Concierge, Inc., the company that merged with our company and proposes
to develop and market its Personal Communications Attendant ("PCA ") and other
similar products useful in the world of the Internet, e-mail and
telecommunications. Management is actively considering two new products for
development.
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
The following exhibits are filed, by incorporation by reference, as part of
this Form 10-QSB:
Exhibit Item
------- ----
2 - Agreement of Merger of January 26, 2000, between
Starfest, Inc. and Concierge, Inc.*
2.1 - Stock Purchase Agreement of March 6, 2000 between
Starfest, Inc. and MAS Capital, Inc.*
2.2 - Amendment No. 1 to Agreement of Merger of January 26,
2000 between Starfest, Inc. and Concierge, Inc.+
2.3 - Amended Agreement of Merger of January 19, 2001 between
Starfest, Inc. and Concierge, Inc.+++
3.1 - Articles of Incorporation and Amended Articles of
Incorporation of Starfest, Inc.*
3.2 - Bylaws of Starfest, Inc.*
3.3 - Articles of Incorporation of Concierge, Inc.**
3.4 - Bylaws of Concierge, Inc.**
11
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.*+
10 - 1999 Stock Option Plan adopted by Starfest, Inc.*
10.1 - Manufacturing Services Agreement between Concierge,
Inc. and XeTel Corporation.+
10.2 - Service Level Agreement between Concierge, Inc. and
eAssist.com, Inc.***+
10.3 - Independent Consulting Agreement between Concierge,
Inc. and Dave Cook Consulting.***+
10.4 - CD-ROM Storage and Fulfillment Agreement between
Concierge, Inc. and Point To Point LLC.+++
* Previously filed with Form 8-K12G3 on March 10, 2000; Commission File
No. 000-29913, incorporated herein.
** Previously filed with Form S-4 on June 8, 2000; Commission File No.
333-38838, incorporated herein.
+ Previously filed with Amendment No. 1 to Form S-4 on September 5,
2000; Commission File No. 333-38838, incorporated herein.
+++ Previously filed with Amendment No. 3 to Form S-4 on January 31,
2001, Commission File No. 333-38838, incorporated herein.
*+ Previously filed with Form 8-K on April 2, 2002; Commission File No.
000-29913, incorporated herein.
(B) Forms 8-K
Form 8-K - Item 2. Acquisition or Disposition of Assets March 20, 2002,
filed April 2, 2002, reporting the merger between Starfest, Inc. and Concierge,
Inc. and the resulting change of name from Starfest, Inc. to Concierge
Technologies, Inc.
12
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the Registrant
has caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Dated: May 14, 2002 CONCIERGE TECHNOLOGIES, INC.
By:/s/Allen E. Kahn
-----------------------------------
Allen E. Kahn, President
13