-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AezUNfxQwL9lGFErgJk1gf05A0RiAP0/CCsVb8Hq2O6dlzVAv1cEXnN/70N0lhIU eZniAi6fXJwhf8GIuUfjZQ== 0001010549-07-000228.txt : 20070524 0001010549-07-000228.hdr.sgml : 20070524 20070320171912 ACCESSION NUMBER: 0001010549-07-000228 CONFORMED SUBMISSION TYPE: 10KSB/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20060630 FILED AS OF DATE: 20070320 DATE AS OF CHANGE: 20070409 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCIERGE TECHNOLOGIES INC CENTRAL INDEX KEY: 0001005101 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 954442384 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10KSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-29913 FILM NUMBER: 07707226 BUSINESS ADDRESS: STREET 1: 22048 SHERMAN WAY STREET 2: SUITE 303 CITY: CANOGA PARK STATE: CA ZIP: 91303 BUSINESS PHONE: 8186100310 MAIL ADDRESS: STREET 1: 22048 SHERMAN WAY STREET 2: SUITE 303 CITY: CANOGA PARK STATE: CA ZIP: 91303 FORMER COMPANY: FORMER CONFORMED NAME: STARFEST INC DATE OF NAME CHANGE: 20000310 10KSB/A 1 cti10ksba063006.txt 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, 2006 or [_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Concierge Technologies, Inc. (Exact name of registrant as specified in its charter) Nevada 333-38838 95-4442384 ------ --------- ---------- (state of (Commission File Number) (IRS Employer incorporation) I.D. Number) 22048 Sherman Way, Suite 301 Canoga Park, CA 91303 (818) 610-0310 ---------------------------------------------------- (Address and telephone number of registrant's principal executive offices and principal place of business) Securities registered under Section 12(b) of the Exchange Act: Title of each class: None. Name of each exchange on which registered: None. Securities registered under Section 12(g) of the Exchange Act: Common Stock, $0.001 par value ------------------------------ (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes [X] No [_] State issuer's revenues for its most recent fiscal year: None. State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days: $595,676 computed by reference to the $0.0075 average of the bid and asked price of the Company's Common Stock on October 6, 2006. State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 142,292,747 shares of Common Stock, $0.001 par value, on October 6, 2006. 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] 2 TABLE OF CONTENTS Page ---- Item 1. Description of Business ..............................................1 Business Development .................................................1 Business of Concierge ................................................2 Number of Employees ..................................................3 Item 2. Description of Property ..............................................3 Facilities ...........................................................4 Item 3. Legal Proceedings ....................................................4 Item 4. Submission of Matters to a Vote of Security Holders ............................................4 Item 5. Market for Common Equity and Related Stockholder Matters .....................................................5 Holders ..............................................................5 Dividends ............................................................5 Penny Stock Regulations ..............................................6 The Penny Stock Suitability Rule ...............................6 The Penny Stock Disclosure Rule ................................7 Effects of the Rule ............................................8 Recent Sales of Unregistered Securities ..............................8 Item 6. Management's Discussion and Analysis or Plan of Operations .............................................8 Plan of Operations for the Next Twelve Months.........................9 Liquidity ...........................................................10 Off-Balance Sheet Arrangements.......................................10 Item 7. Financial Statements ................................................11 Item 8. Changes in and Disagreements With Accountants On Accounting and Financial Disclosure ...........................29 Item 8A. Controls and Procedures .............................................29 Item 8B. Other Information ...................................................29 Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act .............................29 Audit Committee and Audit Committee Financial Expert ...............................................31 Code of Ethics ......................................................31 Compliance with Section 16(a) of the Exchange Act ...................32 Item 10. Executive Compensation ..............................................32 Long-Term Compensation ..............................................33 Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.................33 Item 12. Certain Relationships and Related Transactions ......................34 Item 13. Exhibits ............................................................34 Item 14. Principal Accountant Fees and Services ..............................35 Signatures ...................................................................37 i PART I ITEM 1. DESCRIPTION OF BUSINESS Business Development Concierge Technologies, Inc. was incorporated in California on August 18, 1993 as "Fanfest, Inc." On August 29, 1995 its name was changed to Starfest, Inc., and on March 20, 2002 its name was changed to "Concierge Technologies, Inc." Pursuant to a Stock Purchase Agreement (the "Purchase Agreement") dated March 6, 2000 between MAS Capital, Inc., an Indiana corporation, the controlling shareholder of MAS Acquisition XX Corp. ("MAS XX"), an Indiana corporation, and Starfest, approximately 96.83 percent (8,250,000 shares) of the outstanding shares of common stock of MAS Acquisition XX Corp. were exchanged for $100,000 and 150,000 shares of common stock of Starfest in a transaction in which Starfest became the parent corporation of MAS XX. At the time of this transaction, the market price of Starfest's common stock was $1.50 bid at closing on March 7, 2000 on the OTC Bulletin Board. Accordingly, the consideration Starfest paid for the 96.83 percent interest was valued at $325,000. Concierge loaned to Starfest the $100,000 cash portion of the consideration evidenced by a no-interest, demand note. Michael Huemmer, the president of Starfest, loaned to Starfest the 150,000 shares of common stock of Starfest that was the stock portion of the consideration. Upon execution of the Purchase Agreement and the subsequent delivery of $100,000 cash and 150,000 shares of common stock of Starfest on March 7, 2000, to MAS Capital Inc., pursuant to Rule 12g-3(a) of the General Rules and Regulations of the Securities and Exchange Commission, Starfest became the successor issuer to MAS Acquisition XX Corp. for reporting purposes under the Securities and Exchange Act of 1934 and elected to report under the Act effective March 7, 2000. MAS XX had no business, no assets, and no liabilities at the time of the transaction. Starfest entered into the transaction solely for the purpose of becoming the successor issuer to MAS Acquisition XX Corp. for reporting purposes under the 1934 Exchange Act. Prior to this transaction, Starfest was preparing to register its common stock with the Commission in order to avoid being delisted by the OTC Bulletin Board. By engaging in the Rule 12g-3(a) transaction, Starfest avoided the possibility that its planned registration statement with the Commission would not be fully reviewed by the Commission's staff before an April 2000 deadline, which would result in Starfest's common stock being delisted on the OTC Bulletin Board. An agreement of merger was entered into between Starfest and Concierge, Inc., a Nevada corporation, on January 26, 2000. The proposed merger was submitted to the shareholders of each of Starfest and Concierge pursuant to a Form S-4 Prospectus-Proxy Statement filed with the Commission. 1 As described in Starfest's Form 8-K filed on April 2, 2002 with the Commission (Commission File No. 000-29913), the shareholders of Starfest and Concierge did approve the merger, and the merger was legally effected on March 20, 2002. Pursuant to the agreement of merger between Starfest and Concierge, o Starfest was the surviving corporation, o The shareholders of Concierge received pro rata for their shares of common stock of Concierge, 99,957,713 shares of common stock of Starfest in the merger, and all shares of capital stock of Concierge were cancelled, o The fiscal year-end of the corporation was changed to June 30, o The officers and directors of Concierge became the officers and directors of Starfest, and o The name of Starfest was changed to "Concierge Technologies, Inc." Business of Concierge Technologies As of June 30, 2006, the Company has abandoned its efforts to market the software application product known as the Personal Communications Attendant or "PCA". The product was conceived in 1996 and produced in 2000. Due to a lack of marketing funds, continued product development and a rapidly changing technology industry, management has determined that the existing PCA no longer has a viable market presence. Efforts to retail the product on the company website have been unproductive; however, a purchaser for the bulk of the remaining 14,700 pieces still in inventory will be sought. On May 5, 2004 we acquired all of the outstanding and issued shares of Planet Halo, a privately held Nevada corporation. Planet Halo's assets include intellectual property related to the industrial design, mechanical design, operation and know-how to market a wireless, hand-held, cellular phone with integrated QWERTY keypad, color screen and voice activation software. The device, known as the "Halo", had been advanced to the beta-test phase and there exists four working prototypes. In addition to the Halo, Planet Halo also has an exclusive North American license to exploit a wireless gateway that acts as the interface between wireless devices, including the Halo, and the Internet. The gateway, branded as "Halomail", uses secure socket layer technology for encrypted financial transactions, email access, desktop synchronization, HTML, XML, SHTML, WAP and other Web-based functions that are enabled on devices running the Halomail software client. We intend to assist Planet Halo with placement of the Halomail into active commercial service within the near term. Management has also initiated a strategy of vertical integration of development stage, wireless, companies into Concierge. We believe that should we be able to accumulate a sufficient market potential through combined product offerings we may be more successful in sourcing needed capital to fund the execution and expansion of our overall business plan. That plan as of October 6, 2 2006 is to seek and acquire, through issuance of equity, development stage operating companies which have a synergistic relationship to our intellectual properties and will provide a revenue stream to the Company. We have no assurances that such a strategy will ultimately be successful or that the addition of product lines and intellectual properties will create the favorable environment for investors that we anticipate; however, we plan to continue the creation of value for our shareholders through acquisitions and partnerships. As this process continues, we also hope to begin commercial operations with the Halomail and source a buyer for the PCA inventory, thus generating sufficient funds to, in part, offset our cash expenditures. Governmental Approval of Principal Products. No governmental approval is required in the U.S. for Concierge's products. 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 2006. Environmental Controls. Concierge is subject to no environmental controls or restrictions that require the outlay of capital or the obtaining of a permit in order to engage in business. Patents, Trademarks, Copyrights and Intellectual Property. Concierge has trademarked its Personal Communications Attendant. It has no patents on the product. Planet Halo has trademarked the names "Halo", "Halomail", and "Planet Halo". Patent applications are pending on certain aspects of the Halo device and software applications that enable certain of its functionality. The know-how centered around the programming, low-level drivers, key board matrix, operating system interface and certain other aspects of the Halo device, including its industrial design, are considered a valued intellectual property of Planet Halo. Number of Employees On June 30, 2006, we employed no persons full time and no persons part time. ITEM 2. DESCRIPTION OF PROPERTY We own no plants, real property or any significant personal property. 3 Facilities Our office facilities are co-located with those of our president and chief operations officer, David Neibert, at 22048 Sherman Way, Suite 301, Canoga Park, CA 91303. We have no lease and currently pay no rent. In the event we are able to secure the additional funds required to further our business plan, the shared office space consisting of approximately 880 square feet, including furniture and fixtures, can be leased by us for the amount of $1,235 per month on a one-year lease. Should additional space be needed, there is ample office space available in the vicinity at competitive prices. Planet Halo has no separate office facilities. ITEM 3. LEGAL PROCEEDINGS On May 6, 2002, a default judgment was awarded to Brookside Investments Ltd against, jointly and severally, our company, Allen E. Kahn, and The Whitehall Companies in the amount of $135,000 plus interest and legal fees. Concierge did not defend against the complaint by Brookside, which alleged that Brookside was entitled to a refund of its investment as a result of a breach of contract. Brookside had entered into a subscription agreement with Concierge, Inc. that called for, among other things, the pending merger between Starfest and Concierge to be completed within 180 days of the investment. The merger was not completed within 180 days and Brookside sought a refund of its investment, which Concierge was unable to provide. As of October 6, 2006, Brookside has not attempted to enforce its judgment. As of October 6, 2006, we are unable to pay the amount of the judgment and have no assets available to Brookside for liquidation in settlement of the judgment. Neither Concierge Technologies nor any of its property is the subject of any other pending legal proceedings or any proceeding that a governmental authority is contemplating. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS In an effort to improve the corporate vehicle to better accommodate a merger or acquisition, the decision was made by the directors to re-domesticate the corporation in the State of Nevada. During the month of May 2005 a vote regarding the move to Nevada was solicited from a group of shareholders comprising a majority. A majority vote in favor was received and an Information Statement was subsequently sent to all shareholders detailing the action. On October 5, 2006 the Articles of Merger were filed with the State of California and Concierge Technologies, Inc., a California corporation, merged with a wholly-owned subsidiary, also named Concierge Technologies, Inc., a Nevada corporation. The Nevada corporation is the surviving corporation in the merger. The charters of the two corporations are essentially identical, and the transaction was effected as no more than a change of domicile from California to Nevada.. There are no changes to the bylaws, the number of shares outstanding, or the restrictions applicable to trading in the company stock that would not otherwise exist as if the company had not completed its move to Nevada. 4 PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our Common Stock presently trades on the OTC Bulletin Board. The high and low bid prices, as reported by the OTC Bulletin Board, are as follows for fiscal years ended June 30, 2005 and 2006. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. High Low ---- --- Calendar 2004: 3rd Qtr. 0.020 0.0100 4th Qtr. 0.012 0.0075 Calendar 2005 1st Qtr. 0.012 0.006 2nd Qtr. 0.009 0.006 3rd Qtr. 0.019 0.006 4th Qtr. 0.010 0.005 Calendar 2006 1st Qtr. 0.030 0.005 2nd Qtr. 0.016 0.010 Holders On June 30, 2006 there were approximately 325 holders of record of our common stock. Dividends We have had no earnings and have declared no dividends on our capital stock. Under California law, a company - such as our company - can pay dividends only o from retained earnings, or o if after the dividend is made, o its tangible assets would equal at least 11/4 times its liabilities, and o its current assets would at least equal its current liabilities, or o if the average of its earnings before income taxes and before interest expenses for the last two years was less than the average of its interest expenses for the last two years, then its current assets must be equal to at least 11/4 times its current liabilities. The directors' strategy on dividends is to declare and pay dividends only from retained earnings and when the directors deem it prudent and in the best interests of the company to declare and pay dividends. Penny Stock Regulations Our common stock trades on the OTC Bulletin Board at a price less than $5 a share and is subject to the rules governing "penny stocks." A "penny stock" is any stock that: o sells for less than $5 a share. o is not listed on an exchange or authorized for quotation on The Nasdaq Stock Market, and o is not a stock of a "substantial issuer." We are not now a "substantial issuer" and cannot become one until we have net tangible assets of at least $2 million. There are statutes and regulations of the Securities and Exchange Commission (the "Commission") that impose a strict regimen on brokers that recommend penny stocks. The Penny Stock Suitability Rule -------------------------------- Before a broker-dealer can recommend and sell a penny stock to a new customer who is not an institutional accredited investor, the broker-dealer must obtain from the customer information concerning the person's financial situation, investment experience and investment objectives. Then, the broker-dealer must "reasonably determine" (1) that transactions in penny stocks are suitable for the person and (2) that the person, or his advisor, is capable of evaluating the risks in penny stocks. After making this determination, the broker-dealer must furnish the customer with a written statement setting forth the basis for this suitability determination. The customer must sign and date a copy of the written statement and return it to the broker-dealer. Finally the broker-dealer must also obtain from the customer a written agreement to purchase the penny stock, identifying the stock and the number of shares to be purchased. The above exercise delays a proposed transaction. It causes many broker-dealer firms to adopt a policy of not allowing their representatives to recommend penny stocks to their customers. The Penny Stock Suitability Rule, described above, and the Penny Stock Disclosure Rule, described below, do not apply to the following: 6 o transactions not recommended by the broker-dealer, o sales to institutional accredited investors, o transactions in which the customer is a director, officer, general partner, or direct or indirect beneficial owner of more than 5 percent of any class of equity security of the issuer of the penny stock that is the subject of the transaction, and o transactions in penny stocks by broker-dealers whose income from penny stock activities does not exceed five percent of their total income during certain defined periods. The Penny Stock Disclosure Rule ------------------------------- Another Commission rule - the Penny stock Disclosure Rule - requires a broker-dealer, who recommends the sale of a penny stock to a customer in a transaction not exempt from the suitability rule described above, to furnish the customer with a "risk disclosure document." This document is set forth in a federal regulation and contains the following information: o A statement that penny stocks can be very risky, that investors often cannot sell a penny stock back to the dealer that sold them the stock, o A warning that salespersons of penny stocks are not impartial advisers but are paid to sell the stock, o The statement that federal law requires the salesperson to tell the potential investor in a penny stock - o the "offer" and the "bid" on the stock, and o the compensation the salesperson and his firm will receive for the trade, o An explanation that the offer price and the bid price are the wholesale prices at which dealers are willing to sell and buy the stock from other dealers, and that in its trade with a customer the dealer may add a retail charge to these wholesale prices, o A warning that a large spread between the bid and the offer price can make the resale of the stock very costly, o Telephone numbers a person can call if he or she is a victim of fraud, o Admonitions - o to use caution when investing in penny stocks, o to understand the risky nature of penny stocks, 7
o to know the brokerage firm and the salespeople with whom one is dealing, and o to be cautious if ones salesperson leaves the firm. Finally, the customer must be furnished with a monthly statement including prescribed information relating to market and price information concerning the penny stocks held in the customer's account. Effects of the Rule ------------------- The above penny stock regulatory scheme is a response by the Congress and the Commission to known abuses in the telemarketing of low-priced securities by "boiler shop" operators. The scheme imposes market impediments on the sale and trading of penny stocks. It has a limiting effect on a stockholder's ability to resell a penny stock. Our shares likely will trade below $5 a share on the OTC Bulletin Board and be, for some time at least, shares of a "penny stock" subject to the trading market impediments described above. Recent Sales of Unregistered Securities; Outstanding Stock Options Our company sold the following shares of its common stock during the last three years without registering the shares: - ------------------- ---------------- --------------------------- --------------------------- ---------------- Value of Date No. of Shares Name of Purchaser Type of Consideration Consideration - ------------------- ---------------- --------------------------- --------------------------- ---------------- - ------------------- ---------------- --------------------------- --------------------------- ---------------- November 12, 2003 1,000,000 Frank Ramogida Cash $ 10,000 - ------------------- ---------------- --------------------------- --------------------------- ---------------- January 7, 2004 4,000,000 Ryan Consult Ltd. Services $216,000 - ------------------- ---------------- --------------------------- --------------------------- ---------------- February 19, 2004 1,000,000 Marc Angell Trust Cash $ 10,000 - ------------------- ---------------- --------------------------- --------------------------- ---------------- May 6, 2004 10,000,000 Planet Halo Shareholders Share-for-Share Exchange $500,000 - ------------------- ---------------- --------------------------- --------------------------- ----------------
All of the above sales were made pursuant to the exemption from registration provided by the Commission's Regulation D, Rule 506. All purchasers were either accredited investors or, if not, were provided copies of the company's recent filings with the Commission including financial statements meeting the requirements of the Commission's Item 310 of Regulation S-B. All purchasers were provided the opportunity to ask questions of Concierge's management. No equity of Concierge is subject to outstanding options or warrants to purchase, or securities convertible into, equity of the company. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The following discussion and analysis should be read in conjunction with the financial statements and the accompanying notes thereto and is qualified in its entirety by the foregoing and by more detailed financial information appearing elsewhere. See "Financial Statements." 8 Plan of Operation for the Next Twelve Months Our plan of operation for the next twelve months is to do the following: o exploit the opportunities afforded us through our acquisition of Planet Halo by implementing a sales strategy to deploy the wireless gateway, Halomail, on synergistic networks, o properly position the corporation and its structure to accommodate a business combination with a funding partner, o engage the assistance of our directors and outside consultants to aggressively pursue acquisition targets in the field of wireless communications. On April 6, 2004, our company signed a definitive agreement to acquire the privately-held company, Planet Halo, in a cash-free stock transaction. On April 20, 2004 the companies completed the necessary documentation to effect the acquisition. On May 5, 2004 Concierge Technologies instructed its transfer agent to issue the purchase price in shares of common stock to the shareholders of Planet Halo. The transaction was officially closed and the shares considered issued as of May 5, 2004. Planet Halo is a development-stage company that has developed a prototype, hand-held, wireless Internet appliance named the "Halo". The Halo is able to send and receive email, short messages, run applications such as address book, calculator, scheduler, etc and operates as a fully functional cellular telephone. In addition to the Halo device Planet Halo also has an exclusive license to deploy a proprietary wireless gateway in North America. The gateway, named "Halomail", provides a secure interface for wireless access to the Internet, and to the worldwide web. Users of the Halo or other wireless devices may use Halomail as their email client, a secure connection for monetary transactions, browse the worldwide web, connect to their own Intranets, and essentially use the gateway as a secure on-ramp to the Internet in much the same way as a wired connection operates. Concierge plans to move the Halo device into production readiness and to seek partners for the launch of the Halomail gateway on service provider networks. Planet Halo will continue to be operated by its President, Marc Angell. Concierge Technologies has not approved an operating budget for Planet Halo and is currently reliant upon Marc Angell to continue providing his services, including personal operating expenses, for the near term. There is no assurance that this situation will endure for the long term, or that Concierge will not be required to fund its operations in the near future. On June 17, 2002, David W. Neibert became our President and Chief Operations Officer. Upon assuming that role, he moved the general accounting and administrative offices of our company to a co-location with his firm, The Wallen Group. We do not currently pay rent and have no lease for the facilities being provided by Mr. Neibert. 9 As of June 30, 2005, we had no employees 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 have a limited amount of office fixtures, furniture and computer equipment acquired with the Planet Halo transaction. Our president, the president of Planet Halo, our CEO and directors are continuing to provide services without cash compensation; however, on July 19, 2006 Chairman Allen Kahn polled the directors and received a unanimous vote in favor of issuing Five Million (5,000,000) shares of stock to compensate Ryan Consultants Ltd, a Jersey, UK corporation, which has provided the services of David Neibert for the previous two years, incurred expenses on our behalf, and performed other supportive roles in our fund raising efforts. As of October 6, 2006 the shares of stock have not been issued, but will be issued as soon as it is practical to do so. There are no guarantees that Mr. Neibert will continue to act as our Chief Operating Officer beyond the current fiscal year, or that Ryan Consultants will continue to compensate Mr. Neibert if he chooses to continue to perform his fiduciary duties, or that he will continue in his capacity without compensation. Liquidity Our primary source of operating capital has been funding sourced through insiders or shareholders under the terms of unsecured promissory notes. In two instances we have sold shares of our common stock in exchange for cash. The amount of borrowed funds and funds from equity sales has been sufficient to pay the cost of legal and accounting fees as necessary to maintain a current reporting status with the Securities and Exchange Commission. However, sufficient funds have been unavailable to significantly pay down commercial and vendor accounts payable. We have also been unable to pay salaries to our officers and several of our outside consultants who had performed services during the past and present fiscal years. Although our management is continuing to provide services to the Company for the near term without cash compensation, we will still require additional funding to maintain the corporation. With the acquisition of Planet Halo there are added demands for operating capital if we are to place the product into service. The Company has been aggressively pursuing financing for the funding of the Halo device project, however the financial advisor retained to assist with the effort has not produced a satisfactory result. Until such time as definitive agreements are reached with investors, any form of financing remains speculative. If the financing is not available, the Halo may not be put into production. In the event the financing is not completed, our funds and inventory assets will be exhausted at some point and continuing operations may be impossible. Off-Balance Sheet Arrangements Our company has not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under which we have o an obligation under a guarantee contract, o a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets, 10
o an obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, or o an obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by, and material to, us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging, or research and development services with, us. Contractual obligations The following table sets forth, as of the end of the latest fiscal year-end balance sheet, information with respect to our known contractual obligations. - -------------------------------- ----------------------------------------------------------------- Payments Due-by Period - -------------------------------- ----------------------------------------------------------------- Contractual Less Than More Than Obligations Total 1 Year 1-3 Years 3-5 Years 5 Years - -------------------------------- --------- ------------- ------------- ------------- ------------- Long-Term Debt Obligations None - -------------------------------- --------- ------------- ------------- ------------- ------------- Capital Lease Obligations None - -------------------------------- --------- ------------- ------------- ------------- ------------- Operating Lease Obligations None - -------------------------------- --------- ------------- ------------- ------------- ------------- Other Long-Term Liabilities Reflected on Our Balance Sheet under GAAP None - -------------------------------- --------- ------------- ------------- ------------- ------------- - -------------------------------- --------- ------------- ------------- ------------- ------------- Total None - -------------------------------- --------- ------------- ------------- ------------- -------------
ITEM 7. FINANCIAL STATEMENTS INDEX The financial statements of the company appear as follows: Independent Auditors' Report ........................................12 Consolidated Balance Sheet, June 30, 2006 ...........................13 Consolidated Statements of Operations, Years Ended June 30, 2006 and 2005 and the Period from September 20, 1996 (Inception) to June 30, 2006 ............14 Statements of Changes in Stockholders' Equity (Deficit), September 20, 1996 (Inception) to June 30, 2006 ............15 Consolidated Statements of Cash Flows, Years Ended June 30, 2006 and 2005 and the Period from September 20, 1996 (Inception) to June 30, 2006 ............17 Notes to Financial Statements .......................................18 11 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors Concierge Technologies, Inc. We have audited the accompanying consolidated balance sheet of Concierge Technologies, Inc. and subsidiary (a development stage company) as of June 30, 2006 and the related statements of operations, stockholders' deficit and cash flows for each of the two years in the period ended June 30, 2006 and for the period from September 20, 1996 (inception), to June 30, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Concierge Technologies, Inc., and subsidiary as of June 30, 2006 and the results of its operations, stockholders deficit and cash flows for each of the two years in the period ended June 30, 2006 and from September 20, 1996 (inception), to June 30, 2006, in conformity with accounting principles generally accepted in the United States of America. The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company's has not earned any revenue since its inception and has accumulated deficit of $3,909,313 at June 30, 2006 including a net loss of $44,552 during the year ended June 30, 2006. These factors as discussed in Note 4 to the financial statements, raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Kabani & Company, Inc. KABANI & COMPANY, INC. CERTIFIED PUBLIC ACCOUNTANTS Los Angeles, California October 03, 2006 12 CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) CONSOLIDATED BALANCE SHEET June 30, 2006 ASSETS ------ CURRENT ASSETS: Cash & cash equivalents $ 3,882 Due from related party 160 ----------- $ 4,042 =========== LIABILITIES AND STOCKHOLDERS' DEFICIT ------------------------------------- CURRENT LIABILITIES: Accounts payable and accrued expenses $ 402,977 Notes payable - related parties 129,751 ----------- Total current liabilities 532,728 STOCKHOLDERS' DEFICIT: Preferred stock, par value $.001 per share; 10,000,000 shares authorized; none issued -- Common stock, $.001 par value; 190,000,000 shares authorized; issued and outstanding 142,292,747 142,293 Additional paid in capital 3,238,334 Deficit accumulated during the development stage (3,909,313) ----------- Total stockholders' deficit (528,686) ----------- $ 4,042 =========== The accompanying notes are an integral part of these financial statements. 13
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2006 AND 2005 AND THE PERIOD FROM SEPTEMBER 20, 1996 (INCEPTION) TO JUNE 30, 2006 For the Period Years Ended From September 20, June 30, 1996 (Inception) 2006 2005 to June 30, 2006 ------------------ ------------------ ------------------ COSTS AND EXPENSES Product Launch Expenses $ -- $ -- $ 1,077,785 Impairment of Assets -- 496,843 988,443 General & Administrative Expenses 42,980 45,926 1,471,870 ------------------ ------------------ ------------------ TOTAL COSTS AND EXPENSES 42,980 542,769 3,538,098 OTHER INCOME (EXPENSES) Other Income 28 85 113 Settlement Income -- -- 52,600 Litigation Settlement -- -- (135,000) ------------------ ------------------ ------------------ TOTAL OTHER INCOME (EXPENSES) 28 85 (82,287) ------------------ ------------------ ------------------ NET LOSS BEFORE INCOME TAXES (42,952) (542,684) (3,620,385) Provision of Income Taxes 1,600 1,600 10,400 ------------------ ------------------ ------------------ NET LOSS $ (44,552) $ (544,284) $ (3,630,785) ================== ================== ================== WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING, BASIC AND DILUTED 142,292,747 142,292,747 ================== ================== BASIC AND DILUTED NET LOSS PER SHARE (0.00) $ (0.00) ================== ==================
The accompanying notes are an integral part of these financial statements. 14
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT AND THE PERIOD FROM SEPTEMBER 20, 1996 (INCEPTION) TO JUNE 30, 2006 Common Stock -------------------------------------------- Additional Number of Par paid in Accumulated Stockholders' shares value capital Deficit deficit ------------ ------------ ------------ ------------ ------------ Common Stock issued for cash through 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 -- -- -- -- Common stock issued for services in the year ended June 30, 1999 450 -- -- -- -- 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) 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 -- -- -- -- Common stock issued for services in the year ended June 30, 2000 354,870 -- -- -- -- Post acquisition stock subscription funds received net of costs & expenses of $79,710 -- -- -- -- -- Net loss for the year ended June 30, 2000 -- -- -- (986,986) (986,986) ------------ ------------ ------------ ------------ ------------ Balance at June 30, 2000 1,376,380 6,959 300,812 (1,457,729) (1,149,958) Post acquisition stock subscription funds received -- -- -- -- -- 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) Recapitalization upon merger 118,681,333 113,099 (300,812) (278,527) (466,240) The accompanying notes are an integral part of these financial statements. 15 Stock subscription received for 500,000 shares -- -- -- -- 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 Adjustment to paid in capital on merger -- (116,499) 116,499 -- -- Net loss for the year ended June 30, 2002 -- -- -- (478,229) (478,229) ------------ ------------ ------------ ------------ ------------ Balance at June 30, 2002 122,590,294 122,590 116,499 (2,758,565) (2,335,546) Stock issued for subscription received in the prior year 500,000 500 29,483 -- -- Stock issued for services included in the prior period 3,275,472 3,275 150,672 -- -- Forfeiture of stock subscription -- -- 10,000 -- 10,000 Cancellation of over issued shares on recapitalization (73,017) -- -- -- -- Net loss for the year ended June 30, 2003 -- -- -- (47,272) (47,272) ------------ ------------ ------------ ------------ ------------ Balance at June 30, 2003 126,292,749 126,365 306,654 (2,805,837) (2,372,818) Adjustment to par value -- (72) 72 -- -- Issuance of shares for cash 2,000,000 2,000 18,000 -- 20,000 Issuance of shares for cash 3rd qtr -- -- -- -- Issuance of shares for services 4,000,000 4,000 212,000 -- 216,000 Issuance of shares for acquisition of Planet Halo 9,999,998 10,000 490,000 -- 500,000 Net loss for the year ended June 30, 2004 -- -- -- (514,639) (514,639) ------------ ------------ ------------ ------------ ------------ Balance at June 30, 2004 142,292,747 142,293 1,026,726 (3,320,476) (2,151,457) Reclassify contingent liabilities to Additional Paid In Capital -- -- 1,929,900 -- 1,929,900 Net loss for the year ended June 30, 2005 -- -- -- (544,284) (544,284) ------------ ------------ ------------ ------------ ------------ Balance at June 30, 2005 142,292,747 142,293 2,956,626 (3,864,761) (765,841) Loans converted to Paid in Capital -- -- 281,708 -- 281,708 Net loss for the year ended June 30, 2006 -- -- -- (44,552) (44,552) ------------ ------------ ------------ ------------ ------------ Balance at June 30, 2006 142,292,747 $ 142,293 $ 3,238,334 $ (3,909,313) $ (528,686) ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. 16
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2006 AND 2005 AND THE PERIOD FROM SEPTEMBER 20, 1996 (INCEPTION) TO JUNE 30, 2006 September 20, 1996 June 30, June 30, (inception) to 2006 2005 June 30, 2006 ------------------ ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (44,552) $ (544,284) $ (3,630,785) Adjustments to reconcile net loss to net cash used in operating activities: Impairment of asset -- 496,843 742,643 Depreciation and amortization -- 245 13,155 Stock issued for services -- -- 496,352 Decrease in current assets: Prepaid expense -- -- (245,800) Increase in current liabilities: Accrued expenses 6,005 15,269 318,444 ------------------ ------------------ ------------------ Net cash used in operating activities (38,548) (31,928) (2,305,991) ------------------ ------------------ ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Cash received on acquisition of subsidiary -- -- 2,912 Note receivable - related party -- -- (100,000) Acquisition of equipment -- -- (12,910) ------------------ ------------------ ------------------ Net cash used in investing activities -- -- (109,998) ------------------ ------------------ ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Due from related party 3,531 (3,690) (160) Proceeds from Issuance of Shares -- -- 587,007 Proceeds from stock subscription forfeited -- -- 10,000 Proceeds from advance subscriptions -- -- 1,772,983 Costs and expenses of advance subscriptions -- -- (79,710) Proceeds from (payments to) related party loans 38,251 (67,500) 129,751 Reclassification from LP to APIC -- ------------------ ------------------ ------------------ Net cash provided (used) by financing activities 41,782 (71,190) 2,419,871 ------------------ ------------------ ------------------ NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS 3,234 (103,118) 3,882 CASH & CASH EQUIVALENTS, BEGINNING BALANCE 648 103,766 -- ------------------ ------------------ ------------------ CASH & CASH EQUIVALENTS, ENDING BALANCE $ 3,882 $ 648 $ 3,882 ================== ================== ==================
The accompanying notes are an integral part of these financial statements. 17 CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Concierge Technologies, Inc., (the "Company"), a California corporation, was incorporated on August 18, 1993 as Fanfest, Inc. In August 1995 the Company changed its name to Starfest, Inc. During 1998, the Company was inactive, just having minimal administrative expenses. During 1999 the Company attempted to pursue operations in the online adult entertainment field. There were no revenues from this endeavor. On March 20, 2002, the Company changed its name to Concierge Technologies, Inc. In March 2000, the Company acquired approximately 96.83 percent (8,250,000 shares) of the common stock of MAS Acquisition XX Corp. (MAS XX) for $314,688. This amount was expensed in March 2000 as at the time of the acquisition, MAS XX had no assets or liabilities and was inactive. On March 21, 2002, the Company consummated a merger with Concierge, Inc. (Note 11). Concierge, Inc. ("CI") was a development stage enterprise incorporated in the state of Nevada on September 20, 1996. The CI had undertaken the development and marketing of a new technology, a unified messaging product "The Personal Communications Attendant" ("PCA(TM)"). "PCA(TM)" will provide a means by which the user of Internet e-mail can have e-mail messages spoken to him/her over any touch-tone telephone or wireless phone in the world. To-date, the Company has not earned any revenue. On April 6, 2004 the Company entered into a Stock Purchase Agreement with Planet Halo, Inc. (PHI) whereby, the Company purchased all of the outstanding and issued shares of PHI in exchange for 10 million shares of the Company's common stock valued at $500,000. On May 5, 2004 the Company issued the shares on a ratio of 8.232 shares of its common stock to each share of PHI stock to the former shareholders of PHI. The existing PHI shares were then retired and cancelled. The Company is now the sole shareholder of PHI, a Nevada corporation. On May 5, 2004 the President of PHI was officially appointed to the Board of Directors of the Company along with one other PHI named appointee (Note 15). PHI is a development stage company in the wireless telecommunications industry and plans to design, manufacture, sale and distribution of hardware and services that include a hand-held wireless Internet appliance/cell phone known as the "Halo", and an integrated wireless gateway interface to the Internet named "Halomail." The accounting policies of the Company are in accordance with generally accepted accounting principles and conform to the standards applicable to development stage companies. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Concierge Technologies, Inc. (parent) and its wholly owned subsidiary, Planet Halo, Inc. All significant inter-company transactions and accounts have been eliminated in consolidation. Cash and cash equivalents The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents. 18 CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Use of estimates The preparation of financial statements is in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 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. 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. 19 CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) NOTES TO CONSOLIDATED 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 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. 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. Research and Development Expenditures for software development costs and research are expensed as incurred. Such costs are required to be expensed until the point that technological feasibility is established. The period between achieving technological feasibility and the general availability of such software has been short. Consequently, costs otherwise capitalizable after technological feasibility is achieved are generally expensed because they are insignificant. Revenue Recognition Revenue is recognized when earned. The Company's revenue recognition policies are in compliance with all applicable accounting regulations, including American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) 97-2, Software Revenue Recognition, SOP 98-9, Modification of SOP 97-2 and Staff accounting bulletin (SAB) 104. 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 20 CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS purchase price and the option of buying upgrades at a fixed fee based on fair value of the upgrade. When the revenue recognition criteria required for distributor and reseller arrangements are not met, revenue is recognized as payments are received. Costs related to insignificant obligations, which include telephone support for certain products, are accrued. Provisions are recorded for returns, concessions and bad debts. Cost of revenue includes direct costs to produce and distribute product and direct costs to provide online services, consulting, product support, and training and certification of system integrators. Research and development costs are expensed as incurred. The company did not earn any revenue in the years ended June 30, 2006 and 2005. 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, 2006. Advertising The Company expenses advertising costs as incurred. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. 3. RECENT PRONOUNCEMENTS In September 2006, FASB issued SFAS 158 `Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans--an amendment of FASB Statements No. 87, 88, 106, and 132(R)' This Statement improves financial reporting by requiring an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. An employer without publicly traded equity securities is required to recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after June 15, 2007. However, an employer without publicly traded equity securities is required to disclose the following information in the notes to financial statements for a fiscal year ending after December 15, 2006, but before June 16, 2007, unless it has applied the recognition provisions of this Statement in preparing those financial statements: a. A brief description of the provisions of this Statement b. The date that adoption is required c. The date the employer plans to adopt the recognition provisions of this Statement, if earlier. 21 CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The requirement to measure plan assets and benefit obligations as of the date of the employer's fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. The management is currently evaluating the effect of this pronouncement on financial statements. In September 2006, FASB issued SFAS 157 `Fair Value Measurements'. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The management is currently evaluating the effect of this pronouncement on financial statements. In March 2006 FASB issued SFAS 156 'Accounting for Servicing of Financial Assets' this Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. This Statement: 1. Requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract. 2. Requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable. 3. Permits an entity to choose 'Amortization method' or 'Fair value measurement method' for each class of separately recognized servicing assets and servicing liabilities. 4. At its initial adoption, permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in some manner as offsetting the entity's exposure to changes in fair value of servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value. 5. Requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities. This Statement is effective as of the beginning of the Company's first fiscal year that begins after September 15, 2006. Management believes that this statement will not have a significant impact on the consolidated financial statements. In February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for Derivative Instruments and Hedging Activities", and SFAF No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". SFAS No. 155, permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interest in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded 22 CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS derivatives, and amends SFAS No. 140 to eliminate the prohibition on the qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This statement is effective for all financial instruments acquired or issued after the beginning of the Company's first fiscal year that begins after September 15, 2006. The Company has not evaluated the impact of this pronouncement its financial statements. In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections." This statement applies to all voluntary changes in accounting principle and requires retrospective application to prior periods' financial statements of changes in accounting principle, unless this would be impracticable. This statement also makes a distinction between "retrospective application" of an accounting principle and the "restatement" of financial statements to reflect the correction of an error. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We are evaluating the effect the adoption of this interpretation will have on its financial position, cash flows and results of operations. 4. GOING CONCERN The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern. However, the Company did not earn any revenue during the year ended June 30, 2006. The Company has accumulated deficit of $3,909,313 including a net loss of $44,552 during the year ended June 30, 2006. The continuing losses have adversely affected the liquidity of the Company. Losses are expected to continue for the immediate future. The Company faces continuing significant business risks, which includes but not limited to, its ability to maintain vendor and supplier relationships by making timely payments when due. In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. Management devoted considerable effort from inception through the year ended June 30, 2006, towards (i) obtaining additional equity (ii) management of accrued expenses and accounts payable (iii) liquidation of the software "PCA(TM)" and (vi) searching for a suitable strategic partner. Management believes that the above actions will allow the Company to continue operations through the next fiscal year. 5. DUE FROM RELATED PARTY Concierge Technologies, Inc. has no bank account in its own name. Wallen Group, a consulting company headed by David W. Neibert (the president and director of Concierge Technologies, Inc.), maintains an administrative account for Concierge Technologies, Inc. at Wells Fargo Bank. As of June 30, 2006, $160 is due from Wallen Group. 23 CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. NOTES PAYABLE - RELATED PARTIES Notes payable consisted of the following at June 30, 2006: Notes payable to shareholder, interest rate of 8%, unsecured and payable on October 1, 2006 (past due) 35,000 Notes payable to director/shareholder, non-interest bearing unsecured and payable on demand 3,251 Notes payable to director/shareholder, non-interest bearing unsecured and payable on demand 8,500 Notes payable to shareholder, interest rate of 10%, unsecured, and payable on July 31, 2004 (past due) 5,000 Notes payable to shareholder, interest rate of 10%, unsecured and payable on October 1, 2004 (past due) 28,000 Notes payable to shareholder, interest rate of 8%, unsecured and payable on October 1, 2004 (past due) 14,000 Notes payable to director/shareholder, interest rate of 8%, unsecured and payable on September 1, 2004 (past due) 3,500 Notes payable to shareholder, interest rate of 8%, unsecured and payable on October 1, 2005 20,000 Notes payable to director/shareholder, interest rate of 8%, unsecured and payable on February 1, 2006 5,000 Notes payable to director/shareholder, interest rate of 8%, unsecured and payable on June 1, 2006 5,000 Notes payable to director/shareholder, interest rate of 8%, unsecured and payable on February 1, 2006 2,500 --------- Total Notes payable $ 129,751 ========= The Company has recorded interest expense payable to related parties, amounting to $9,652 and $6,549 for the year ended June 30, 2006 and 2005, respectively. 7. INCOME TAXES No provision was made for Federal income tax since the Company has significant net operating loss carryforward. Through June 30, 2006, the Company incurred net operating losses for tax purposes of approximately $3,630, 785. Differences between financial statement and tax losses consist primarily of amortization allowance, was immaterial at June 30, 2006. The net operating loss carryforward may be used to reduce taxable income through the year 2025. Net operating loss for carry forwards for the State of California is generally available to reduce taxable income through the year 2010. The availability of the Company's net 24 CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS operating loss carryforward is subject to limitation if there is a 50% or more positive change in the ownership of the Company's stock. The 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, 2006 and 2005 were approximately $1, 452, 000 and $1,445,000 respectively. A 100% valuation allowance has been established against the deferred tax assets, as the utilization of the loss carryforwards cannot reasonably be assured. The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Consolidated Statements of Operations: June 30, June 30, 2006 2005 Tax expense (credit) at statutory rate-federal (34)% (34)% State tax expense net of federal tax (6) (6) Changes in valuation allowance 40 40 -------- -------- Tax expense at actual rate -- -- ======== ======== 8. SHARES OF CONCIERGE, INC. ISSUED SUBJECT TO CONTINGENCY AND SUBSCRIPTIONS RECEIVED FOR COMMON STOCK 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 June 30, 2006, were 680,504 for cash and services amounting to $266,610. 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 were 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 25 CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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). On January 1, 2005, the Company re-classified such shares to its equity since the lapse of time had removed any contingencies because of applicable statutes of limitation. 9. COMMON STOCK On May 5, 2004 the Company issued 9,999,998 shares of its common stock valued at $500,000 in exchange for Planet Halo's 100% outstanding and issued shares on a ratio of, 8.232 shares of the Company to each share of Planet Halo stock. 10. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS The Company prepares its statements of cash flows using the indirect method as defined under the Financial Accounting Standard No. 95. During the twelve months ended June 30, 2006, the Company paid all tax liabilities outstanding with the Franchise Tax Board of the State of California for the fiscal years ended June 30, 2003, 2004 and 2005, including all calculated penalties and interest, totaling $3,322.97. The amount reserved for income tax in the accompanying financial statements as been appropriately adjusted to reflect the current status. The Company paid $0 for interest during the twelve month periods ended June 30, 2006 and 2005. 11. COMMITMENT The Company is co-located with the president of the Company and pays no rent. Rent expense was $0 for the twelve month periods ended June 30, 2006 and 2005. 12. LITIGATION On May 6, 2002, a default judgment was awarded to Brookside Investments Ltd against, jointly and severally, Concierge, Inc, Allen E. Kahn, and The Whitehall Companies in the amount of $135,000 plus legal fees. The Company did not defend against the complaint by Brookside, which alleged that Brookside was entitled to a refund of their investment as a result of a breach of contract. Brookside had entered into a subscription agreement with Concierge, Inc., which called for, among other things, the pending merger between Starfest and Concierge to be completed within 180 days of the investment. The merger was not completed within 180 days and Brookside sought a refund of their investment, which Concierge was unable to provide. The Company has accrued the judgment amount of $135,000 in 26 CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS the year 2002 as litigation settlement in the accompanying financial statements. This amount is included in accrued expenses as of June 30, 2006. 13. ACQUISITION & IMPAIRMENT OF INTANGIBLE ASSET On April 6, 2004 the Company and Planet Halo entered into Stock Purchase agreement whereby, when consummated, the Company would purchase all of the outstanding and issued shares of Planet Halo in exchange for 10 Million shares of the Company's common stock valued at $500,000. On April 20, 2004 all of the conditions of the acquisition were met apart from the issuance of the shares. On May 5, 2004, the Company issued the shares on a ratio of 8.232 shares of the Company to each share of Planet Halo stock. The shares were issued directly to the shareholders of Planet Halo. The existing Planet Halo shares were retired and cancelled. The Company is now a sole shareholder of Planet Halo, a Nevada corporation. On May 5, 2004 the President of Planet Halo was officially appointed to the Board of Directors of the Company along with one other Planet Halo named appointee. Planet Halo is a development stage company involved in the wireless telecommunications industry through the design, manufacture, sale and distribution of hardware and services that include a hand-held wireless Internet appliance/cell phone known as the "Halo", and an integrated wireless gateway interface to the Internet named "Halomail." The purchase price was determined in arms-length negotiations between the parties. The assets acquired in this acquisition include without limitation computer hardware and goodwill. A summary of the Planet Halo assets acquired and consideration for is as follows: Allocated amount ---------------- Cash $ 2,912 Equipment, net 245 Goodwill 496,843 -------- $ 500,000 ========= Consideration paid ------------------ 10,000,000 shares of common stock $ 500,000 ========= The Company evaluates intangible assets, goodwill and other long-lived assets for impairment, at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash flows. Recoverability of intangible assets, other long-lived assets and, goodwill is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss. Potential impairment of goodwill is being evaluated in accordance with SFAS No. 142. The SFAS No. 142 is applicable to the financial statements of the Company beginning July 1, 2002. On December 31, 2004, the Company evaluated the valuation of goodwill based upon the performance and market value of the acquisition. The Company determined the goodwill is impaired and recorded the impairment of $496,843 in the accompanying financial statements. 27 CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARY (A development stage company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company evaluated value of its prepaid expenses during the year ended June 30, 2004 and based upon uncertainness surrounding the utilization of its software for the "PCA" development, the Company has recorded an impairment of the prepaid expense amounting $245,800. 14. FORMATION OF NEVADA SUBSIDIARY On April 20, 2005, the Company formed a subsidiary corporation under the laws of the State of Nevada. The subsidiary corporation, Concierge Technologies, Inc. (Nevada) was formed for the purpose of re-domesticating the Company stock in the State of Nevada and dissolving the California Corporation. The action was taken pursuant to a vote in favor by a majority of shareholders of the Company. On March 2, 2006, the Company filed articles of merger with the Secretary of State in Nevada effectuating the merger of Concierge Technologies, Inc. of California into the Nevada subsidiary. In order to consummate the merger, the Secretary of State in California requires a Certificate of Tax Clearance from the Franchise Tax Board. The delay in acquiring the tax clearance caused for the Nevada Corporation to become inactive. On September 22, 2006 the Franchise Tax Board issued the tax clearance certificate. On October 6, 2006 the tax clearance certificate from California, and the other documents necessary to reactivate Concierge Technologies, Inc. in Nevada, were filed in the respective states. The Secretary of State of California has acknowledged receipt of the tax clearance certificate and the merger documents and the Articles of Merger were filed with the State of California on October 5, 2006. Concierge Technologies, Inc. is now a Nevada corporation. Consent of Service will be to the Resident Agent in Nevada, Capitol Corporate Services, Inc., 202 South Minnesota Street, Carson City, NV 89703. 15. SUBSEQUENT EVENTS On October 2, 2006, the Company signed a promissory note and borrowed $12,500 from Marc Angell, a director. The Note is due before or on November 1, 2007 and bears an interest rate of 6%. Upon default, the holder has the right to foreclose or otherwise enforce all liens or security interests securing payment hereof from the Company. On August 12, 2006, the Company signed a promissory note and borrowed $1,000 from David Neibert, a director. The Note is due before or on September 1, 2007 and bears an interest rate of 6%. Upon default, the holder has the right to foreclose or otherwise enforce all liens or security interests securing payment hereof from the Company. On July 19, 2006 Chairman Allen Kahn received a unanimous vote from the directors in favor of issuing Five Million (5,000,000) shares of stock to compensate Ryan Consultants Ltd, a Jersey, UK corporation, who have provided the services of David Neibert for the previous two years, incurred expenses on our behalf, and performed other supportive roles in our fund raising efforts. As of October 6, 2006 the shares of stock have not been issued, but will be issued as soon as is practical to do so. There are no guarantees that Mr. Neibert will continue to act as our Chief Operating Officer beyond the current fiscal year, or that Ryan Consultants will continue to compensate Mr. Neibert if he chooses to continue to perform his fiduciary duties, or that he will continue indefinitely in his capacity without compensation. 28 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE The principal independent accountant of the company or any significant subsidiary has not resigned, declined to stand for re-election, or been dismissed by the company during the periods for which financial statements are included herein. ITEM 8A. CONTROLS AND PROCEDURES Evaluation of disclosure controls and procedures. The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective and provide reasonable assurances that the information the Company is required to disclose in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time period required by the Commission's rules and forms. There were no significant changes in the Company's internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting. ITEM 8B. OTHER INFORMATION On October 5, 2006 the registrant, Concierge Technologies, Inc., a California corporation, merged with a wholly-owned subsidiary, also named Concierge Technologies, Inc., a Nevada corporation. The Nevada corporation is the surviving corporation in the merger. The charters of the two corporations are essentially identical, and the transaction was effected as no more than a change of domicile from California to Nevada. The Articles of Incorporation of the Nevada corporation and the Articles of Merger are filed as Exhibits 3.7 and 3.8 to this Form 10-KSB. PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT Set forth below are the names, and terms of office of each of the directors, executive officers and significant employees of Concierge Technologies at June 30, 2006 and a description of the business experience of each. 29
- -------------------------- ---------------------------------------- -------------- ---------- Office Held Term of Person Offices Since Office - -------------------------- ---------------------------------------- -------------- ---------- - -------------------------- ---------------------------------------- -------------- ---------- David W. Neibert President and Director 2002 2007 - -------------------------- ---------------------------------------- -------------- ---------- James E. Kirk Secretary and Director 1996 2007 - -------------------------- ---------------------------------------- -------------- ---------- Samuel Wu Director 2002 2007 - -------------------------- ---------------------------------------- -------------- ---------- Allen E. Kahn Chairman, CEO, CFO and Director 1996 2007 - -------------------------- ---------------------------------------- -------------- ---------- Patrick Flaherty Director 2002 2007 - -------------------------- ---------------------------------------- -------------- ---------- Marc Angell Director and President of Planet Halo 2004 2007 - -------------------------- ---------------------------------------- -------------- ---------- Pat Rodden Director 2004 2007 - -------------------------- ---------------------------------------- -------------- ----------
Allen E. Kahn: Mr. Kahn entered the computer industry as a Systems Engineer with IBM and subsequently held a series of technical, sales, marketing and management positions with other multi-billion dollar corporations before becoming President and CEO of two companies marketing data communications hardware and software. He has extensive experience in voice technology, optical character recognition, data communications and other technical elements of the PCA, which he conceived. Mr. Kahn is an honors graduate of the University of Texas at El Paso and pursued postgraduate studies in Business Administration at UTEP and California State University, Long Beach. David W. Neibert: Mr. Neibert has been the President and a director of Concierge Technologies since June 17, 2002. Mr. Neibert is also the president of The Wallen Group, a general partnership providing consulting services to wireless communications companies and other high technology firms in development stages. Prior to founding The Wallen Group, Mr. Neibert served as the president of Roamer One and as a director and executive vice president of business development of their publicly traded parent company Intek Global Corporation. Intek Global Corporation manufactured, sold and distributed radio products (under the names "Midland", "Securicor Wireless", "Linear Modulation Technologies", and others) globally to the consumer, government and commercial markets and operated a nationwide land mobile radio network in the U.S. known as Roamer One. Intek Global Corporation was subsequently acquired by its majority shareholder, Securicor plc of Sutton Surrey, England. Mr. Neibert reported to offices located in Los Angeles, CA, Kansas City, MO, New York City, NY, and Sutton Surrey, England during period from 1992 - 1998 before locating The Wallen Group in Canoga Park, CA. Patrick Flaherty: Mr. Flaherty has been in the technology related business for over 30 years. During the last five years, he has been president of Manhattan Resources, a consulting company specializing in Network Communications and Storage Management. In late 1999 he became Senior Vice President of Concierge, Inc, and served in this position until March of 2002. Since April 2002, he has resumed his consulting business and was elected to the board of Concierge Technologies, Inc in September of 2002. James E. Kirk, Esq.: Mr. Kirk is Corporate Secretary and General Counsel and has served as a Director of Concierge, Inc. since inception. He is a graduate of Wichita State University and holds LLB and JD degrees from the law school of Washburn University. Mr. Kirk is an attorney in private practice in Albuquerque, New Mexico. 30 Samuel C.H. Wu: With nearly 20 years of experience in engineering, banking and finance; Mr. Wu has played a pivotal role in developing and managing national and international business activity relationships for organizations in the public and private sectors. He was a senior marketing/credit officer with the Bank of America -World Banking Division in Tokyo, London and Hong Kong before founding Woodsford Shipping & Trading Co., Ltd. Under Mr. Wu's guidance, Woodsford has become a preeminent firm in the area's import/export and financial markets. He has been actively involved in the affairs of Concierge since its inception. Mr. Wu is fluent in English, Japanese and a number of Chinese dialects. He is a graduate of the University of California, Berkeley, where he received his BSEE in electronics and computer sciences and MBA. He has also taken advanced studies in manufacturing, quality assurance and community medicine. Marc Angell: Mr. Angell is the founder and President of Planet Halo and has operated the company since its inception in 2000. Prior to founding Planet Halo, and from the period 1997 through 1999, Mr. Angell was the founder, majority shareholder and CEO of Angellcom, a supplier and distributor of one-way paging devices in the U.S. During the early 1990s Mr. Angell was also involved in the land mobile radio business as a license holder and manager of 220MHz radio systems. Mr. Angell conceptualized, designed and marketed both the one-way pagers for Angellcom and the Halo device for Planet Halo. He was elected to the board of directors of Concierge simultaneous with the acquisition of Planet Halo. Pat Rodden: Mr. Rodden has nearly two decades of unique experience developing products and strategies for leading consumer, sports, recreation and electronics companies. Rodden is a founding partner, director and head of operations for Fiori whose expertise has built the company into a leading consumer technology research and design firm that has garnered more than 25 international awards over the past three years alone, many on behalf of Fortune 500 companies. Prior to founding Fiori in 1994, Mr. Rodden held various product development and program director positions at Virtual Vision, Precor, Paccar and Hughes. He graduated from California State University, Chico in 1984 with a B.S. in Mechanical Engineering. There are no family relationships between the directors and officers. There are no significant employees of Concierge who are not described above. Audit Committee and Audit Committee Financial Expert Our directors serve as our audit committee. There is no financial expert serving on the audit committee. We have no financial expert serving on the audit committee, because we have no assets of substantial value and have no ongoing business activities. Code of Ethics We have adopted a Code of Ethics that applies to our chief executive officer, chief financial officer, and - should we acquire such - principal accounting officer or controller or persons performing similar functions. A copy of the Code of Ethics was filed as an exhibit to the Form 10-KSB annual report for FY 06-30-2004. 31 Compliance with Section 16 (a) of the Exchange Act Section 16(a) Beneficial Ownership Reporting Compliance. Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to us with respect to our fiscal year ended June 30, 2006 and any written representations furnished to us from a person subject to Section 16(a) filing requirements that no Form 5 is required for such period, no person who, at any time during the fiscal year, was a director, officer or beneficial owner of more than ten person of our common stock failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during such fiscal year. ITEM 10. EXECUTIVE COMPENSATION The following information concerns the compensation of our chief executive officer and our chief operations officers for the last three completed fiscal years. No other executive officers or individuals received total annual salary and bonus that exceeded $100,000 during the last three completed fiscal years. Shares of Name of Chief Executive Officer Year Cash Salary Common Stock Awarded David Neibert 2006 0 0 Allen Kahn 2006 0 0 David Neibert 2005 0 0(1) Allen Kahn 2005 0 0 David Neibert 2004 0 0 Allen Kahn 2004 0 0 - -------------------- (1) Mr. Neibert received no shares of stock, however Ryan Consultants Ltd was issued 4,000,000 shares of our stock as payment for the services provided by Mr. Neibert. Mr. Neibert disclaims beneficial ownership of the shares. 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, 2006. 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. 32 Long-Term Compensation We have no long-term compensation plans or employment agreements with any of our officers or directors. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The table below sets forth the ownership, as of September 20, 2006 of each individual known to management to be the beneficial owner of more than five percent of the company's common stock, by all directors, and named executive officers, individually and as a group. Name and Address of Amount Percent of Beneficial Owner Owned Class ------------------------ ------ ---------- Allen E. Kahn 23,778,135 16.7% 7547 W. Manchester Ave., No. 325 Los Angeles, CA 90045 Samuel C.H. Wu 20,855,437 14.7% 1202 Tower 1, Admiralty Centre 18 Harcourt Road Hong Kong, China Polly Force Co., Ltd. 10,805,680 (1) 7.6% 1202 Tower 1, Admiralty Centre 18 Harcourt Road Hong Kong, China Marc Angell 7,174,181 5.04% 1575 Spinnaker Dr Suite 204A Ventura, CA 93001 Fiori Product Development 411,612 (2) (3) 411 SW Second Ave. Third Floor Portland, OR 97204 F. Patrick Flaherty 4,727,485 3.3% 637 29th Street Manhattan Beach, CA 90266 James E. Kirk 3,383,291 2.4% 1401 Kirby, N.E. Albuquerque, NM 87112 David W. Neibert 1,539,100 (1) 24028 Clarington Drive West Hills, CA 91304 Officers and Directors as a Group (7 persons) 61,869,241 43.5% (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. 33 (2) Mr. Rodden is a beneficial owner of these shares through his presence on the Board of Directors and his shareholdings in Fiori Product Development, Inc. (3) 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 transactions, to which Concierge Technologies was or is to be a party, in which any director, executive officer, nominee for election as a director, any security holder named in Item 10 above and any immediate family member of any of the foregoing persons had or is to have a direct or indirect material interest. ITEM 13. EXHIBITS The following exhibits are filed as part of this Form 10-KSB: Exhibit No. Description ----------- ----------- 2 - Stock Purchase Agreement of March 6, 2000 between Starfest, Inc. and MAS Capital, Inc.* 3.1 - Certificate of Amendment of Articles of Incorporation of Starfest, Inc. and its earlier articles of incorporation.* 3.2 - Bylaws of Concierge, Inc., which became the Bylaws of Concierge Technologies upon its merger with Starfest, Inc. on March 20, 2002.* 3.5 - Articles of Merger of Starfest, Inc. and Concierge, Inc. filed with the Secretary of State of Nevada on March 1, 2002.** 3.6 - Agreement of Merger between Starfest, Inc. and Concierge, Inc. filed with the Secretary of State of California on March 20, 2002.** 3.7 - Articles of Incorporation of Concierge Technologies, Inc. filed with the Secretary of State of Nevada on April 20, 2005.+ 34 3.8 - Articles of Merger between Concierge Technologies, Inc., a California corporation, and Concierge Technologies, Inc., a Nevada corporation, filed with the Secretary of State of Nevada on March 2, 2006 and the Secretary of State of California on October 5, 2006.+ 10.1 - Agreement of Merger between Starfest, Inc. and Concierge, Inc.* 14 - Code of Ethics for CEO and Senior Financial Officers.*** 31 - Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.1 - Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 - Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.1 - Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *Previously filed with Form 8-K12G3 on March 10, 2000; Commission File No. 000-29913, incorporated herein. **Previously filed with Form 8-K on April 2, 2002; Commission File No. 000-29913, incorporated herein. ***Previously filed with Form 10-KSB on October 13, 2004; Commission File No. 000-29913, incorporated herein. +Previously filed with Form 10-KSB FYE 06-30-06 on October 13, 2006; Commission File No. 000-29913; incorporated herein. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Audit Fees. Our principal independent accountant billed us, for each of the last two fiscal years, the following aggregate fees for its professional services rendered for the audit of our annual financial statements and review of financial statements included in our Form 10-QSB reports or other services normally provided in connection with statutory and regulatory filings or engagements for those two fiscal years: Fiscal Year ended June 30, 2006 $25,000 Fiscal Year ended June 30, 2005 $26,500 35 Audit-Related Fees. Our principal independent accountant billed us, for each of the last two fiscal years, the following aggregate fees for assurance and related services reasonably related to the performance of the audit or review of our financial statements and not reported above under "Audit Fees": Fiscal Year ended June 30, 2006 $-0- Fiscal Year ended June 30, 2005 $-0- Tax Fees. Our principal independent accountant billed us, for each of the last two fiscal years, the following aggregate fees for professional services rendered for tax compliance, tax advice and tax planning: Fiscal Year ended June 30, 2006 $-0- Fiscal Year ended June 30, 2005 $-0- All Other Fees. Our principal independent accountant billed us, for each of the last two fiscal years, the following aggregate fees for products and services provided by it, other than the services reported in the above three categories: Fiscal Year ended June 30, 2006 $-0- Fiscal Year ended June 30, 2005 $-0- Pre-Approval of Audit and Non-Audit Services. The Audit Committee requires that it pre-approve all audit, review and attest services and non-audit services before such services are engaged. 36 SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CONCIERGE TECHNOLOGIES, INC. /s/ David W. Neibert Date: March 19, 2007 By ------------------------------------------------- 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. /s/ David W. Neibert Date: March 19, 2007 --------------------------------------------------- David W. Neibert, President and Director /s/ Allen E. Kahn Date: March 19, 2007 --------------------------------------------------- Allen E. Kahn, Chief Financial Officer and Director /s/ F.P. Flaherty Date: March 19, 2007 --------------------------------------------------- F. Patrick Flaherty, Director /s/ James E. Kirk Date: March 19, 2007 --------------------------------------------------- James E. Kirk, Secretary and Director /s/ Samuel C.H. Wu Date: March 19, 2007 --------------------------------------------------- Samuel C.H. Wu, Director /s/ Marc Angell Date: March 19, 2007 --------------------------------------------------- Marc Angell, Director /s/ Pat Rodden Date: March 19, 2007 --------------------------------------------------- Pat Rodden, Director 37 CONCIERGE TECHNOLOGIES, INC. Commission File No. 000-29913 Index to Exhibits to Amendment No. 1 to Form 10-KSB 06-30-06 The following exhibits are filed, by incorporation by reference, as part of this Form 10-KSB: Exhibit No. Description ----------- ----------- 2 - Stock Purchase Agreement of March 6, 2000 between Starfest, Inc. and MAS Capital, Inc.* 3.1 - Certificate of Amendment of Articles of Incorporation of Starfest, Inc. and its earlier articles of incorporation.* 3.2 - Bylaws of Concierge, Inc., which became the Bylaws of Concierge Technologies upon its merger with Starfest, Inc. on March 20, 2002.* 3.5 - Articles of Merger of Starfest, Inc. and Concierge, Inc. filed with the Secretary of State of Nevada on March 1, 2002.** 3.6 - Agreement of Merger between Starfest, Inc. and Concierge, Inc. filed with the Secretary of State of California on March 20, 2002.** 3.7 - Articles of Incorporation of Concierge Technologies, Inc. filed with the Secretary of State of Nevada on April 20, 2005.+ 3.8 - Articles of Merger between Concierge Technologies, Inc., a California corporation, and Concierge Technologies, Inc., a Nevada corporation, filed with the Secretary of State of Nevada on March 2, 2006 and the Secretary of State of California on October 5, 2006.+ 10.1 - Agreement of Merger between Starfest, Inc. and Concierge, Inc.* 14 - Code of Ethics for CEO and Senior Financial Officers.*** 31 - Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 1 31.1 - Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 - Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.1 - Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *Previously filed with Form 8-K12G3 on March 10, 2000; Commission File No. 000-29913, incorporated herein. **Previously filed with Form 8-K on April 2, 2002; Commission File No. 000-29913, incorporated herein. ***Previously filed with Form 10-KSB on October 13, 2004; Commission File No. 000-29913, incorporated herein. +Previously filed with Form 10-KSB FYE 06-30-06 on October 13, 2006; Commission File No. 000-29913, incorporated herein. 2 EX-31 2 cti10ksbaex31063006.txt CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350) I, Allen E. Kahn, certify that: 1. I have reviewed this annual report on Form 10-KSB of Concierge Technologies, Inc.; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 quarterly report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 19, 2007 /s/ Allen E. Kahn --------------------------- Allen E. Kahn Chief Executive Officer Exhibit 31 Page 1 of 1 Page EX-31.1 3 cti10ksbaex311063006.txt CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350) I, Allen E. Kahn, certify that: 1. I have reviewed this annual report on Form 10-KSB of Concierge Technologies, Inc.; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 quarterly report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 19, 2007 /s/ Allen E. Kahn --------------------------- Allen E. Kahn Chief Financial Officer Exhibit 31.1 Page 1 of 1 Page EX-32 4 cti10ksbaex32063006.txt 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 fiscal year ended June 30, 2006 (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 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ss.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. Date: March 19, 2007 /s/ Allen E. Kahn --------------------------- Allen E. Kahn Chief Executive Officer The above certification is furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss.1350) and is not being filed as part of the Form 10-KSB or as a separate disclosure document. Exhibit 32 Page 1 of 1 Page EX-32.1 5 cti10ksbaex321063006.txt 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 fiscal year ended June 30, 2006 (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 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ss.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. Date: March 19, 2007 /s/ Allen E. Kahn --------------------------- 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. ss.1350) and is not being filed as part of the Form 10-KSB or as a separate disclosure document. Exhibit 32.1 Page 1 of 1 Page CORRESP 6 filename6.txt FULLER TUBB A PROFESSIONAL LIMITED LIABILITY COMPANY 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 MICHAEL A. BICKFORD ----- OF COUNSEL: THOMAS J. KENAN E-MAIL THOMAS J. KENAN kenan@ftpslaw.com DAN M. PETERS March 13, 2007 Jorge Bonilla, Senior Staff Accountant Division of Corporation Finance, MailStop 4561 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549-3561 ATTENTION WILSON K. LEE Re: Concierge Technologies, Inc. Form 10-KSB for fiscal year ended June 30, 2006 File No. 000-29913 Dear Mr. Bonilla: As counsel to Concierge Technologies, Inc., I enclose Amendment No. 1 to its Form 10-KSB for the fiscal year ended June 30, 2006, in accordance with the instructions in your letter dated March 9, 2007. The following responses are made to your additional comments. The responses are keyed to your comments. We are providing by FedEx, as courtesy copies, three redlined copies as well as three plain copies of the filed version of the amendment. FORM 10-KSB FOR THE YEAR ENDED JUNE 30, 2006 Financial Statements and Notes Report of Independent Registered Accounting Firm, page 12 1. The third paragraph has now been amended to include an audit opinion on the 2005 consolidated statement of operations and cash flows. Item 8A. Controls and Procedures 2. We have added to this disclosure language stating that the officers have concluded the "procedures are effective and provide reasonable assurances . . ." of compliance with Release No. 33-8238. Please contact the undersigned regarding any questions concerning the above. If there are questions or matters that could be resolved more effectively by telephone, please call me at 405-235-2575. My fax number is 405-232-8384. Sincerely, /s/ Thomas J. Kenan Thomas J. Kenan e-mail: kenan@ftpslaw.com Enclosures Copy: Allen E. Kahn (w/enclosures) David W. Neibert. (w/enclosures) Hamid Kabani, C.P.A. (w/enclosures) -----END PRIVACY-ENHANCED MESSAGE-----