FULLER, TUBB, POMEROY & STOKES
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
201 ROBERT S. KERR AVENUE, SUITE 1000
OKLAHOMA CITY, OK 73102
G. M. FULLER (1920-1999) TELEPHONE 405-235-2575
JERRY TUBB FACSIMILE 405-232-8384
DAVID POMEROY
TERRY STOKES
-------
OF COUNSEL:
MICHAEL A. BICKFORD
THOMAS J. KENAN
ROLAND TAGUE
BRADLEY D. AVEY
October 17, 2002
Office of Small Business
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Concierge Technologies, Inc.
Commission File No. 333-38838
Amendment No. 1 to Form 10-KSB
FYE 06-30-02
Gentlemen:
The attached Amendment No. 1 to Form 10-KSB is being filed solely to (1)
add Item 14 - Controls and Procedures; and (2) add Certifications of the Chief
Executive Officer and Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
If you have any questions that might be properly handled by conversing with
the undersigned, please do so at my telephone number 405-235-2575, fax number
405-232-8384, or e-mail at kenan@ftpslaw.com.
Sincerely,
/s/ Thomas J. Kenan
Thomas J. Kenan
e-mail: kenan@ftpslaw.com
cc: David W. Neibert, President
Hamid Kabani, C.P.A.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO 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, 2002
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)
(Previous name of Starfest, Inc. was changed on March 20, 2002)
California 333-38838 95-4442384
---------- --------- ----------
(state of (Commission File Number) (IRS Employer
incorporation) I.D. Number)
22048 Sherman Way, Suite 303
Canoga Park, CA 91303
(818) 610-0310
-------------------------------------------------------
(Address and telephone number of registrant's principal
executive offices and principal place of business)
531 Main Street, #963
El Segundo, CA 90245
(310) 645-1582
------------------------------------------------------
(Former name or address, if changed since last report)
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]
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: $1,112,461 computed by reference to the
$0.017 average of the bid and asked price of the Company's Common Stock on
October 3, 2002.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 126,292,749 shares of Common
Stock, $0.001 par value, on April 8, 2002.
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]
ii
TABLE OF CONTENTS
Page
----
Item 1. Description of Business 1
Business Development 1
Business of Concierge Technologies 2
Government Approval of Principal Products 2
Government Regulations 3
Dependence on Major Customers 3
Seasonality 3
Research and Development 3
Environmental Controls 3
Patents, Trademarks, Copyrights and
Intellectual Property 3
Number of Employees 3
Item 2. Description of Property 3
Facilities 3
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security
Holders 4
Item 5. Market for Common Equity and Related Stockholder
Matters 4
Holders 5
Rule 144 and Rule 145 Restrictions on Trading 5
Dividends 6
Penny Stock Regulations 7
The Penny Stock Suitability Rule 7
The Penny Stock Disclosure Rule 8
Effects of the Rule 9
Recent Sales of Unregistered Securities 9
Item 6. Plan of Operations 10
Liquidity 11
Item 7. Financial Statements 12
Item 8. Changes in and Disagreements With Accountants On
Accounting and Financial Disclosure 27
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance with
Section 16(a) of the Exchange Act 27
Section 16(a) Beneficial Ownership
Reporting Compliance 28
Item 10. Executive Compensation 28
Long-Term Compensation 29
Item 11. Security Ownership of Certain Beneficial Owners
and Management 29
Item 12. Certain Relationships and Related Transactions 30
iii
Item 13. Exhibits and Reports on Form 8-K 31
(a) Exhibits 31
(b) Reports on Form 8-K 31
Item 14 Controls and Procedures 32
Signatures 32
iv
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,
- Starfest was the surviving corporation,
- 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,
- The fiscal year-end of the corporation was changed to June 30,
- The officers and directors of Concierge became the officers and
directors of Starfest, and
- The name of Starfest was changed to "Concierge Technologies, Inc."
Business of Concierge Technologies
The business of Concierge Technologies is to conceptualize, design,
develop, distribute and market software, hardware and services within the
personal communications industry. As of June 30, 2002, we offer one product,
which is known by the name "Personal Communications Attendant" or the "PCA". The
PCA is in the form of a CD containing a proprietary program application coupled
with licensed voice recognition and text-to-speech software than enables a user
to retrieve email messages from any remote telephone and have the text of the
email message "read" in a computer generated voice. This product was developed
and manufactured in limited quantities prior to the completion of the merger
with Starfest. Although the product was available for distribution, the Company
was without sufficient funds to properly market the product in timely fashion.
As a result of the passing time, later introduction of new operating systems,
changes in email client code, changes in consumer buying habits, the expanding
presence of wireless Internet and email appliances, and the declining use of
dial-up voice modems have all contributed to the need to upgrade the PCA product
prior to re-engaging an aggressive marketing effort.
With the PCA in its current form, we do not expect any significant revenues
to be generated from retail sales. Until such time as the PCA can be upgraded to
a later format, we will only offer the product for sale via its promotion on our
website, www.pcahome.com or www.conciergetech.com. The retail price of the PCA
is $39.95.
Governmental Approval of Principal Products. No governmental approval is
required in the U.S. for Concierge's products.
2
Government Regulations. There are no governmental regulations in the U.S.
that apply to Concierge's products.
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 fourth calendar quarter
associated with the year-end holidays.
Research and Development. Concierge expended no funds on research and
development in 2001.
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.
Number of Employees. On September 30, 2002, we employed no persons full
time and no persons part time.
ITEM 2. DESCRIPTION OF PROPERTY
We own no plants, real property or personal property.
Facilities
Our office facilities are co-located with those of our President and
C.O.O., David Neibert, at 22048 Sherman Way, Suite 303, 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.
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 their investment as a result of a breach of contract.
3
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.
As of October 3, 2002, Brookside has not attempted to enforce its judgment.
We are in discussions with representatives from Brookside concerning a
resolution of the matter. As of October 3, 2002, 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 which a governmental
authority is contemplating.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On January 25, 2002 the shareholders of Starfest voted to approve the
merger with Concierge Technologies, Inc.
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 and asked prices, as reported by the OTC Bulletin Board, are as
follows for fiscal years ended June 30, 2000, 2001 and 2002. The quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
Average Daily
High Low Shares Traded
---- --- --------------
Calendar 1999:
3rd Qtr. 0.2000 0.0600 105,733
4th Qtr. 0.1050 0.0450 95,998
Calendar 2000:
1st Qtr. 2.3125 0.075 852,552
2nd Qtr. 2.9688 0.3700 215,654
3rd Qtr. 0.7813 0.35 108,162
4th Qtr. 0.41 0.09375 186,584
Calendar 2001:
1st Qtr. 0.18 0.081 79,969
2nd Qtr. 0.25 0.08 146,105
3rd Qtr. 0.215 0.035 110,617
4th Qtr. 0.26 0.05 98,005
Calendar 2002:
1st Qtr. 0.14 0.049 41,877
2nd Qtr. 0.15 0.035 104,629
Holders
On September 30, 2002 there were approximately 285 holders of record of our
common stock. Approximately 63,608,655 shares are held for approximately 4,200
owners of our common stock in the name of "Cede & Co.," which is the record
holder for shares in numerous brokerage accounts.
Rule 144 and Rule 145 Restrictions on Trading
All shares of common stock of the post-merger company issued in the merger
to the stockholders of Concierge, Inc. were issued pursuant to registration with
the Commission. Nevertheless, there are certain restrictions on the transfer
for value of the shares received in the merger by the affiliates of Concierge,
Inc. who may be deemed to be underwriters.
Securities and Exchange Commission rules define as "affiliates" a
corporation's executive officers, directors and other persons who, by any
manner, exercise control over the corporation's direction and policies. The
affiliates of Concierge, Inc. at the time of the merger, in order to sell their
shares received in the merger, must either register them for resale or comply
with the resale provisions set forth in paragraph (d) of the Commission's Rule
145, unless some other exemption-from-registration provision is available. The
resale provisions of paragraph (d) of Rule 145 refer to certain provisions of
the Commission's Rule 144 and require, for sales of the shares by such
affiliates, that:
- the company must have been subject to the reporting requirements
of Section 13 or Section 15(d) of the Securities Exchange Act for
at least 90 days (which is the case, here),
- the company must have filed all reports with the Commission
required by such rule during the twelve months preceding such
sale (or such shorter period that the company was required to
file such reports) (which is the case, here),
- transfers for value by such affiliates can occur only either (1)
through broker transactions not involving the solicitation of
buyers or (2) directly to market-makers, and
- each such affiliate can transfer for value, during a 90-day
period, no more shares than the greater of one percent of all
issued and outstanding shares of common stock of the company
(119,957,713 shares immediately after the merger) or the average
weekly volume of trading in such common stock reported through
the automated quotation system of Nasdaq or the Bulletin Board
during the four calendar weeks prior to placing the sell order
with a broker-dealer.
5
The above resale provisions of Rule 145 shall continue for such affiliates
for one year after the merger - until March 20, 2003. Then, only the company's
reporting requirement shall continue. When any such affiliate has ceased to be
an affiliate of the post-merger company for at least three months, and provided
at least two years have elapsed since the date of the merger, then even the
requirement that the company file reports with the Commission will no longer be
required for such a former affiliate to sell any of the shares acquired in the
merger.
The following table allocates the post-merger company's common stock
between restricted and non-restricted stock for Concierge, Inc.'s and Starfest's
affiliates at the time of the merger:
Percent of No. of Shares Restricted
Post-Merger Company No. of Shares Total Issued by Rules 144 and 145
------------------- ------------- ------------ ------------------------
Authorized shares 190,000,000 - -
Issued and outstanding
shares 126,292,749 100.0 66,661,909
----------- ----- ----------
Issued and outstanding
shares to be controlled
by Concierge, Inc.'s Rule 145:
affiliates 59,993,856 47.5 59,993,856
Issued and outstanding
shares to be controlled Rule 144:
by Starfest's affiliates 860,000 0.7 860,000
Shares issued for
services or cash in
the post-merger period Rule 144:
to non-affiliates 5,808,053 4.6 5,808,053
Shares in the "public
float," subject to no
restrictions on trading 59,630,840 47.2 -
----------- ----- ---------
126,292,749 100.0 66,661,909
The 860,000 shares controlled by Starfest's affiliates were issued in 2000
and will continue to be "restricted" shares until they have been held for two
years. The same is true of the 1,402,001 other shares of Starfest issued in
2000. After such shares have been held for one year, they may be sold pursuant
to the provisions of Rule 144, the principal ones of which are set forth above
on pages 5 and 6 as "bullet points" in the second paragraph of this heading.
No equity of Starfest is subject to outstanding options or warrants to
purchase, or securities convertible into, equity of the company.
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
6
- from retained earnings, or
- if after the dividend is made,
- its tangible assets would equal at least 11/4 times its
liabilities, and
- its current assets would at least equal its current
liabilities, or
- 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.
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:
- sells for less than $5 a share.
- is not listed on an exchange or authorized for quotation on The
Nasdaq Stock Market, and
- 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.
7
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:
- transactions not recommended by the broker-dealer,
- sales to institutional accredited investors,
- 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
- 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:
- 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,
- A warning that salespersons of penny stocks are not impartial
advisers but are paid to sell the stock,
- The statement that federal law requires the salesperson to tell the
potential investor in a penny stock -
- the "offer" and the "bid" on the stock, and
8
- the compensation the salesperson and his firm will receive for
the trade,
- 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,
- A warning that a large spread between the bid and the offer price can
make the resale of the stock very costly,
- Telephone numbers a person can call if he or she is a victim of
fraud,
- Admonitions -
- to use caution when investing in penny stocks,
- to understand the risky nature of penny stocks,
- to know the brokerage firm and the salespeople with whom one is
dealing, and
- 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
Our company sold the following shares of its common stock during the last
three years without registering the shares:
9
No. of Value of
Date Shares Name of Purchaser Type of Consideration Consideration
08-12-02 500,000 Samuel Wu Cash $ 30,000
06-20-02 2,532,581 John Everding Services $ 119,031
08-12-02 2,870,259 Ken Lamkin Services $ 134,873
08-12-02 405,213 Trudy Self Services $ 19,041
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.
ITEM 6. PLAN OF OPERATIONS
Our plan of operation for the next twelve months is to source and secure a
development partner to upgrade the PCA to a viable commercial product. We have
initiated discussions with several companies who have the expertise to further
the development of the PCA to modern operating systems, and to also provide a
multi-user version as well as other feature set upgrades. The final nature of
the proposed relationship between us and any development partner is yet to be
determined. Once the multi-user, upgraded version of the PCA is completed, we
intend to continue our marketing efforts via direct mail, bundled OEM software
with new PCs, web based advertising and a physical presence at retail points of
purchase. In order to complete the development and initiate the marketing
efforts, we project that $500,000 of expenses will be incurred prior to
achieving a break-even cash flow position. There is currently no assurance that
we will be able to source the needed funds, or that if we are successful in
sourcing funds through either debt or equity financing, that such funds will be
sufficient to achieve profitability.
In addition to pursuing an upgrade to its current product offering, we
intend to aggressively pursue other opportunities in the field of communication
services by partnering with start-up and development stage companies whose
products are in the introductory stages. Through a combination of product
offerings including wireless airtime, wireless Internet access, software
offerings, and subscription services, we hope to build a vertically integrated
company able to respond in timely fashion to the consumer demand for
communications services. Our management believes that such a vertically
integrated company will be worth, as a whole, more than the sum of the otherwise
separate entities. As such, management expects the consolidated company to be a
more attractive investment opportunity for the financial community in general.
Leveraging the expertise of its management and directors, who are currently
providing their time without charge, we have established contact with several
likely strategic partners. Should we be successful in our negotiations,
management hopes to be able to acquire control of certain of these targeted
companies through an equity exchange and cash compensation. Management is not
seeking a transaction that would result in a change of control; however, it is
10
likely that, if the transactions being contemplated by management are to be
carried through to conclusion, our current shareholders would suffer some
dilution. Further dilution to current shareholders is also possible, and likely,
to occur simultaneous with a successful financing effort.
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 the company to co-location with his firm, The
Wallen Group. We do not currently pay rent and have no lease for the facilities
being provided by Mr. Neibert. He has agreed to provide his services at no
charge to the company until such time as we are in a financial position to pay a
reasonable salary commensurate with compensation packages paid to other
executives of publicly traded companies in similar stages of development within
the personal communications industry.
As of September 30, 2002, we had no employees other than unpaid officers
and no fixed overhead other than the variable cost of web hosting, legal and
professional fees, fees charged by our transfer agent and minimum tax payments.
We own no office fixtures, furniture or appliances.
Liquidity
Our only source of operating capital has been funding sourced through
insiders or shareholders under the terms of unsecured promissory notes. The
amount of borrowed funds have 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 pay down 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 earlier in the fiscal year.
Although our management will continue to provide service to the Company for
the near term without pay, we will still require additional funding to maintain
the corporation and further the development of the PCA product. Management hopes
to source the needed funds through a debt financing of the acquisitions targeted
for the next several months. If the financing is not available, the acquisitions
themselves will also not be completed. In the event either the financing or the
proposed acquisitions are not completed, our funds will be exhausted and
continuing operations may be impossible.
11
ITEM 7. FINANCIAL STATEMENTS INDEX
The financial statements of the company appear as follows:
Independent Auditors' Report 13
Balance Sheet, June 30, 2002 14
Statements of Operations, Twelve Months Ended June 30,
2002 and June 30, 2001 and the Period from
September 20, 1996 (Inception) to June 30, 2002 15
Statements of Changes in Stockholders' Equity (Deficit),
Advance Subscriptions and Common Stock
Subject to Contingency for the Period September 30,
1996 (Inception) to June 30, 2002 16
Statements of Cash Flows, Years Ended June 30, 2002
and June 30, 2001 and the Period from
September 20, 1996 (Inception) to June 30, 2002 17
Notes to Financial Statements 18
12
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors
Concierge Technologies, Inc.
We have audited the accompanying balance sheet of Concierge Technologies, Inc.
(a development stage company) as of June 30, 2002 and the related statements of
operations, stockholders' equity and cash flows for the period then ended and
for the period from September 20, 1996 (inception), to June 30, 2002. 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 audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position Concierge Technologies, Inc. as of
June 30, 2002 and the results of its operations and its cash flows for the
period then ended and from September 20, 1996 (inception), to June 30, 2002, in
conformity with accounting principles generally accepted in the United States of
America.
The Company's 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 $2,758,565 at June 30, 2002, including a net loss of
$478,229 during the year ended June 30, 2002. These factors as discussed in Note
3 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 3. 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
Fountain Valley, California
September 26, 2002
13
CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
BALANCE SHEET
JUNE 30, 2002
ASSETS
------
CURRENT ASSETS:
Cash & cash equivalents $ 655
Prepaid Expenses 245,800
---------
Total current assets 246,455
EQUIPMENT, net 903
---------
$ 247,358
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
--------------------------------------
CURRENT LIABILITIES:
Accrued expenses $ 348,796
Loans Payable-Shareholders 304,208
-----------
Total current liabilities 653,004
SUBSCRIPTIONS RECEIVED FOR COMMON STOCK
SUBJECT TO CONTINGENCY 1,663,290
COMMON STOCK ISSUED SUBJECT TO CONTINGENCY 266,610
STOCKHOLDERS' DEFICIT:
Preferred stock, par value $.001 per share; 10,000,000
shares authorized; none issued
Common stock, no par value; 190,000,000 shares
authorized; issued and outstanding 122,590,294 239,089
Shares to be issued 183,930
Deficit accumulated during the development stage (2,758,565)
-----------
Total stockholders' deficit (2,335,546)
-----------
$ 247,358
===========
The accompanying notes are an integral part of these financial statements.
14
CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 2002 AND 2001 AND THE PERIOD FROM
SEPTEMBER 20, 1996 (INCEPTION) TO JUNE 30, 2002
SEPTEMBER 20,
JUNE 30, JUNE 30, 1996 (INCEPTION)
2002 2001 TO JUNE 30, 2002
----------- ------------ ----------------
REVENUE $ - $ - $ -
COSTS AND EXPENSES
Product launch Expenses - 230,241 1,077,785
General & Administrative Expenses 395,029 313,039 1,315,053
----------- ------------ -----------
TOTAL COSTS AND EXPENSES 395,029 543,280 2,392,838
OTHER INCOME/(EXPENSES)
Settlement income, net 52,600 - 52,600
Litigation settlement (135,000) - (135,000)
----------- ------------ -----------
TOTAL OTHER INCOME/(EXPENSES) (82,400) - (82,400)
----------- ------------ -----------
NET LOSS BEFORE INCOME TAXES (477,429) (543,280) (2,475,238)
Provision of Income Taxes 800 800 4,800
----------- ------------ -----------
NET LOSS $ (478,229) $ (544,080) $(2,480,038)
=========== =========== ===========
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING,
BASIC AND DILUTED 120,134,037 120,057,713
=========== ===========
BASIC AND DILUTED NET LOSS
PER SHARE $ (0.004) $ (0.005)
=========== ===========
The accompanying notes are an integral part of these financial statements.
15
CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT), ADVANCE
SUBSCRIPTIONS
AND COMMON STOCK SUBJECT TO CONTINGENCY
FOR THE PERIOD SEPTEMBER 20, 1996 (INCEPTION) TO JUNE 30, 2002
Common Stock Common Stock
Number of Par Additional Shares Accumulated Stockholders' Advance subject to
shares value Paid In Capital to be issued Deficit Equity (deficit) Subscriptions contingency
--------- ----- --------------- ------------ ----------- ---------------- ------------- -------------
Common Stock issued
for cash though
June 30, 1997 176,306 $ 1,763 $ 106,162 - $ - $ 107,925 $ - $ -
Common stock issued
for services through
June 30, 1997 621,545 6,215 - - - 6,215 - -
Net loss through
June 30, 1997 - - - - (96,933) (96,933) - -
----------------------------------------------------------------------------------------------------------
Balance at
June 30, 1997 797,851 7,978 106,162 - (96,933) 17,207 - -
Common Stock issued
for cash in the year
ended June 30, 1998 137,475 1,375 194,650 - - 196,025 - -
Common stock issued
for services in
the year ended
June 30, 1998 22,550 226 - - - 226 - -
Net loss for the year
ended June 30, 1998 - - - - (283,891) (283,891) - -
----------------------------------------------------------------------------------------------------------
Balance at June 30,
1998 957,876 9,579 300,812 - (380,824) (70,433) - -
Common Stock issued
for cash in the year
ended June 30, 1999 208,000 - - - - - - 60,996
Common stock issued
for services in
the year ended
June 30, 1999 450 - - - - - - 4
Net loss for the year
ended June 30, 1999 - - - - (89,919) (89,919) - -
----------------------------------------------------------------------------------------------------------
Balance at
June 30, 1999 1,166,326 9,579 300,812 - (470,743) (160,352) - 61,000
Acquisition and
retirement of
Common shares (262,000) (2,620) - - - (2,620) - -
Common Stock issued
for cash in the year
ended June 30, 2000 117,184 - - - - - - 202,061
Common stock issued
for services in
the year ended
June 30, 2000 354,870 - - - - - - 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) (986,986) - -
----------------------------------------------------------------------------------------------------------
Balance at
June 30, 2000 1,376,380 6,959 300,812 - (1,457,729) (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) (544,080) - -
----------------------------------------------------------------------------------------------------------
Balance at
June 30, 2001 1,376,380 6,959 300,812 - (2,001,809) (1,694,038) 1,663,290 266,610
Recapitalization
upon merger 118,681,333 113,099 (300,812) - (278,527) (466,240) - -
Stock subscription
received for
500,000 shares - - - 29,983 - 29,983 - -
Stock issued for
services 2,532,581 119,031 - - - 119,031 - -
Stock to be issued
for services -
3,275,472 shares - - - 153,947 - 153,947 - -
Net loss for the year
ended June 30, 2002 - - - - (478,229) (478,229) - -
----------------------------------------------------------------------------------------------------------
Balance at
June 30, 2002 122,590,294 $239,089 $ - $ 183,930 $(2,758,565) $ (2,335,546) $ 1,663,290 $ 266,610
==========================================================================================================
The accompanying notes are an integral part of these financial statements.
16
CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2002 AND 2001 AND THE PERIOD FROM
SEPTEMBER 20, 1996 (INCEPTION) TO JUNE 30, 2002
SEPTEMBER 20,
JUNE 30, JUNE 30, 1996 (INCEPTION)
2002 2001 TO JUNE 30, 2002
----------- ------------ ----------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (478,229) $ (544,080) $(2,480,038)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 1,207 2,582 12,007
Stock issued for services 119,031 - 126,405
Stock to be issued for services 153,947 153,947
Increase in current assets:
Prepaid Expenses - - (245,800)
Increase/(decrease) in
current liabilities:
Accrued expenses 173,521 (48,012) 264,264
Payroll tax payable - (4,400) -
---------- ----------- -----------
Net cash used in
operating activities (30,523) (593,910) (2,169,215)
---------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Note receivable -
related party - - (100,000)
Acquisition of property
& equipment - - (12,910)
---------- ----------- -----------
Net cash used in investing
activities - - (112,910)
---------- ----------- -----------
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 (repayments of)
related party loans 500 22,000 22,500
---------- ----------- -----------
Net cash provided by financing
activities 30,483 509,500 2,282,780
---------- ----------- -----------
NET INCREASE/(DECREASE) IN CASH &
CASH EQUIVALENTS (40) (84,410) 655
CASH & CASH EQUIVALENTS,
BEGINNING BALANCE 695 85,105 -
---------- ----------- -----------
CASH & CASH EQUIVALENTS,
ENDING BALANCE $ 655 $ 695 $ 655
========== ========== ===========
The accompanying notes are an integral part of these financial statements.
17
CONCIERGE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO 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 11). The Company is the
surviving entity as a result of the merger.
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.
Principles of Recapitalization
The accompanying financial statements for the period ended June 30, 2002 and
2001 include the accounts of the CI for the twelve-month periods ended June 30,
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. Proforma
financial statements are not presented as the net assets of the Company were
insignificant prior to merger.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 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.
Equipment
Equipment is carried at cost. Depreciation of equipment is provided using the
straight-line method over the estimated useful lives of the assets. Expenditures
for maintenance and repairs are charged to expense as incurred.
18
CONCIERGE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Income taxes
Deferred income tax assets and liabilities are computed annually for differences
between the financial statements and tax basis of assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted laws
and rates applicable to the periods in which the differences are expected to
affect taxable income (loss). Valuation allowance is established when necessary
to reduce deferred tax assets to the amount expected to be realized.
Basic and diluted net loss per share
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
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation". SFAS No. 123 prescribes accounting and reporting standards for
all stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using the existing accounting rules prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for stock issued to employees" (APB 25) and
related interpretations with pro forma disclosure of what net income and
earnings per share would have been had the Company adopted the new fair value
method. The company uses the intrinsic value method prescribed by APB25 and has
opted for the disclosure provisions of SFAS No.123. The implementation of this
standard did not have any material impact on the Company's financial statements.
Issuance of shares for service
Valuation of shares for services is based on the estimated fair market value of
the services performed.
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.
Accounting for the costs of computer software developed or obtained for internal
use
In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants (ASEC of AICPA) issued Statement of
position (SOP) No. 98-1, "Accounting for the costs of computer software
developed or obtained for internal use", effective for fiscal years beginning
19
CONCIERGE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
after December 15, 1998. SOP N0. 98-1 requires that certain costs of computer
software developed or obtained for internal use be capitalized and amortized
over the useful life of the related software. The Company adopted this standard
in fiscal year 1999 and the implementation of this standard did not have a
material impact on its financial statements.
Web site development costs
In March 2000, the Emergency Issues Task Force (EITF) of FASB issued its
consensus under EITF-00-02. Per the consensus, certain costs incurred in the
development of a Web site should be capitalized. According to the EITF, those
costs incurred in developing a software program should be capitalized in
accordance with Statement of Position (SOP) 98-1, "Accounting for the costs of
Computer Software Developed or obtained for internal use". Capitalization of
software development costs begins upon the establishment of technological
feasibility. The establishment of technological feasibility and the ongoing
assessment of recoverability of capitalized software development costs require
considerable judgment by management with respect to certain external factors,
including, but not limited to, anticipated future revenues, estimated economic
life, and changes in software and hardware technologies. The Company expenses
web site development costs, which are allocated for preliminary project
development, web site general and maintenance.
Costs of start-up activities
In April 1998, the ASEC of AICPA issued SOP No. 98-5, "Reporting on the costs of
start-up activities", effective for fiscal years beginning after December 15,
1998. SOP 98-5 requires the costs of start-up activities and organization costs
to be expensed as incurred. The Company adopted this standard in fiscal year
1999 and the implementation of this standard did not have a material impact on
its financial statements.
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 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, and SOP
98-9, Modification of SOP 97-2, With Respect to Certain Transactions. 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
20
CONCIERGE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
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, 2002 and 2001.
Allowance for doubtful accounts
In determining the allowance to be maintained, management evaluates many factors
including industry and historical loss experience. The allowance for doubtful
accounts is maintained at an amount management deems adequate to cover estimated
losses. The company did not have accounts receivable or allowance for doubtful
accounts as of June 30, 2002 and 2001.
Advertising
The Company expenses advertising costs as incurred.
Reclassifications
Certain prior period amounts have been reclassified to conform with the current
period presentation.
2. RECENT PRONOUNCEMENTS
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.
Adoption of SFAS No. 144 does not have a material impact on the Company's
financial statements.
In May 2002, the Board issued SFAS No. 145, Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ("SFAS
145"). SFAS 145 rescinds the automatic treatment of gains or losses from
extinguishments of debt as extraordinary unless they meet the criteria for
extraordinary items as outlined in 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. SFAS
145 also requires sale-leaseback accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions and makes
various technical corrections to existing pronouncements. The provisions of SFAS
145 related to the rescission of FASB Statement 4 are effective for fiscal years
beginning after May 15, 2002, with early adoption encouraged. All other
provisions of SFAS 145 are effective for transactions occurring after May 15,
2002, with early adoption encouraged. The Company does not anticipate that
adoption of SFAS 145 will have a material effect on its earnings or financial
position.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." This statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." This statement
requires that a liability for a cost associated with an exit or disposal
21
CONCIERGE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
activity be recognized when the liability is incurred. Under EITF Issue 94-3, a
liability for an exit cost, as defined, was recognized at the date of an
entity's commitment to an exit plan. The provisions of this statement are
effective for exit or disposal activities that are initiated after December 31,
2002 with earlier application encouraged. The Company does not expect adoption
of SFAS No. 146 to have a material impact, if any, on its 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 year ended June 30, 2002 and the Company has accumulated deficit of
$2,758,565 at June 30, 2002, including a net loss of $478,229 during the year
ended June 30, 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 year ended June 30, 2002, towards (i) obtaining
additional equity (ii) management of accrued expenses and accounts payable (iii)
evaluation of its distribution and marketing methods.
Management believes that the above actions will allow the Company to continue
operations through the next fiscal year.
4. EQUIPMENT
June 30, 2002
---------------
Equipment $ 12,910
Less: Accumulated depreciation 12,007
---------
$ 903
=========
5. 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.
22
CONCIERGE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
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.
6. NOTES PAYABLE - RELATED PARTIES
The Company has notes payable to shareholders amount $5,000 due September 30,
2002 and $8,000 due February 15, 2003 with interest rate of 10% per annum on
both. The remaining notes payable to shareholders of $291,208 are non-interest
bearing, unsecured and due on demand.
7. INCOME TAXES
No provision was made for Federal income tax since the Company has significant
net operating loss carryforwards. Through June 30, 2002, the Company incurred
net operating losses for tax purposes of approximately $2,480,000. Differences
between financial statement and tax losses consist primarily of amortization
allowance, was immaterial at June 30, 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 June 30, 2002 was approximately $992,000. A 100% valuation allowance has been
established against the deferred tax assets, as the utilization of the loss
carrytforwards cannot reasonably be assured.
8. 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. For the
reasons stated in Note 9 below with regard to sales of securities during the
period from July 1 through September 15, 2000, which securities may have been
sold without the benefit of an exemption from registration, all sales of
securities by CI from and after December 1998 until the merger with Concierge
Technologies, Inc. could be integrated with these sales in 2000 and could
therefore be deemed to have also been issued without the benefit of an exemption
from federal or state registration. 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 June 30, 2002,
were 680,504 for cash and services amounting $266,610.
23
CONCIERGE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
9. 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. Per the subscription agreement, 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 11, 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 June 30, 2002.
10. SHARES ISSUED AND TO BE ISSUED
During the year ended June 30, 2002, the Company issued 2,532,581 shares for
consulting services of $$119,031. The Company did not issue any shares in the
year ended December 31, 2001.
During the year ended June 30, 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. As of June 30, 2002, the Company has not issued any shares
for the subscription received. During the year ended June 30, 2002, the Company
incurred consulting expenses of $153,947 for which 3,275,472 shares of common
stock will be issued. All of these shares were issued in August 2002.
11. 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
24
CONCIERGE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
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.
12. 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 $800 for income tax in the years ended June 30, 2002 and 2001.
Total amount paid for income taxes from September 20, 1996 (inception) through
March 31, 2002 amounted to $4,800. The Company paid $158 for interest during the
periods ended June 30, 2002 and $-0- for 2001. Total amount paid for interest
from September 20, 1996 (inception) through June 30, 2002, amounted to $4,385.
The Company issued 2,532,581 shares of common stock for consulting fees
amounting $119,031 during the fiscal year ended June 30, 2002. Valuation of
shares is based on the estimated fair market value of the services performed.
The Cash flow statements do not include effect of merger with CI.
13. 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 $18,504 and $18,501 for the year ended June
30, 2002 and 2001, respectively.
Future minimum lease payments associated with the lease are as follow:
Twelve months ended June 30 Amount
------------------------------- ------
2003 3,084
14. LITIGATION
Concierge, Inc. filed a complaint against Emerald-Delaware, Inc. (ED), in the
superior court for the County of Contra Costa on March 9, 2001 for breach of
contract, negligence, fraud etc in relation to development of its products PCA.
ED filed a cross complaint in the same court. The parties reached a settlement
on October 9, 2001, whereby ED agreed to compensate CI by $50,000. The
settlement amount was received during the year ended June 30, 2002 and has been
reflected as settlement income in the financial statements.
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
25
CONCIERGE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
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 as
litigation settlement in the financial statements.
26
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
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 September 30, 2002 and a description of the business experience
of each.
Office Held Term of
Person Offices Since Office
David W. Neibert President and Director 06-2002 2003
James E. Kirk Secretary and Director 09-1996 2003
Samuel Wu Director 03-2002 2003
Allen E. Kahn Chairman, CEO, CFO and
Director 09-1996 2003
Patrick Flaherty Director 08-2002 2003
David W. Neibert. Mr. Neibert has been the President of Concierge
Technologies since June 17, 2002. Prior to assuming the duties of President,
Mr. Neibert was, and remains, a director of Concierge Technologies since 1999.
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 Midland USA, 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 globally to the
consumer, government and commercial markets and operated a nationwide land
mobile radio network in the U.S. Intek Global Corporation was subsequently
acquired by their majority shareholder, Securicor plc of Sutton Surrey, England.
Mr. Neibert reported to offices located in Los Angeles, California, Kansas City,
Missouri New York, New York, and Midsomer Norton, England during his tenure with
Intek Global Corporation from 1992 until 1997.
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.
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
27
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.
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.
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 that 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 August of 2002.
There are no family relationships between the directors and officers.
There are no significant employees of Concierge who are not described above.
Section 16(a) Beneficial Ownership Reporting Compliance
------------------------------------------------------------
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the registrant during its most recent fiscal year and Forms 5 and
amendments thereto furnished to the registrant with respect to its most recent
fiscal year, and a review of any written representations received by the
registrant from the following persons, no person, who was at any time a
director, officer or beneficial owner of more than ten percent of any class of
equity securities of the registrant registered pursuant to Section 12, failed to
file on a timely basis, as disclosed in the above Forms, the reports required by
Section 16(a) of the Exchange Act during the most recent fiscal year or prior
fiscal years.
ITEM 10. EXECUTIVE COMPENSATION
The following information concerns the compensation of our chief executive
officer for the last three completed fiscal years. No other executive officers
28
or individuals received total annual salary and bonus that exceeded $100,000
during the last three completed fiscal years.
Shares of
Name of Chief Executive Officer Year Cash Salary Common Stock Awarded
Allen Kahn 2002 0 0
Michael Huemmer 2002 0 0
Michael Huemmer 2001 0 0
Michael Huemmer 2000 0 302,001(1)
Thomas J. Kenan 2000 0 0
Herb Gronauer 2000 0 0
-------------------------
(1) The value of the 302,001 shares of stock awarded to Mr. Huemmer was
$15,100 when the award was made, based upon the $0.045 bid price of the
stock on the OTC Bulletin Board the day the shares were awarded.
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, 2002. 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.
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
The table below sets forth the ownership, as of September 30, 2002 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.
29
Name and Address of Amount Percent of
Beneficial Owner Owned Class
---------------------- ------ -----------
Allen E. Kahn
7547 W. Manchester Ave., No. 325
Los Angeles, CA 90045 24,988,135 19.8%
Samuel C.H. Wu
1202 Tower 1, Admiralty Centre
18 Harcourt Road
Hong Kong, China 20,355,437 16.1%
Polly Force Co., Ltd.
1202 Tower 1, Admiralty Centre
18 Harcourt Road
Hong Kong, China 10,805,680(1) 8.6%
East Asia Strategic Holdings, Ltd.
1202 Tower 1, Admiralty Centre
18 Harcourt Road
Hong Kong, China 7,395,137 5.8%
F. Patrick Flaherty
637 29th Street
Manhattan Beach, CA 90266 4,727,485 3.7%
James E. Kirk
1401 Kirby, N.E.
Albuquerque, NM 87112 3,883,291 3.1%
David W. Neibert
24028 Clarington Drive
West Hills, CA 91304 715,876 (2)
Officers and Directors
as a Group (5 persons) 54,670,224 43.29%
(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) Less than one percent.
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
30
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 AND REPORTS ON FORM 8-K
(a) 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.**
10.1 - Agreement of Merger between Starfest, Inc. and
Concierge, Inc.*
*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.
(b) Reports on Form 8-K
Form 8-K - Item 2 - Acquisition or Disposition of Assets; Item 7 -
Articles of Merger of Starfest, Inc. and Concierge, Inc. filed with the
Secretary of State of Nevada on March 1, 2002 and Agreement of Merger between
31
Starfest, Inc. and Concierge, Inc. filed with the Secretary of State of
California on March 20, 2002; and Item 8 - Change in Fiscal Year (SEC File
#000-29913) filed April 2, 2002.
Item 14. Controls and Procedures
Evaluation of disclosure controls and procedures. We maintain controls and
procedures designed to ensure that information required to be disclosed in this
report is recorded, processed, accumulated and communicated to our management,
including our chief executive officer and our chief financial officer, to allow
timely decisions regarding the required disclosure. Within the 90 days prior to
the filing date of this report, our management, with the participation of our
chief executive officer and chief financial officer, carried out an evaluation
of the effectiveness of the design and operation of these disclosure controls
and procedures. Our chief executive officer and chief financial officer
concluded, as of fifteen days prior to the filing date of this report, that
these disclosure controls and procedures are effective.
Changes in internal controls. Subsequent to the date of the above
evaluation, we made no significant changes in our internal controls or in other
factors that could significantly affect these controls, nor did we take any
corrective action, as the evaluation revealed no significant deficiencies or
material weaknesses.
SIGNATURES
In accordance with Section 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.
By:/s/ David W. Neibert
Date: October 17, 2002 ------------------------------------------
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.
32
/s/ David W. Neibert
Date: October 17, 2002 ---------------------------------------------
David W. Neibert, President and Director
/s/ Allen E. Kahn
Date: October 17, 2002 ---------------------------------------------
Allen E. Kahn, Chief Executive Officer, Chief
Financial Officer and Director
/s/ F. Patrick Flaherty
Date: October 17, 2002 ---------------------------------------------
F. Patrick Flaherty, Director
/s/ James E. Kirk
Date: October 18, 2002 ---------------------------------------------
James E. Kirk, Secretary and Director
/s/ Samuel C.H. Wu
Date: October 18, 2002 ---------------------------------------------
Samuel C.H. Wu, Director
33
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
I, Allen E. Kahn, Chief Executive Officer of the registrant, certify that:
1. I have reviewed this annual report on Form 10-KSB of Concierge
Technologies, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: October 17, 2002 /s/ Allen E. Kahn
Allen E. Kahn
Chief Executive Officer
34
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
I, Allen E. Kahn, Chief Financial Officer of the registrant, certify that:
1. I have reviewed this annual report on Form 10-KSB of Concierge
Technologies, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: October 17, 2002 /s/ Allen E. Kahn
Allen E. Kahn
Chief Financial Officer
34
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the accompanying Annual Report of Concierge
Technologies, Inc. (the "Company") on Form 10-KSB for the year ended June 30,
2002 (the "Report"), I, Allen E. Kahn, Chief Executive Officer of the Company,
hereby certify that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Allen E. Kahn
Dated: October 17 , 2002
Allen E. Kahn
Chairman and Chief Executive Officer
The above certification is furnished solely pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and is not being filed as part of
the Form 10-K or as a separate disclosure document.
35
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the accompanying Annual Report of Concierge
Technologies, Inc. (the "Company") on Form 10-KSB for the year ended June 30,
2002 (the "Report"), I, Allen E. Kahn, Chief Financial Officer of the Company,
hereby certify that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Allen E. Kahn
Dated: October 17, 2002
Allen E. Kahn
Chief Financial Officer
The above certification is furnished solely pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and is not being filed as part of
the Form 10-K or as a SEPARATE DISCLOSURE DOCUMENT.
36