Exhibit 3.3
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
OR
| | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to . |
Commission File Number:
CONCIERGE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |
120 Calle Iglesia
Unit B
Fax: 888.312.0124
(Address and telephone number of registrant's principal
executive offices and principal place of business)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class of Security | Trading Symbol | Name of Exchange on Which Registered |
| None |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| | ☐ | Smaller reporting company | | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The registrant had
CONCIERGE TECHNOLOGIES, INC.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “would,” “shall,” “might,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
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the outcome of the class action litigation; |
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| • | recent resolutions with the Securities Exchange Commission (the “SEC”) and the Commodity Futures Trading Commission (the “CFTC”) against United States Oil Fund, L.P., United States Commodity Funds, LLC, a subsidiary of our subsidiary, Wainwright Holdings, and other related parties, as disclosed under “Item 1. Legal Proceedings”; | |
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our future financial performance, including our revenue, cost of revenue, gross profit, gross margin, operating expenses, ability to generate positive cash flow, and ability to achieve and maintain profitability; and the impact of the COVID-19 pandemic thereon; |
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the sufficiency of our cash and cash equivalents to meet our working capital, capital expenditure, and liquidity needs; and the impact of the COVID-19 pandemic thereon; |
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our operating subsidiaries' ability to attract and retain customers to use our products, to optimize the pricing for our products, to expand our sales to our customers, and to convince our existing customers to renew subscriptions; |
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the evolution of technologies affecting our operating subsidiaries' products and markets; |
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our operating subsidiaries' ability to innovate and provide a superior user experience and our intentions and strategy with respect thereto; |
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our operating subsidiaries' ability to successfully penetrate enterprise markets; and the impact of the COVID-19 pandemic thereon; |
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our operating subsidiaries' ability to successfully expand in our existing markets and into new markets, including international markets; and the impact of the COVID-19 pandemic thereon; |
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the attraction and retention of key personnel; |
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our ability to effectively manage our growth and future expenses; |
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worldwide economic conditions, including the economic disruption imposed by the COVID-19 pandemic, and their impact on spending; and |
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and our operating subsidiaries' ability to comply with modified or new laws and regulations applying to our business, including privacy and data security regulations. |
We caution you that the foregoing list does not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2021 and this Quarterly Report on Form 10-Q. Moreover, we and our subsidiaries operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We and our subsidiaries may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
PART I – FINANCIAL INFORMATION
| Item 1. Financial Statements. |
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| September 30, 2021 | June 30, 2021 (1) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Accounts receivable - related parties | ||||||||
| Inventories | ||||||||
| Prepaid income tax and tax receivable | ||||||||
| Investments | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Restricted cash | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Deferred tax assets, net-U.S. | ||||||||
| Other assets, long - term | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable, accrued expenses and legal settlement | $ | $ | ||||||
| Expense waivers – related parties | ||||||||
| Operating lease liabilities, current portion | ||||||||
| Notes payable - related parties | ||||||||
| Loans - property and equipment, current portion | ||||||||
| Total current liabilities | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Loans - property and equipment, net of current portion | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Deferred tax liabilities, net-foreign | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Preferred stock, $ par value; authorized | ||||||||
| Series B: issued and outstanding at September 30, 2021 and at June 30, 2021 | ||||||||
| Common stock, $ par value; shares authorized; shares issued and outstanding at September 30, 2021 and at June 30, 2021 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Retained earnings | ||||||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
(1) Derived from audited financial statements
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(UNAUDITED)
| Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||
| Net revenue | ||||||||
| Fund management - related party | $ | $ | ||||||
| Food products | ||||||||
| Security systems | ||||||||
| Beauty products | ||||||||
| Net revenue | ||||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expense | ||||||||
| General and administrative expense | ||||||||
| Fund operations | ||||||||
| Marketing and advertising | ||||||||
| Depreciation and amortization | ||||||||
| Salaries and compensation | ||||||||
| Legal settlement | ||||||||
| Total operating expenses | ||||||||
| (Loss) income from operations | ( | ) | ||||||
| Other income: | ||||||||
| Interest and dividend income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other income | ||||||||
| Total other income, net | ||||||||
| (Loss) income before income taxes | ( | ) | ||||||
| Provision of income taxes | ( | ) | ( | ) | ||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Weighted average shares of common stock | ||||||||
| Basic and diluted | ||||||||
| Net (loss) income per common share | ||||||||
| Basic and diluted | $ | ( | ) | $ | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Other comprehensive income: | ||||||||
| Foreign currency translation (loss) gain | ( | ) | ||||||
| Comprehensive (loss) income | $ | ( | ) | $ | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTH PERIODS ENDING SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(UNAUDITED)
| Period Ending September 30, 2021 | Preferred Stock (Series B) | Common Stock | ||||||||||||||||||||||||||||||
| Number of Shares | Amount | Number of Shares | Par Value | Additional Paid - in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders' Equity | |||||||||||||||||||||||||
| Balance at July 1, 2021 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Loss on currency translation | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Period Ending September 30, 2020 | Preferred Stock (Series B) | Common Stock | ||||||||||||||||||||||||||||||
| Number of Shares | Amount | Number of Shares | Par Value | Additional Paid - in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders' Equity | |||||||||||||||||||||||||
| Balance at July 1, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Gain on currency translation | - | - | ||||||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Three Month Period Ended | ||||||||
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Bad debt expense | ||||||||
| Unrealized loss (gain) on investments | ( | ) | ||||||
| Loss (gain) on disposal of equipment | ( | ) | ||||||
| Operating lease right-of-use asset - non-cash lease cost | ||||||||
| Decrease (increase) in current assets: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Accounts receivable - related party | ||||||||
| Prepaid income taxes and tax receivable | ( | ) | ||||||
| Inventories | ( | ) | ( | ) | ||||
| Other current assets | ||||||||
| Decrease (increase) in current liabilities: | ||||||||
| Accounts payable, accrued expenses and legal settlement | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Expense waivers - related party | ||||||||
| Net cash provided by operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash paid for acquisition of assets | ( | ) | ||||||
| Purchase of real estate and equipment | ( | ) | ( | ) | ||||
| Sale of investments | ||||||||
| Purchase of investments | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayment of property and equipment loans | ( | ) | ( | ) | ||||
| Net cash (used in) financing activities | ( | ) | ( | ) | ||||
| Effect of exchange rate change on cash and cash equivalents | ( | ) | ||||||
| NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING BALANCE | ||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid (refunded) | $ | $ | ( | ) | ||||
| Non-cash financing and investing activities: | ||||||||
| Reclassification of acquisition deposit | $ | $ | ||||||
| Purchase price payable | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIALS STATEMENTS
(UNAUDITED)
| NOTE 1. | ORGANIZATION AND DESCRIPTION OF BUSINESS |
Concierge Technologies, Inc., (the “Company” or “Concierge”), a Nevada corporation, operates through its wholly owned subsidiaries who are engaged in varied business activities. The operations of the Company’s wholly owned subsidiaries are more particularly described herein but are summarized as follows:
| ● | Wainwright Holdings, Inc. (“Wainwright”), a U.S. based company, is the sole member of two investment services limited liability company subsidiaries, United States Commodity Funds LLC (“USCF”), and USCF Advisers LLC (“USCF Advisers”), each of which manages, operates or is an investment advisor to exchange traded funds organized as limited partnerships or investment trusts that issue shares which trade on the NYSE Arca stock exchange. | |
| ● | Gourmet Foods, Ltd., a New Zealand based company, manufactures and distributes New Zealand meat pies on a commercial scale and its wholly owned New Zealand subsidiary company, Printstock Products Limited ("Printstock"), prints specialty wrappers for the food industry in New Zealand and Australia (collectively "Gourmet Foods"). | |
| ● | Brigadier Security Systems (2000) Ltd. (“Brigadier”), a Canadian based company, sells and installs commercial and residential alarm monitoring systems under the names Brigadier Security Systems and Elite Security in the province of Saskatchewan. | |
| ● | Kahnalytics, Inc. dba/Original Sprout (“Original Sprout”), a U.S. based company, is engaged in the wholesale distribution of hair and skin care products under the brand name Original Sprout on a global scale. | |
| ● | Marygold & Co., a newly formed U.S. based company, together with its wholly owned limited liability company, Marygold & Co. Advisory Services, LLC, (collectively "Marygold") was established by Concierge to explore opportunities in the financial technology ("Fintech") space, is still in the development stage as of September 30, 2021, and is estimated to launch commercial services in the current fiscal year. Through September 30, 2021, expenditures have been limited to developing the business model and the associated application development. | |
| ● | Marygold & Co. (UK) Limited, a newly formed U.K. limited company (“Marygold UK”), was established to act as a holding company for acquisitions to be made in the U.K. As of September 30, 2021, there have been no acquisitions completed and no operations. The expenses of Marygold UK have been included with those of Concierge. |
Concierge manages its operating businesses on a decentralized basis. There are no centralized or integrated operational functions such as marketing, sales, legal or other professional services and there is little involvement by Concierge’s management in the day-to-day business affairs of its operating subsidiary businesses apart from oversight. Concierge’s corporate management is responsible for capital allocation decisions, investment activities and selection and retention of the Chief Executive to head each of the operating subsidiaries. Concierge's corporate management is also responsible for corporate governance practices, monitoring regulatory affairs, including those of its operating businesses and involvement in governance-related issues of its subsidiaries as needed. Across Concierge and its subsidiaries the Company employs
As more fully detailed in the Company’s Definitive Information Statement on Schedule 14C, filed with the U.S. Securities and Exchange Commission on September 13, 2021, on August 24, 2021, the Board of Directors of the Company approved, by unanimous written consent in lieu of a meeting, to effect a name change of the Company to "The Marygold Companies, Inc." As of November 12, 2021, no action has been taken with respect to the name change and no definitive date has been set.
| NOTE 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation and Accounting Principles
The Company has prepared the accompanying unaudited financial statements on a consolidated basis. In the opinion of management, the accompanying consolidated balance sheets, related statements of income and comprehensive income, and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation, prepared on an accrual basis, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The information included in this Form 10-Q should be read in conjunction with information included in the Company’s Annual Report on Form 10-K for year ended June 30, 2021 and filed with the U.S. Securities and Exchange Commission on September 22, 2021.
Principles of Consolidation
The accompanying unaudited consolidated financial statements, which are referred to herein as the “Financial Statements” include the accounts of Concierge and its wholly owned subsidiaries, Wainwright, Gourmet Foods, Brigadier, Original Sprout, Marygold and Marygold UK.
All inter-company transactions and accounts have been eliminated in consolidation.
Use of Estimates
The preparation of the Financial Statements are in conformity with U.S. GAAP which 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.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid debt instruments with original maturities of three months or less on the date of purchase. The Company maintains its cash and cash equivalents in financial institutions in the United States, Canada, and New Zealand. Accounts in the United States are insured by the Federal Deposit Insurance Corporation up to $250,000 per depositor, and accounts in Canada are insured by the Canada Deposit Insurance Corporation up to CD$100,000 per depositor. Accounts in New Zealand are uninsured. The Company has, at times, held deposits in excess of insured amounts, but the Company does not expect any losses in such accounts.
Accounts Receivable, net and Accounts Receivable - Related Parties
Accounts receivable, net consist of receivables related to the Brigadier, Gourmet Foods and Original Sprout businesses. Management regularly reviews the composition of accounts receivable and analyzes customer credit worthiness, customer concentrations, current economic trends and changes in customer payment patterns to determine whether or not an account should be deemed uncollectible. Reserves, if any, are recorded on a specific identification basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of September 30, 2021 and June 30, 2021, the Company had $
Accounts receivable - related parties consist of fund asset management fees receivable from the Wainwright business. Management fees receivable generally consist of one month of management fees which are collected in the month after they are earned. As of September 30, 2021 and June 30, 2021, there is
Major Customers and Suppliers – Concentration of Credit Risk
Concierge, as a holding company, operates through its wholly owned subsidiaries and has no concentration of risk either from customers or suppliers as a stand-alone entity. Marygold and Marygold UK, as newly formed development stage entities, had no revenues and no significant transactions for the three months ended September 30, 2021. Any transactions that did occur were included with those of Concierge.
For our subsidiary, Wainwright, the concentration of risk and the relative reliance on major customers are found within the various funds it manages and the associated three-month revenues as of September 30, 2021 compared with those at September 30, 2020 along with the accounts receivable – related parties as of September 30, 2021 and June 30, 2021 as depicted below.
| For the Three Months Ended | For the Three Months Ended | |||||||||||||||
| September 30, 2021 | September 30, 2020 | |||||||||||||||
| Revenue | Revenue | |||||||||||||||
| Fund | ||||||||||||||||
| USO | $ | % | $ | % | ||||||||||||
| BNO | % | % | ||||||||||||||
| UNG | % | % | ||||||||||||||
| USCI | % | % | ||||||||||||||
| All Others | % | % | ||||||||||||||
| Total | $ | % | $ | % | ||||||||||||
| As of September 30, 2021 | As of June 30, 2021 | |||||||||||||||
| Accounts Receivable | Accounts Receivable | |||||||||||||||
| Fund | ||||||||||||||||
| USO | $ | % | $ | % | ||||||||||||
| BNO | % | % | ||||||||||||||
| UNG | % | % | ||||||||||||||
| USCI | % | % | ||||||||||||||
| All Others | % | % | ||||||||||||||
| Total | $ | % | $ | % | ||||||||||||
Concierge, through Gourmet Foods and following the acquisition of Printstock Products Limited on July 1, 2020, has two major customer groups comprising gross revenues: 1) baking, and 2) printing. For the purpose of segment reporting (Note 15) both revenue streams are considered part of the same "food industry" segment as they are evaluated as one segment by the Company's Chief Operating Decision Maker.
Baking: Within the baking sector there are three major customer groups; 1) grocery, 2) gasoline convenience stores, and 3) independent retailers. The grocery industry is dominated by several large chain operations, which are customers of Gourmet Foods, and there are no long-term guarantees that these major customers will continue to purchase products from Gourmet Foods, however, many of the existing relationships have been in place for sufficient time to give management reasonable confidence in their continuing business. For the three months ended September 30, 2021, Gourmet Foods’ largest customer in the grocery industry, who operates through a number of independently branded stores, accounted for approximately
In the gasoline convenience store market customer group, Gourmet Foods supplies two major channels. The largest is a marketing consortium of gasoline dealers operating under the same brand who, for the three month periods ended September 30, 2021 and September 30, 2020 accounted for approximately
The third major customer group is independent retailers and cafes, which collectively accounted for the balance of baking sales revenue, however no single customer in this group was a significant contributor of baking sales revenues for the three month periods ended September 30, 2021 or September 30, 2020, nor a significant contributor to baking accounts receivable as of September 30, 2021 and June 30, 2021.
Printing: The printing sector of Gourmet Foods' gross revenues is comprised of many customers, some large and some small, with one customer accounting for
Consolidated: With respect to Gourmet Foods’ consolidated risk, the largest
Gourmet Foods, including Printstock, is not dependent upon any one major supplier as many alternative sources are available in the local marketplace should the need arise. However, the unavailability of, or increase in price in, any of the ingredients on which Gourmet Foods relies to produce its products could harm its operating results for such period.
Concierge, through Brigadier, is partially dependent upon its contractual relationship with the alarm monitoring company who provides monitoring services to Brigadier’s customers. In the event this contract is terminated, Brigadier would be compelled to find an alternate source of alarm monitoring, or establish such a facility itself. Management believes that the contractual relationship is sustainable, and has been for many years, with alternate solutions available should the need arise. Sales to the largest customer, which includes contracts and recurring monthly support fees, totaled
Brigadier purchases alarm panels, digital and analog cameras, mounting hardware and accessory items needed to complete security installations from a variety of sources. The manufacture of electronic items such as those sought by Brigadier has expanded to a global scale thus providing Brigadier with a broad choice of suppliers. Brigadier bases its vendor selection on several criteria including: price, availability, shipping costs, quality, suitability for purpose and the technical support of the manufacturer. Brigadier is not reliant on any one supplier.
Concierge, through Original Sprout, has thousands of customers and, from time to time, certain customers become significant during specific reporting periods, but may not be significant during other periods. Original Sprout had
Concierge, through Original Sprout, is dependent upon its relationship with a product packaging company who, at the direction of Original Sprout, produces the products in accordance with proprietary formulas, packages them in appropriate containers, and delivers the finished goods to Original Sprout for distribution to its customers. All of Original Sprout’s products are currently produced by this packaging company, although if this relationship were to fail there are other similar packaging companies available to Original Sprout at competitive pricing. Because of the nature of the Original Sprout product ingredients, some of the ingredients may, at times, be difficult to source in timely fashion or at the expected price point. To safeguard against this possibility Original Sprout endeavors to maintain at least a 90-day supply of all products in stock. Estimating and maintaining a reserve stock account is not a guarantee that a shortage of ingredient supplies will not affect production such that Original Sprout will not exhaust its reserves or be unable to fulfill customer orders.
Inventories
Inventories, consisting primarily of; (i) food products, printing supplies, and packaging in New Zealand, (ii) hair and skin care finished products and components in the U.S. and, (iii) security system hardware in Canada, are valued at the lower of cost or net realizable value. Inventories in Canada and New Zealand are maintained on the first-in, first-out method, while inventory in the U.S is maintained using the average cost method. Inventories include product cost, inbound freight and warehousing costs where applicable. Management compares the cost of inventories with the net realizable value and an allowance is made for writing down the inventories to their net realizable value, if lower. An assessment is made at the end of each fiscal quarter to determine what slow-moving inventory items, if any, should be deemed obsolete and written down to their estimated net realizable value. For the three months ended September 30, 2021 and September 30, 2020, the expense for slow-moving or obsolete inventory was $
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation. Expenditures for maintenance and repairs are charged to operating expense as incurred; additions and improvements are capitalized. Office furniture and equipment include office fixtures, computers, printers and other office equipment plus software and applicable packaging designs. Leasehold improvements, which are included in plant and equipment, are depreciated over the shorter of the useful life of the improvement and the length of the lease. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation is computed using the straight line method over the estimated useful life of the asset (see Note 5 to the Consolidated Financial Statements).
| Category | Estimated Useful Life (in years) | |||
| Building | ||||
| Plant and equipment: | ||||
| Furniture and office equipment | ||||
| Vehicles | ||||
Intangible Assets
Intangible assets consist of brand names, domain names, recipes, non-compete agreements and customer lists along with the internally developed software in process for the business applications of Marygold to be launched in the coming fiscal year. Intangible assets with finite lives are amortized over the estimated useful life and are evaluated for impairment at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company assesses recoverability by determining whether the carrying value of such assets will be recovered through the discounted expected future cash flows. If the future discounted cash flows are less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. There was
Goodwill
Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a business combination transaction. Goodwill is tested for impairment on an annual basis during the fourth quarter of the Company's fiscal year, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may be impaired. The Company first performs a qualitative test to determine if goodwill is impaired at a reporting unit. In performing this test, the Company evaluates macroeconomic factors, industry and market considerations, cost factors such as the increase in the cost of materials or labor or other costs, overall financial performance, changes in key personnel or customers or strategy, and other entity-specific events or trends that could indicate impairment, among other items. If the results of this test indicate that it is more likely than not that the fair value of the reporting is below its carrying value, a quantitative test is then performed to determine the amount of the impairment. When impaired, the carrying value of goodwill is written down to fair value. There was
Impairment of Long-Lived Assets
The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. There was
Investments and Fair Value of Financial Instruments
Short-term investments are classified as available-for-sale securities. The Company measures the investments at fair value at period end with any changes in fair value reflected as unrealized gains or (losses) which is included as part of other (expense) income. The Company values its investments in accordance with Accounting Standards Codification ("ASC") 820 – Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurement. ASC 820 establishes a fair value hierarchy that distinguishes between: (1) market participant assumptions developed based on market data obtained from sources independent of the Company (observable inputs) and (2) The Company’s own assumptions about market participant assumptions developed based on the best information available under the circumstances (unobservable inputs). The three levels defined by the ASC 820 hierarchy are as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 assets include the following: quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).
Level 3 – Unobservable pricing input at the measurement date for the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.
In some instances, the inputs used to measure fair value might fall within different levels of the fair value hierarchy. The level in the fair value hierarchy within which the fair value measurement in its entirety falls shall be determined based on the lowest input level that is significant to the fair value measurement in its entirety.
Revenue Recognition
Revenue consists of fees earned through management of investment funds, sale of gourmet meat pies and printing of food wrappers in New Zealand, security alarm system installation and maintenance services in Canada, and sales of hair and skin care products internationally. Revenue is accounted for net of sales taxes, sales returns, and trade discounts. The performance obligation is satisfied when the product has been shipped and title, risk of loss and rewards of ownership have been transferred. For most of the Company’s product sales or services, these criteria are met at the time the product is shipped, the subscription period commences, or the management fees earned each month. For our Brigadier subsidiary in Canada, the Company operates under contract with an alarm monitoring company that pays a percentage of its recurring monitoring fee to Brigadier in exchange for continued customer service and support functions with respect to each customer maintained under contract by the monitoring company. The Company has no costs of contracts which require capitalization.
The Company generates revenue, in part, through contractual monthly recurring fees received for providing ongoing customer support services to monitoring company clientele. The five-step process governing contract revenue reporting includes:
| 1. Identifying the contract(s) with customers |
| 2. Identifying the performance obligations in the contract |
| 3. Determining the transaction price |
| 4. Allocating the transaction price to the performance obligations in the contract |
| 5. Recognizing revenue when or as the performance obligation is satisfied |
Transactions involve security systems that are sold outright to the customer where the Company's performance obligations include customer support services and the sale and installation of the security systems. For such arrangements, the Company allocates a portion of the transaction price to each performance obligation based on a relative stand-alone selling price. Revenue associated with the sale and installation of security systems is recognized once installation is complete, and is reflected as security system revenue in the Consolidated Statements of Income. Revenue associated with customer support services is recognized as those services are provided, and is included as a component of security system revenue in the Condensed Consolidated Statements of (Loss) Income, which for the three months ended September 30, 2021, were approximately $
Because the Company has no contract with the end user, and the monthly payments for customer support services are made to the Company by the monitoring company who has a contract with the end user, and end user customers are subject to cancellation through no control of the Company, no deferred revenues or contingent liability reserves have been established with respect to these contracts. The services are deemed delivered as the obligation is acknowledged on a monthly basis.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefits or if future deductibility is uncertain.
When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of Income.
Advertising Costs
The Company expenses the cost of advertising as incurred. Marketing and advertising costs for the three months ended September 30, 2021 and September 30, 2020 were $
Other Comprehensive Income (Loss)
Foreign Currency Translation
We record foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830-30, Foreign Currency Translation. The accounts of Gourmet Foods use the New Zealand dollar as the functional currency. The accounts of Brigadier Security Systems use the Canadian dollar as the functional currency. Assets and liabilities are translated at the exchange rate on the balance sheet date, and operating results are translated at the weighted average exchange rate throughout the period. Foreign currency transaction gains and (losses) can also occur if a transaction is settled in a currency other than the entity's functional currency. Accumulated currency translation gains and (losses) are classified as an item of accumulated other comprehensive income (loss) in the stockholders’ equity section of the consolidated balance sheet.
Segment Reporting
The Company defines operating segments as components for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances. The Company allocates its resources and assesses the performance of its sales activities based on these segments (Refer to Note 16 of the Condensed Consolidated Financial Statements).
Business Combinations
We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed. For the three months ended September 30, 2021 and September 30, 2020 a determination was made that no adjustments were necessary.
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Board Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, and ASU 2019-11, which replace the existing incurred loss impairment model with an expected credit loss model and require a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The new guidance will be effective for annual reporting periods beginning after December 15, 2022 (as amended by ASU 2019-10), including interim periods within that annual period. The Company anticipates the adoption of the standard will lead to changes in disclosures as well as insignificant changes related to the period of recognition of losses on its receivables.
In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The amendment is meant to simplify the accounting for convertible instruments by removing certain separation models in subtopic 470-20 for convertible instruments. The amendment also changed the method used to calculate diluted earnings per share ("EPS") for convertible instruments and for instruments that may be settled in cash. The amendment is effective for years beginning after December 15, 2023, including interim periods for those fiscal years. Early adoption is permitted for periods beginning after December 15, 2020, including interim periods within those fiscal years. The Company anticipates the adoption of the standard will not have a material impact on its consolidated financial statements and related disclosures given its current and anticipated operations.
| NOTE 3. | BASIC AND DILUTED NET INCOME PER SHARE |
Basic net income per share is based upon the weighted average number of common shares outstanding. This calculation also includes the weighted average number of Series B Convertible Preferred shares outstanding as they are deemed to be substantially similar to the common shares and shareholders are entitled to the same liquidation and dividend rights. Diluted net income 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. The Company does not have any options or warrants or other dilutive financial instruments. As such, basic and diluted earnings per share are the same.
On August 25, 2021 the Company adopted the Concierge Technologies, Inc. 2021 Omnibus Equity Incentive Plan (the "Plan") and had not issued any awards under the Plan as of September 30, 2021. The Company has also authorized a reverse stock split of its Common Stock by a ratio of not less than 1-for-
Basic and diluted net income per share reflects the effects of shares actually potentially issuable upon conversion of convertible preferred stock.
The components of basic and diluted earnings per share were as follows:
| For the Three Months Ended September 30, 2021 | ||||||||||||
| Net Loss | Shares | Per Share | ||||||||||
| Basic net loss per share: | ||||||||||||
| Net loss available to common shareholders | $ | ( | ) | $ | ( | ) | ||||||
| Net loss available to preferred shareholders | ( | ) | $ | ( | ) | |||||||
| Basic and diluted net loss per share | $ | ( | ) | $ | ( | ) | ||||||
| For the Three Months Ended September 30, 2020 | ||||||||||||
| Net Income | Shares | Per Share | ||||||||||
| Basic net income per share: | ||||||||||||
| Net income available to common shareholders | $ | $ | ||||||||||
| Net income available to preferred shareholders | $ | |||||||||||
| Basic and diluted net income per share | $ | 2,219,434 | 38,473,159 | $ | 0.06 | |||||||
| NOTE 4. | INVENTORIES |
Inventories for Gourmet Foods, Brigadier, Original Sprout and Marygold consisted of the following totals as of September 30, 2021 and June 30, 2021:
| September 30, | June 30, | |||||||
| 2021 | 2021 | |||||||
| Raw materials | $ | $ | ||||||
| Supplies and packing materials | ||||||||
| Finished goods | ||||||||
| Total inventories | $ | $ | ||||||
| NOTE 5. | PROPERTY, PLANT AND EQUIPMENT |
Property, plant and equipment consisted of the following as of September 30, 2021 and June 30, 2021:
| September 30, | June 30, | |||||||
| 2021 | 2021 | |||||||
| Plant and equipment | $ | $ | ||||||
| Furniture and office equipment | ||||||||
| Vehicles | ||||||||
| Land and building | ||||||||
| Total property, plant and equipment, gross | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Total property, plant and equipment, net | $ | $ | ||||||
For the three months ended September 30, 2021 and September 30, 2020, depreciation expense for property, plant and equipment totaled $
| NOTE 6. | INTANGIBLE ASSETS |
Intangible assets consisted of the following as of September 30, 2021 and June 30, 2021:
| September 30, | June 30, | |||||||
| 2021 | 2021 | |||||||
| Customer relationships | $ | $ | ||||||
| Brand name | ||||||||
| Domain name | ||||||||
| Recipes | ||||||||
| Non-compete agreement | ||||||||
| Internally developed software | ||||||||
| Total | ||||||||
| Less : accumulated amortization | ( | ) | ( | ) | ||||
| Net intangibles | $ | $ | ||||||
CUSTOMER RELATIONSHIPS
On August 11, 2015, the Company acquired Gourmet Foods, Ltd. The fair value on the acquired customer relationships was estimated to be $
| September 30, | June 30, | |||||||
| 2021 | 2021 | |||||||
| Customer relationships | $ | |||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total customer relationships, net | $ | |||||||
BRAND NAME
On August 11, 2015, the Company acquired Gourmet Foods, Ltd. The fair value on the acquired brand name was estimated to be $
| September 30, | June 30, | |||||||
| 2021 | 2021 | |||||||
| Brand name | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total brand name, net | $ | $ | ||||||
DOMAIN NAME
On August 11, 2015, the Company acquired Gourmet Foods, Ltd. The fair value on the acquired domain name was estimated to be $
| September 30, | June 30, | |||||||
| 2021 | 2021 | |||||||
| Domain name | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total brand name, net | $ | $ | ||||||
RECIPES AND FORMULAS
On August 11, 2015, the Company acquired Gourmet Foods, Ltd. The fair value on the recipes was estimated to be $
| September 30, | June 30, | |||||||
| 2021 | 2021 | |||||||
| Recipes and formulas | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total recipes and formulas, net | $ | $ | ||||||
NON-COMPETE AGREEMENT
On June 2, 2016, the Company acquired Brigadier. The fair value on the acquired non-compete agreement was estimated to be $
| September 30, | June 30, | |||||||
| 2021 | 2021 | |||||||
| Non-compete agreement | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total non-compete agreement, net | $ | $ | ||||||
INTERNALLY DEVELOPED SOFTWARE
During the quarter ended September 30, 2020, Marygold began incurring expenses in connection with the internal development of software applications that are planned for eventual integration to its consumer Fintech offering. Certain of these expenses, totaling as of September 30, 2021, have been capitalized as intangible assets. Once development has been completed and the product is commercially viable, these capitalized costs will be amortized over their useful lives. As of September 30, 2021,
AMORTIZATION EXPENSE
The total amortization expense for intangible assets for the three months ended September 30, 2021 and September 30, 2020 was $
Estimated remaining amortization expenses of intangible assets for the next five fiscal years, are as follows:
| Years Ending June 30, | Expense | |||
| 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Thereafter | ||||
| Total | $ | |||
| NOTE 7. | OTHER ASSETS |
Other Current Assets
Other current assets totaling $
| As of September 30, 2021 | As of June 30, 2021 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Other current assets | ||||||||
| Total | $ | $ | ||||||
Investments
Wainwright, from time to time, provides initial investment in the creation of ETP funds that Wainwright manages. Wainwright classifies these investments as current assets as these investments are generally sold within one year of the balance sheet date. Investments in which no controlling financial interest or significant influence exists are recorded at fair value with the change included in earnings on the Consolidated Statements of Income. Investments in which no controlling financial interest exists, but significant influence exists are recorded per the equity method of investment accounting. As of September 30, 2021 and June 30, 2021, there were no investments in its ETP funds or investments requiring equity method investment accounting. The Company also invests in marketable securities. As of September 30, 2021 and June 30, 2021, such investments were approximately $
Investments measured at estimated fair value consist of the following as of September 30, 2021 and June 30, 2021:
| September 30, 2021 | ||||||||||||||||
| Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||
| Other short-term investments | ||||||||||||||||
| Other equities | ( | ) | ||||||||||||||
| Total short-term investments | $ | $ | $ | ( | ) | $ | ||||||||||
| June 30, 2021 | ||||||||||||||||
| Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||
| Other short term investments | ||||||||||||||||
| Other equities | ( | ) | ||||||||||||||
| Total short-term investments | $ | $ | $ | ( | ) | $ | ||||||||||
All of the Company's short-term investments are Level 1 as of September 30, 2021 and June 30, 2021. During the three months ended September 30, 2021 and September 30, 2020, there were no transfers between Level 1 and Level 2.
Restricted Cash
At September 30, 2021 and June 30, 2021, Gourmet Foods had on deposit approximately NZ$
Long Term Assets
Other long-term assets totaling $
| (i) | $ | |
| (ii) | and $ |
| NOTE 8. | GOODWILL |
Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in business combinations. The amount recorded in goodwill for September 30, 2021 and June 30, 2021 was $
Goodwill is comprised of the following amounts as of September 30, 2021 and June 30, 2021:
| September 30, | June 30, | |||||||
| 2021 | 2021 | |||||||
| Goodwill – Original Sprout | ||||||||
| Goodwill – Gourmet Foods | ||||||||
| Goodwill – Brigadier | ||||||||
| Total | $ | $ | ||||||
The Company tests for goodwill impairment at each reporting unit. There was
| NOTE 9. | ACCOUNTS PAYABLE, ACCRUED EXPENSES AND LEGAL SETTLEMENT |
Accounts payable and accrued expenses consisted of the following as of September 30, 2021 and June 30, 2021:
| September 30, | June 30, | |||||||
| 2021 | 2021 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued interest | ||||||||
| Taxes payable | ||||||||
| Accrued payroll, vacation and bonus payable | ||||||||
| Accrued operating expenses and legal settlement | ||||||||
| Total | $ | $ | ||||||
| NOTE 10. | RELATED PARTY TRANSACTIONS |
Notes Payable - Related Parties
Current related party notes payable consist of the following as of September 30, 2021 and June 30, 2021:
| September 30, | June 30, | |||||||
|
|
| |||||||
| Notes payable to shareholder, interest rate of 8%, unsecured and payable on December 31, 2012 (past due) | $ | $ | ||||||
| Notes payable to shareholder, interest rate of 4%, unsecured and payable on May 25, 2022 | ||||||||
| Notes payable to shareholder, interest rate of 4%, unsecured and payable on April 8, 2022 | ||||||||
| $ | $ | |||||||
Interest expense for all related party notes for the three months ended September 30, 2021 and September 30, 2020 was $
Wainwright - Related Party Transactions
The Funds managed by USCF and USCF Advisers are deemed by management to be related parties. The Company’s Wainwright revenues, totaling $
| NOTE 11. | LOANS - PROPERTY AND EQUIPMENT |
As of September 30, 2021, Brigadier had an outstanding principal balance of CD$
| NOTE 12. | STOCKHOLDERS' EQUITY |
Convertible Preferred Stock
Each issued Series B Convertible Preferred Stock is convertible into
| NOTE 13. | BUSINESS COMBINATIONS |
On March 11, 2020 our wholly owned subsidiary Gourmet Foods, Ltd. entered into a Stock Purchase Agreement to acquire all the issued and outstanding shares of Printstock, a New Zealand private company located in Napier, New Zealand. Printstock is a printer of wrappers distributed to food manufacturers primarily within New Zealand and limited export to Australia. The company will be operated as a subsidiary of Gourmet Foods and is expected to incrementally reduce the cost of goods sold through reduction in the cost of wrappers purchased by Gourmet Foods by elimination of inter-company profit while increasing overall revenues and profits to Gourmet Foods on a consolidated basis through inclusion of Printstock operations. The purchase price was agreed to be million subject to adjustment within 90 days of the closing date. The transaction closed on July 1, 2020 with a payment of and an estimated final payment due of on September 30, 2020. Included in the below purchase price allocation are estimated deferred income tax liabilities of pertaining to the increase in the value of fixed assets above their book value and the acquired intangible assets. The amounts have been translated to US currency as of the acquisition date, July 1, 2020.
| Item | Amount | |||
| Cash in bank | $ | |||
| Accounts receivable | ||||
| Prepayments/deposits | ||||
| Inventories | ||||
| Operating lease right of use asset | ||||
| Plant, property and equipment | ||||
| Intangible assets | ||||
| Goodwill | ||||
| Deferred tax liability | ( | ) | ||
| Assumed lease liabilities | ( | ) | ||
| Accounts payable and accrued expenses | ( | ) | ||
| Total Purchase Price | $ | |||
On August 13, 2021, Marygold UK entered into a Share Purchase Agreement that, when consummated, would result in the acquisition of all the outstanding and issued shares of Tiger Financial and Asset Management Limited, a U.K. limited company, ("Tiger") in exchange for GBP
| NOTE 14. | INCOME TAXES |
The Company accounts for income taxes under the asset and liability method, which recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the tax bases of assets and liabilities and their financial statement reported amounts, and for net operating losses and tax credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company records a valuation allowance against deferred tax assets when it is more likely than not that such asset will not be realized. The Company continues to monitor the likelihood that it will be able to recover its deferred tax assets. If recovery is not likely, the Company must increase its provision for income taxes by recording a valuation allowance against the deferred tax assets.
The Company accounts for uncertain tax positions in accordance with the authoritative guidance on income taxes under which the Company may only recognize or continue to recognize tax positions that meet a "more likely than not" threshold. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes.
As of September 30, 2021, the Company's total unrecognized tax benefits were approximately $
The Company is required to make its best estimate of the annual effective tax rate for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis. The Company recorded tax expense of $
The Company is subject to income taxes in the U.S. federal, various states, Canada and New Zealand tax jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company’s U.S. tax years 2017 through 2020 will remain open for examination by the federal and state authorities which is three and four years, respectively. The Company’s tax years from 2017 through remain open for examination by Canada and New Zealand authorities. As of September 30, 2021, there were no active taxing authority examinations.
| NOTE 15. | COMMITMENTS AND CONTINGENCIES |
Lease Commitments
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, accrued expenses, and long-term operating lease liabilities in the Consolidated Balance Sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The operating lease right-of-use assets also include any lease payments made at or before the commencement date and are reduced by any lease incentives received. The Company’s lease terms may include options to extend or not terminate the lease when it is reasonably certain that it will exercise any such options. For the majority of its leases, the Company concluded that it is not reasonably certain that any renewal options would be exercised, and, therefore, the amounts are not recognized as part of operating lease right-of-use assets nor operating lease liabilities. Leases with an initial term of 12 months or less, and certain office equipment leases which are deemed insignificant, are not recorded on the balance sheet and expensed as incurred and included within rent expense under general and administrative expense. Lease expense is recognized on a straight-line basis over the expected lease term.
The Company’s most significant leases are real estate leases of office, warehouse and production facilities. The remaining operating leases are primarily comprised of leases of printers and other equipment which are deemed insignificant. For all operating leases, the Company has elected the practical expedient permitted under Topic 842 to combine lease and non-lease components. As a result, non-lease components, such as common area or equipment maintenance charges, are accounted for as a single lease element. The Company does not have any finance leases.
Fixed lease expense payments are recognized on a straight-line basis over the lease term. Variable lease payments vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time. Certain of the Company’s operating lease agreements include variable payments that are passed through by the landlord, such as insurance, taxes, and common area maintenance. Variable payments are deemed immaterial, expensed as incurred, and included within rent expense under general and administrative expense.
The Company leases various facilities and offices throughout the world including the following subsidiary locations:
Gourmet Foods has operating leases for its office, factory and warehouse facilities located in Tauranga, New Zealand, and facilities leased by its subsidiary, Printstock, in Napier, New Zealand, as well as for certain equipment including printers and copiers. These leases are generally for -year terms, with some options to renew for an additional term. The leases mature between October 2021 and September 2024, and require monthly rental payments of approximately US$
For the three month periods ended September 30, 2021 and September 30, 2020, the combined lease payments of the Company and its subsidiaries totaled $
Future minimum consolidated lease payments for Concierge and its subsidiaries are as follows:
| Year Ended June 30, | Lease Amount | |||
| 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| Total minimum lease payments | ||||
| Less: present value discount | ( | ) | ||
| Total operating lease liabilities | $ | |||
The weighted average remaining lease term for the Company's operating leases was
Additionally, Gourmet Foods, Ltd. entered into a General Security Agreement in favor of the Gerald O’Leary Family Trust and registered on the Personal Property Securities Register for a priority sum of (approximately US$
Other Agreements and Commitments
USCF manages four Funds (BNO, CPER, UGA, UNL) which had expense waiver provisions during the prior fiscal year, whereby USCF reimburses funds when fund expenditure levels exceed certain threshold amounts. Effective May 1, 2021 USCF discontinued expense waiver reimbursements for BNO, CPER and UGA with only UNL continuing. As of September 30, 2021 and June 30, 2021 the expense waiver payable was $
As Marygold builds out its application it enters into agreements with various service providers. As of September 30, 2021, Marygold has future payment commitments with its primary service vendors totaling $
Litigation
From time to time, the Company and its subsidiaries may be involved in legal proceedings arising primarily from the ordinary course of their respective businesses. Except as described below there are no pending legal proceedings against the Company. USCF, is an indirect wholly owned subsidiary of the Company. USCF, as the general partner of USO and the general partner and sponsor of the related public funds may, from time to time, be involved in litigation arising out of its operations in the ordinary course of business. Except as described herein, (refer to Part II, Item 1. Legal Proceedings) neither the Company or its subsidiaries are currently party to any material legal proceedings.
SEC and CFTC Wells Notices
On November 8, 2021, one of Concierge Technologies, Inc.'s (the "Company") indirect subsidiaries, the United States Commodity Funds LLC (“USCF”), together with United States Oil Fund, LP (“USO”), for which USCF is the general partner, announced a resolution with each of the U.S. Securities and Exchange Commission (the “SEC”) and the U.S. Commodity Futures Trading Commission (the “CFTC”) relating to matters set forth in certain Wells Notices issued by the staffs of each of the SEC and CFTC, as detailed below.
On August 17, 2020, USCF, USO, and John Love received a “Wells Notice” from the staff of the SEC (the “SEC Wells Notice”). The SEC Wells Notice relates to USO's disclosures in late April 2020 and early May 2020 regarding constraints imposed on USO's ability to invest in Oil Futures Contracts. The SEC Wells Notice states that the SEC staff has made a preliminary determination to recommend that the SEC file an enforcement action against USCF, USO, and Mr. Love alleging violations of Sections 17(a)(1) and 17(a)(3) of the 1933 Act and Section 10(b) of the 1934 Act and Rule 10b-5 thereunder, in each case with respect to its disclosures and USO’s actions.
Subsequently, on August 19, 2020, USCF, USO, and Mr. Love received a Wells Notice from the staff of the CFTC (the “CFTC Wells Notice”). The CFTC Wells Notice states that the CFTC staff has made a preliminary determination to recommend that the CFTC file an enforcement action against USCF, USO, and Mr. Love alleging violations of Sections 4o(1)(A) and (B) and 6(c)(1) of the CEA, 7 U.S.C. §§ 6o(1)(A), (B), 9(1) (2018), and CFTC Regulations 4.26, 4.41, and 180.1(a), 17 C.F.R. §§ 4.26, 4.41, 180.1(a) (2019), in each case with respect to its disclosures and USO’s actions.
On November 8, 2021, acting pursuant to an offer of settlement submitted by USCF and USO, the SEC issued an order instituting cease-and-desist proceedings, making findings, and imposing a cease-and-desist order pursuant to Section 8A of the 1933 Act, directing USCF and USO to cease and desist from committing or causing any violations of Section 17(a)(3) of the 1933 Act, 15 U.S.C. § 77q(a)(3) (the “SEC Order”). In the SEC Order, the SEC made findings that, from April 24, 2020 to May 21, 2020, USCF and USO violated Section 17(a)(3) of 1933 Act, which provides that it is “unlawful for any person in the offer or sale of any securities . . . to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.” USCF and USO consented to entry of the SEC Order without admitting or denying the findings contained therein, except as to jurisdiction.
Separately, on November 8, 2021, acting pursuant to an offer of settlement submitted by USCF, the CFTC issued an order instituting cease-and-desist proceedings, making findings, and imposing a cease-and-desist order pursuant to Section 6(c) and (d) of the CEA, directing USCF to cease and desist from committing or causing any violations of Section 4o(1)(B) of the CEA, 7 U.S.C. § 6o(1)(B), and CFTC Regulation 4.41(a)(2), 17 C.F.R. § 4.41(a)(2) (the “CFTC Order”). In the CFTC Order, the CFTC made findings that, from on or about April 22, 2020 to June 12, 2020, USCF violated Section 4o(1)(B) of the CEA and CFTC Regulation 4.41(a)(2), which make it unlawful for any commodity pool operator (“CPO”) to engage in “any transaction, practice, or course of business which operates as a fraud or deceit upon any client or participant or prospective client or participant” and prohibit a CPO from advertising in a manner which “operates as a fraud or deceit upon any client or participant or prospective client or participant,” respectively. USCF consented to entry of the CFTC Order without admitting or denying the findings contained therein, except as to jurisdiction.
Pursuant to the SEC Order and the CFTC Order, in addition to the command to cease and desist from committing or causing any violations of Section 17(a)(3) of the 1933 Act, Section 4o(1)(B) of the CEA, and CFTC Regulation 4.14(a)(2), civil monetary penalties totaling two million five hundred thousand dollars ($2,500,000) in the aggregate must be paid to the SEC and CFTC, of which one million two hundred fifty thousand dollars ($1,250,000) will be paid by USCF to each of the SEC and the CFTC, respectively, pursuant to the offsets permitted under the orders. The SEC Order can be accessed at www.sec.gov and the CFTC Order can be accessed at www.cftc.gov.
In re: United States Oil Fund, LP Securities Litigation
On June 19, 2020, USCF, USO, John P. Love, and Stuart P. Crumbaugh were named as defendants in a putative class action filed by purported shareholder Robert Lucas (the “Lucas Class Action”). The Court thereafter consolidated the Lucas Class Action with two related putative class actions filed on July 31, 2020 and August 13, 2020, and appointed a lead plaintiff. The consolidated class action is pending in the U.S. District Court for the Southern District of New York under the caption In re: United States Oil Fund, LP Securities Litigation, Civil Action No. 1:20-cv-04740.
On November 30, 2020, the lead plaintiff filed an amended complaint (the “Amended Lucas Class Complaint”). The Amended Lucas Class Complaint asserts claims under the 1933 Act, the 1934 Act, and Rule 10b-5. The Amended Lucas Class Complaint challenges statements in registration statements that became effective on February 25, 2020 and March 23, 2020 as well as subsequent public statements through April 2020 concerning certain extraordinary market conditions and the attendant risks that caused the demand for oil to fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The Amended Lucas Class Complaint purports to have been brought by an investor in USO on behalf of a class of similarly-situated shareholders who purchased USO securities between February 25, 2020 and April 28, 2020 and pursuant to the challenged registration statements. The Amended Lucas Class Complaint seeks to certify a class and to award the class compensatory damages at an amount to be determined at trial as well as costs and attorney’s fees. The Amended Lucas Class Complaint named as defendants USCF, USO, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes III, as well as the marketing agent, ALPS Distributors, Inc., and the Authorized Participants: ABN Amro, BNP Paribas Securities Corporation, Citadel Securities LLC, Citigroup Global Markets, Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Goldman Sachs & Company, J.P. Morgan Securities Inc., Merrill Lynch Professional Clearing Corporation, Morgan Stanley & Company Inc., Nomura Securities International Inc., RBC Capital Markets LLC, SG Americas Securities LLC, UBS Securities LLC, and Virtu Financial BD LLC.
The lead plaintiff has filed a notice of voluntary dismissal of its claims against BNP Paribas Securities Corporation, Citadel Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Morgan Stanley & Company, Inc., Nomura Securities International, Inc., RBC Capital Markets, LLC, SG Americas Securities LLC, and UBS Securities LLC.
USCF, USO, and the individual defendants in In re: United States Oil Fund, LP Securities Litigation intend to vigorously contest such claims and has moved for their dismissal.
Mehan Action
On August 10, 2020, purported shareholder Darshan Mehan filed a derivative action on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes, III (the “Mehan Action”). The action is pending in the Superior Court of the State of California for the County of Alameda as Case No. RG20070732.
The Mehan Action alleges that the defendants breached their fiduciary duties to USO and failed to act in good faith in connection with a March 19, 2020 registration statement and offering and disclosures regarding certain extraordinary market conditions that caused demand for oil to fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The complaint seeks, on behalf of USO, compensatory damages, restitution, equitable relief, attorney’s fees, and costs. All proceedings in the Mehan Action are stayed pending disposition of the motion(s) to dismiss in In re: United States Oil Fund, LP Securities Litigation.
USCF, USO, and the other defendants intend to vigorously contest such claims.
In re United States Oil Fund, LP Derivative Litigation
On August 27, 2020, purported shareholders Michael Cantrell and AML Pharm. Inc. DBA Golden International filed two separate derivative actions on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Andrew F Ngim, Gordon L. Ellis, Malcolm R. Fobes, III, Nicholas D. Gerber, Robert L. Nguyen, and Peter M. Robinson in the U.S. District Court for the Southern District of New York at Civil Action No. 1:20-cv-06974 (the “Cantrell Action”) and Civil Action No. 1:20-cv-06981 (the “AML Action”), respectively.
The complaints in the Cantrell and AML Actions are nearly identical. They each allege violations of Sections 10(b), 20(a) and 21D of the 1934 Act, Rule 10b-5 thereunder, and common law claims of breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets. These allegations stem from USO’s disclosures and defendants’ alleged actions in light of the extraordinary market conditions in 2020 that caused demand for oil to fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The complaints seek, on behalf of USO, compensatory damages, restitution, equitable relief, attorney’s fees, and costs. The plaintiffs in the Cantrell and AML Actions have marked their actions as related to the Lucas Class Action.
The Court entered and consolidated the Cantrell and AML Actions under the caption In re United States Oil Fund, LP Derivative Litigation, Civil Action No. 1:20-cv-06974 and appointed co-lead counsel. All proceedings in In re United States Oil Fund, LP Derivative Litigation are stayed pending disposition of the motion(s) to dismiss in In re: United States Oil Fund, LP Securities Litigation.
USCF, USO, and the other defendants intend to vigorously contest the claims in In re United States Oil Fund, LP Derivative Litigation. No accrual has been recorded with respect to the above legal matters as of September 30, 2021 and June 30, 2021. We are currently unable to predict the timing or outcome of, or reasonably estimate the possible losses or range of, possible losses resulting from these matters. It is reasonably possible that this estimate will change in the near term. An adverse outcome regarding these matters could materially adversely affect the Company's financial condition, results of operations and cash flows.
Retirement Plan
Concierge through its wholly owned subsidiary USCF, has a 401(k) Profit Sharing Plan ("401K Plan") covering U.S. employees, including Original Sprout, who are over
| NOTE 16. | SEGMENT REPORTING |
With the acquisition of Wainwright, Gourmet Foods, Brigadier, and the launch of the Original Sprout business unit of Kahnalytics, the Company has identified
The following table presents a summary of identifiable assets as of September 30, 2021 and June 30, 2021.
| September 30, | June 30, | |||||||
| 2021 | 2021 | |||||||
| Identifiable assets: | ||||||||
| Corporate headquarters - including Marygold | $ | $ | ||||||
| U.S.A. : investment fund management - related party | ||||||||
| U.S.A. : beauty products | ||||||||
| New Zealand: food industry | ||||||||
| Canada: security systems | ||||||||
| Consolidated total | $ | $ | ||||||
The following table presents a summary of operating information for the three months ended September 30:
| Three Months Ended | Three Months Ended | |||||||
| September 30, 2021 | September 30, 2020 | |||||||
| Revenues from external customers: | ||||||||
| U.S.A. : investment fund management - related party | $ | $ | ||||||
| U.S.A. : beauty products | ||||||||
| New Zealand : food industry | ||||||||
| Canada : security systems | ||||||||
| Consolidated total | $ | $ | ||||||
| Net (loss) income: | ||||||||
| U.S.A. : investment fund management - related party | $ | ( | ) | $ | ||||
| U.S.A. : beauty products | ||||||||
| New Zealand : food industry | ||||||||
| Canada : security systems | ||||||||
| Corporate headquarters - including Marygold | ( | ) | ( | ) | ||||
| Consolidated total | $ | ( | ) | $ | ||||
The following table presents a summary of net capital expenditures for the three month periods ended September 30:
| Three Months Ended | Three Months Ended | |||||||
| September 30, 2021 | September 30, 2020 | |||||||
| Capital expenditures: | ||||||||
| U.S.A.: investment fund management | $ | $ | ||||||
| U.S.A. : beauty products | ||||||||
| New Zealand: food industry (1) | ||||||||
| Canada: security systems | ( | ) | ||||||
| U.S.A. : corporate headquarters - including Marygold | ||||||||
| Consolidated | $ | $ | ||||||
(1) Includes $
The following table represents the property, plant and equipment in use at each of the Company's locations as of September 30, 2021 and June 30, 2021:
| As of September 30, 2021 | As of June 30, 2021 | |||||||
| Asset Location | ||||||||
| U.S.A.: investment fund management | $ | $ | ||||||
| U.S.A. : beauty products | ||||||||
| New Zealand: food industry | ||||||||
| Canada: security systems | ||||||||
| U.S.A. : corporate headquarters - including Marygold | ||||||||
| Total All Locations | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Net property, plant and equipment | $ | $ | ||||||
| NOTE 17. | SUBSEQUENT EVENTS |
The Company evaluated subsequent events for recognition and disclosure through the date the financial statements were issued or filed.
As it relates to Wainwright, on November 2, 2021, the USCF ETF Trust (“Trust”) launched its new series (or fund), the USCF Gold Strategy Plus Income Fund (“GLDX”). The Trust had previously approved the fund’s formation on May 5, 2021. On November 3, 2021 the fund commenced trading on the NYSE and USCF Advisers purchased $1.25 million of GLDX shares in the open market with existing cash balances.
As more fully detailed in Item 1 Legal Proceedings and Note 15 of this Form 10-Q and in the Company’s Current Report on Form 8-K, filed with the U.S. Securities and Exchange Commission on November 9, 2021, on November 8, 2021, one of the "Company’s indirect subsidiaries, the United States Commodity Funds LLC (“USCF”), together with United States Oil Fund, LP (“USO”), for which USCF is the general partner, announced a resolution with each of the U.S. Securities and Exchange Commission (the “SEC”) and the U.S. Commodity Futures Trading Commission (the “CFTC”) relating to matters set forth in certain Wells Notices issued by the staffs of each of the SEC and CFTC. Subject to this resolution, the USCF has accrued $2.5 million as a legal settlement with these parties as of September 30, 2021.
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion and analysis should be read in conjunction with the consolidated financial statements and the accompanying notes thereto and is qualified in its entirety by the foregoing and by more detailed financial information appearing elsewhere in this quarterly report on Form 10-Q. See "Financial Statements."
Overview
Concierge Technologies, Inc. (“Concierge” or the “Company”) conducts business through its wholly owned operating subsidiaries operating in the U.S., New Zealand, Canada and the United Kingdom. The operations of the Company’s wholly owned subsidiaries are more particularly described herein but are summarized as follows:
| ● |
Wainwright Holdings, Inc. (“Wainwright”), a U.S. based company, is the sole member of two investment services limited liability company subsidiaries that manages, operates or is an investment advisor to exchange traded funds organized as limited partnerships or investment trusts that issue shares that trade on the NYSE Arca stock exchange. |
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| ● |
Gourmet Foods, Ltd., a New Zealand based company, manufactures and distributes New Zealand meat pies on a commercial scale and its wholly owned New Zealand subsidiary company, Printstock Products Limited, prints specialty wrappers for the food industry in New Zealand and Australia. (collectively "Gourmet Foods") |
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| ● |
Brigadier Security Systems (2000) Ltd. (“Brigadier”), a Canadian based company, sells and installs commercial and residential alarm monitoring systems. |
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| ● |
Kahnalytics, Inc. dba/Original Sprout (“Original Sprout”), a U.S. based company, is engaged in the wholesale distribution of hair and skin care products under the brand name Original Sprout on a global scale. |
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| ● |
Marygold & Co., a newly formed U.S. based company, together with its wholly owned limited liability company, Marygold & Co. Advisory Services, LLC, (collectively "Marygold") was established by Concierge to explore opportunities in the financial technology ("Fintech") space, still in the development stage as of September 30, 2021, and estimated to launch commercial services in the current fiscal year. Through September 30, 2021, expenditures have been limited to developing the business model and the associated application development. |
|
| ● |
Marygold & Co. (UK) Limited, a newly formed U.K. limited company (“Marygold UK”), was established to act as a holding company for acquisitions to be made in the U.K. As of September 30, 2021, there have been no acquisitions completed and no operations. The expenses of Marygold UK have been combined with those of Concierge. |
Because the Company conducts its businesses through its wholly owned operating subsidiaries, the risks related to our wholly owned subsidiaries are also risks that impact the Company's financial condition and results of operations. See, "Note 2. Summary of Significant Accounting Policies / Major Customers and Suppliers - Concentration of Credit Risk" in the consolidated financial statements for more information. The emergence of a novel coronavirus on a global scale, known as COVID-19, and related geopolitical events could lead to increased market volatility, disruption to U.S. and world economies and markets and may have significant adverse effects on the Company and its wholly owned subsidiaries. The financial risk to future operations is largely unknown, (refer to Part II, Item 1A, for further details.)
Results of Operations
Concierge and Subsidiaries
Financial summary and comparison data for the three month periods ended September 30, 2021 and September 30, 2020.
The table below summarizes each of Concierges subsidiaries into one of two categories for the three months ended September 30, 2021 and September 30, 2020. The Wainwright business is included in the Financial Services columns and all other subsidiaries, including Gourmet Foods, Brigadier, and Original Sprout in the Other Operating Units columns. Corporate expenses, including Marygold and Marygold UK, are included in the Concierge Corporate columns. The table below is calculated using operating results rounded to the nearest thousand. The operating results depicted below may differ slightly compared to the actual results as indicated on our Condensed Consolidated Financial Statements as a result of rounding.
| Financial Services |
Other Operating Units |
Concierge Corporate |
Consolidated |
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| ($'s in thousands) |
For the Three Months Ended September 30, |
For the Three Months Ended September 30, |
For the Three Months Ended September 30, |
For the Three Months Ended September 30, |
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| 2021 |
2020 |
Change |
2021 |
2020 |
Change |
2021 |
2020 |
Change |
2021 |
2020 |
Change |
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| $ |
% |
$ |
% |
$ |
% |
$ |
% |
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| Revenue |
$ | 5,657 | $ | 7,036 | $ | (1,379 | ) | (20 | )% | $ | 4,074 | $ | 3,709 | $ | 365 | 10 | % | - | - | - | - | $ | 9,730 | $ | 10,745 | $ | (1,015 | ) | (9 | )% | ||||||||||||||||||||||||||||||||||
| % of total revenue |
58 | % | 65 | % | - | (7 | )% | 42 | % | 35 | % | - | 7 | % | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue |
- | - | - | - | 2,652 | 2,399 | 253 | 11 | % | - | - | - | - | 2,652 | 2,399 | $ | 253 | 11 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Gross profit |
$ | 5,657 | $ | 7,036 | $ | (1,379 | ) | (20 | )% | $ | 1,422 | $ | 1,310 | $ | 112 | 9 | % | - | - | - | - | $ | 7,078 | $ | 8,346 | $ | (1,269 | ) | (15 | )% | ||||||||||||||||||||||||||||||||||
| Operating expenses |
6,023 | 3,805 | 2,218 | 58 | % | 1,123 | 1,050 | 73 | 7 | % | 1,579 | 622 | 957 | 154 | % | 8,725 | 5,477 | 3,248 | 59 | % | ||||||||||||||||||||||||||||||||||||||||||||
| % of total operating expenses |
69 | % | 69 | % | - | 0 | % | 13 | % | 19 | % | - | 5 | % | 18 | % | 11 | % | - | 7 | % | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| (Loss) income from operations |
$ | (366 | ) | $ | 3,231 | $ | (3,597 | ) | (111 | )% | $ | 298 | $ | 259 | $ | 39 | 15 | % | $ | (1,579 | ) | $ | (622 | ) | $ | (957 | ) | 154 | % | $ | (1,647 | ) | $ | 2,869 | $ | (4,517 | ) | (157 | )% | |||||||||||||||||||||||||
| Other (expense) income |
6 | 4 | 2 | 42 | % | 5 | 110 | (105 | ) | (96 | )% | (6 | ) | 3 | (9 | ) | (288 | )% | 5 | 117 | (112 | ) | (96 | )% | ||||||||||||||||||||||||||||||||||||||||
| (Loss) income before income taxes |
$ | (360 | ) | $ | 3,235 | $ | (3,595 | ) | (111 | )% | $ | 303 | $ | 369 | $ | (66 | ) | (18 | )% | $ | (1,584 | ) | $ | (619 | ) | $ | (965 | ) | 156 | % | $ | (1,642 | ) | $ | 2,986 | $ | (4,629 | ) | (155 | )% | ||||||||||||||||||||||||
For the Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020
Revenue and Operating Income
Consolidated revenue for the three months ended September 30, 2021 was $9.7 million representing a $1.0 million decrease from the same prior year period revenue of $10.7 million. Net revenues decreased as a result of lower Fund AUM from our fund management business by approximately $1.4 million, or 20%, for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020. The Company's revenues derived from its other operating units increased by $0.4 million, or 10%, from the same prior year period, resulting in an overall decrease in consolidated revenue of approximately 9%. Concierge had an operating (loss) for the three months ended September 30, 2021 of ($1.6) million as compared to operating income of $2.9 million for the three months ended September 30, 2020. The decrease in operating income was primarily attributable to the $2.5 million SEC / CFTC Wells Notice settlement in addition to lower fund management revenue from Wainwright due to lower AUM as well as higher costs within Original Sprout.
Other Income (Expense)
Other income (expense) for the three months ended September 30, 2021 and September 30, 2020, was $4 thousand and $117 thousand, respectively, resulting in net income (loss) before income taxes of ($1.6) million and $3.0 million, respectively.
Income Tax
Provision for income tax (expense) benefit for the three months ended September 30, 2021 and September 30, 2020 were $239 thousand and $766 thousand, respectively, primarily attributable to our United States operations through our Wainwright subsidiary who recorded a lower income for the period ended September 30, 2021 as compared to the income for the period ended September 30, 2020. The Company files income taxes as a combined group and records most income taxes at the Concierge level.
Net Income (Loss)
Overall, the net income for the three months ended September 30, 2021 decreased by $4.1 million to a ($1.9) million net loss, as compared to net income of $2.2 million for the three months ended September 30, 2020. The decrease in profits for the three months ended September 30, 2021 was primarily attributable to the $2.5 million SEC / CFTC Wells Notice settlement recorded as an operating expense in addition to lower fund management fee revenue from Wainwright due to a lower amount of AUM, with only modest offsetting decreases in variable operating expenses, and general and administrative costs resulting in lower net income operating profit margins. All Other Operating Units contributed approximately $302 thousand of net income before tax representing a $99 thousand decrease from the same prior year period primarily as result of higher costs and lower profit margins within Original Sprout. Contributing to the overall decrease in net income were expenses of $817 thousand related to our development stage subsidiary, Marygold. After giving consideration to currency translation loss of ($86) thousand our comprehensive (loss) for the three months ended September 30, 2021 was ($2.0) million as compared to the three months ended September 30, 2020 where there was a currency translation gain of $73 thousand resulting in comprehensive income of $2.3 million. Comprehensive gains and losses are comprised of fluctuations in foreign currency exchange rates related to the effects in the valuation of our holdings in New Zealand and Canada.
Investment Fund Management - Wainwright Holdings
Wainwright was founded as a holding company in March 2004 as a Delaware corporation with one subsidiary, Ameristock Corporation, which was an investment adviser to Ameristock Mutual Fund, Inc., a registered 1940 Act large cap value equity fund. In January 2010, Ameristock Corporation was spun off as a standalone company. In May 2005, USCF was formed as a single member limited liability company in the state of Delaware. In June 2013, USCF Advisers was formed as a Delaware limited liability company and in July 2014, was registered as an investment adviser under the Investment Advisers Act of 1940, as amended. In November 2013, the USCF Advisers board of managers formed USCF ETF Trust (“ETF Trust”) and in July 2016, the USCF Mutual Funds Trust (“Mutual Funds Trust” and together with “ETF Trust” the “Trusts”) both as open-end management investment companies registered under the Investment Company Act of 1940, as amended ("the 1940 Act"). The Trusts are authorized to have multiple segregated series or portfolios. Wainwright owns all of the issued and outstanding limited liability company membership interests of its subsidiaries, USCF and USCF Advisers, each a Delaware limited liability company and are affiliated companies. USCF serves as the general partner (“General Partner”) for various limited partnerships (“LP”) and sponsor (“Sponsor”) as noted below. USCF and USCF Advisers are subject to federal, state and local laws and regulations generally applicable to the investment services industry. USCF is a commodity pool operator (“CPO”) subject to regulation by the Commodity Futures Trading Commission (the "CFTC") and the National Futures Association (the “NFA”) under the Commodities Exchange Act (“CEA”). USCF Advisers is an investment adviser registered under the Investment Advisers Act of 1940, as amended and has registered as a CPO under the CEA. Exchange traded products (“ETPs”) issued or sponsored by USCF are required to be registered with the Securities and Exchange Commission (the “SEC”) in accordance with the Securities Act of 1933. Wainwright operates through USCF and USCF Advisers, which collectively operate ten exchange-traded products ("ETPs") and exchange traded funds (“ETFs”), each of which has its shares listed on the NYSE Arca, Inc. ("NYSE Arca"). The ETPs and ETFs managed by USCF and USCF Advisers have a total of approximately $4 billion assets under management as of September 30, 2021. Wainwright and subsidiaries USCF and USCF Advisers are collectively referred to as “Wainwright” hereafter.
USCF currently serves as the General Partner or the Sponsor to the following commodity pools, each of which is currently conducting a public offering of its shares pursuant to the Securities Act of 1933, as amended:
| USCF as General Partner for the following funds |
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| United States Oil Fund, LP (“USO”) |
Organized as a Delaware limited partnership in May 2005 |
| United States Natural Gas Fund, LP (“UNG”) |
Organized as a Delaware limited partnership in November 2006 |
| United States Gasoline Fund, LP (“UGA”) |
Organized as a Delaware limited partnership in April 2007 |
| United States 12 Month Oil Fund, LP (“USL”) |
Organized as a Delaware limited partnership in June 2007 |
| United States 12 Month Natural Gas Fund, LP (“UNL”) |
Organized as a Delaware limited partnership in June 2007 |
| United States Brent Oil Fund, LP (“BNO”) |
Organized as a Delaware limited partnership in September 2009 |
| USCF as fund Sponsor - each a series within the United States Commodity Index Funds Trust ("USCIF Trust") |
|
| United States Commodity Index Fund (“USCI”) |
Series of the USCIF Trust created in April 2010 |
| United States Copper Index Fund (“CPER”) |
Series of the USCIF Trust created in November 2010 |
USCF Advisers, a registered investment adviser, serves as the investment adviser to the funds listed below within the USCF ETF Trust (the “ETF Trust”) and has overall responsibility for the general management and administration for the ETF Trust. Pursuant to the current Investment Advisory Agreements, USCF Advisers provides an investment program for each of series within the ETF Trust and manages the investment of the assets.
| USCF Advisers as fund manager for each series within the USCF ETF Trust: |
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| USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund ("SDCI") |
Fund launched May 2018 |
| USCF Midstream Energy Income Fund ("UMI") |
Fund launched March 2021 |
In addition, USCF Advisers previously served as the investment adviser to the USCF SummerHaven SHPEI Index Fund, which launched in November 2017 and was liquidated in October 2020, and USCF SummerHaven SHPEN Index Fund, which launched in November 2017 and was liquidated in May 2020.
All commodity pools managed by USCF and each series of the ETF Trust managed by USCF Advisers are collectively referred to as the “Funds” hereafter.
Wainwright’s revenue and expenses are primarily driven by the amount of AUM. Wainwright earns monthly management and advisory fees based on agreements with each Fund as determined by the contractual basis point management fee structure in each agreement multiplied by the average AUM over the given period. Many of the company’s expenses are dependent upon the amount of AUM. These variable expenses include Fund administration, custody, accounting, transfer agency, marketing and distribution, and sub-adviser fees and are primarily determined by multiplying contractual fee rates by AUM. Total Operating Expenses are grouped into the following financial statement line items: General and Administrative, Marketing, Operations and Salaries and Compensation.
For the Three Months Ended September 30, 2021, Compared to the Three Months Ended September 30, 2020
Revenue
Average AUM for the three months ended September 30, 2021 was at $4.2 billion, as compared to approximately $5.6 billion from the three months ended September 30, 2020 primarily due to a decrease in USO, BNO and USL AUM, partially offset by an increase in CPER AUM. As a result, the revenues from management and advisory fees decreased by approximately $1.3 million, or 20%, to $5.7 million for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 where revenues from management and advisory fees totaled $7.0 million.
Expenses
Wainwright’s total operating expenses, after recording the $2.5 million SEC / CFTC Wells Notice settlement, for three months ended September 30, 2021 increased by $2.2 million to $6.0 million, or approximately 58%, from $3.8 million for the three months ended September 30, 2020. Wainwright’s total operating expenses, excluding the settlement expense, for three months ended September 30, 2021 would have decreased by $0.3 million to $3.5 million, or approximately 7%, from $3.8 million for the three months ended September 30, 2020. Variable expenses, as described above, increased by $0.1 million due to increases of $0.3 million in UMI sub-advisory fees, which did not exist in the prior year quarter, offset by decreases in other variable expenses over the respective three-month period due to overall lower AUM which included variable marketing and distribution expenses, fund accounting and administration expenses, and other variable costs. General and administrative ("G&A") expenses of $0.7 million decreased $0.4 million from $1.1 million for the three months ended September 30, 2021 and September 30, 2020, respectively. G&A expenses decreased primarily due to lower fund expense waivers as a result of eliminating expense waivers for BNO, UGA and CPER in May 2021 as well as lower legal expenses for the quarter. Total marketing expenses decreased $0.1 million to $0.6 million for the three months ended September 30, 2021 as compared to the prior year period due to a decrease in variable distribution costs as a result of lower AUM as mentioned above. Employee salaries and benefit compensation expenses were approximately $1.1 million for both three month periods ended September 30, 2021 and September 30, 2020. Operations expenses increased by $0.2 million to $1.1 million due to sub-advisory fees for UMI offset by other lower operations expenses due to lower AUM.
Income
Operating income decreased $3.6 million, after recording the $2.5 million SEC / CFTC Wells Notice settlement, to a loss of ($0.4) million for the three months ended September 30, 2021 from $3.2 million for the three months ended September 30, 2020. Operating income, excluding the settlement expense, decreased $1.1 million to $2.1 million for the three months ended September 30, 2021, or approximately 34%, from $3.2 million for the three months ended September 30, 2020. Other income (expense) was $6 thousand for the three months ended September 30, 2021 compared to $4 thousand for the three months ended September 30, 2020. Net (loss) income before income taxes for the three months ended September 30, 2021 decreased $3.6 million to a loss of ($0.4) million compared to income of $3.2 million for three months ended September 30, 2020 due to the expense settlement as well as a $1.3 million decrease in revenue as a result of lower AUM, offset by a $0.3 million decrease in total operating expenses.
Food Products - Gourmet Foods, Ltd. and Printstock Products Limited
Gourmet Foods, Ltd. was organized in its current form in 2005 (previously known as Pats Pantry Ltd). Pats Pantry was founded in 1966 to produce and sell wholesale bakery products, meat pies and patisserie cakes and slices, in New Zealand. Gourmet Foods, located in Tauranga, New Zealand, sells substantially all of its goods to supermarkets and service station chains with stores located throughout New Zealand. Gourmet Foods, Ltd. also has a large number of smaller independent lunch bars, cafes and corner dairies among the customer list, however they comprise a relatively insignificant dollar volume in comparison to the primary accounts of large distributors and retailers. On July 1, 2020, Gourmet Foods, Ltd. acquired the New Zealand company, Printstock Products Limited. Located in nearby Napier, New Zealand, Printstock prints wrappers for food products, including those used by Gourmet Foods, Ltd. Printstock is a wholly owned subsidiary of Gourmet Foods, Ltd. and its operating results are consolidated with those of Gourmet Foods, Ltd. from July 1, 2020 onwards.
Gourmet Foods operates exclusively in New Zealand and thus the New Zealand dollar is its functional currency. In order to consolidate Concierge’s reporting currency, the US dollar, with that of Gourmet Foods, Concierge records foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830-30. The translation of New Zealand currency into U.S. dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. Gains and losses resulting from foreign currency translations are included in foreign currency translation (loss) gain on the Consolidated Statements of Comprehensive Income as well as accumulated other comprehensive (loss) income found on the Consolidated Balance Sheets.
For the Three Months Ended September 30, 2021, Compared to the Three Months Ended September 30, 2020
Revenue
Net revenues for the three months ended September 30, 2021 were $2.3 million with cost of goods sold of $1.7 million resulting in a gross profit of $0.6 million, or approximately 27% gross margin, as compared to the three month period ended September 30, 2020 where net revenues were $2.1 million and cost of goods sold were $1.6 million producing a gross profit of $0.5 million, or approximately 24%.
Expenses
Operating expenses, including wages and marketing, for the three month periods ended September 30, 2021 and September 30, 2020 were $0.4 million and $0.4 million producing operating income of $0.2 million and $0.1 million, respectively, or approximately 8% net operating profit for the three months ended September 30, 2021 and 5% for the three months ended September 30, 2020. Other income totaled approximately $851 for three months ended September 30, 2021 as compared to $11,063 for the three months ended September 30, 2020.
Income
Income for the three months ended September 30, 2021 was approximately $201 thousand before income tax provision of approximately $48 thousand resulted in a net income of approximately $153 thousand as compared to a net income of $93 thousand for the three months ended September 30, 2020.
Security Systems - Brigadier Security Systems (2000) Ltd.
Brigadier, founded in 1985, is a leading electronic security company in the province of Saskatchewan. Brigadier has offices located in the urban areas of Saskatchewan; Brigadier Security Systems in Saskatoon, and operating as Elite Security in Regina. The company has a combined industry experience of over 135 years. Brigadier provides comprehensive security solutions including access control, camera systems, fire alarm monitoring panels, and intrusion alarms to home and business owners as well as government offices, schools, and public buildings. Their experience as the provider of choice on many large notable sites shows a commitment to design, service and support. Brigadier specializes, and is certified, in several major manufacturers’ products: Honeywell Security, Panasonic, Avigilon and JCI/DSC/Kantech security products. The company and staff are recognized for dedication to customer service with annual awards from SecurTek including being recipients of the Customer Retention, Service Excellence, and overall best dealer with the President’s Award. The company demonstrates a commitment to delivering outstanding quality to customers by the notable facilities, businesses, and homes they secure.
Brigadier is an authorized SecurTek dealer. SecurTek is owned by SaskTel which is Saskatchewan's leading Information and Communications Technology (ICT) provider with over 1.4 million customer connections across Canada. Under the terms of its authorized dealer contract with the monitoring company, Brigadier earns monthly payments during the term of the monitoring contract in exchange for performance of customer service activities on behalf of the monitoring company.
Brigadier operates exclusively in Canada and thus the Canadian dollar is its functional currency. In order to consolidate Concierge’s reporting currency, the U.S. dollar, with that of Brigadier, Concierge records foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830, Foreign Currency Matters. The translation of Canadian currency into U.S. dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period.
For the Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020
Revenue
Net revenues for the three months ended September 30, 2021 were $0.7 million with cost of goods sold recorded as approximately $0.3 million, resulting in a gross profit of approximately $0.4 million with a gross margin of approximately 52% as compared to the three months ended September 30, 2020 where net revenues were approximately $0.7 million with cost of goods sold of $0.3 million and a gross profit of $0.4 million, or approximately 54%.
Expenses
Operating expenses for the three months ended September 30, 2021 were $0.3 million producing an operating profit of $0.1 million or approximately 13% as compared to the three months ended September 30, 2020 where operating profits were $0.1 million, or approximately 19%, with operating expenses of $0.2 million.
Income
Other income comprised of interest income and commission income totaled approximately $7 thousand for the three months ended September 30, 2021, and provision for income tax expense was ($18) thousand, resulting in net income after income taxes of approximately $79 thousand as compared to income after income taxes of approximately $167 thousand for the three months ended September 30, 2020 where government subsidies due to COVID-19 totaled approximately $100 thousand. No government subsidies were received for the three month period ended September 30, 2021.
Beauty Products - Original Sprout
Kahnalytics was founded in 2015 and adopted the dba/Original Sprout in December 2017. Original Sprout formulates and packages various hair and skin care products that are 100% vegan, tested safe and non-toxic, and marketed globally through distribution networks to salons, resorts, grocery stores, health food stores, e-tail sites and on the company's website. The company operates from warehouse and sales offices located in San Clemente, CA, USA. As a result of the ongoing COVID-19 pandemic, Original Sprout has made adjustments to its primary channels to market. Prior to the pandemic Original Sprout relied heavily upon its wholesale distribution network to place products at retail locations and generally to make products available to consumers, whereas in the current environment of social distancing and closures of retail businesses the company found a significant drop in sales volumes as consumers avoided traditional sales outlets. In response to this trend, Original Sprout has established new sales channels with online retailers and also encouraged those national retail chains who stock the product to also make it available at online shopping carts. The positive effects of this transition are now being realized while at the same time the negative effects of the pandemic on the wholesale distribution business continues to increase for the U.S. market. The result is that sales overall have been relatively stable during the pandemic, though derived from different sources.
For the Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020
Revenue
Net revenues for the three months ended September 30, 2021 were $1.0 million as compared to $1.0 million for the three months ended September 30, 2020. Cost of goods sold for the three months ended September 30, 2021 and September 30, 2020 were $0.6 million and $0.5 million, respectively, resulting in a gross profit of approximately $0.4 million and $0.5 million, respectively, or 41% as compared to 46% gross margin. The decrease in profit margin is attributed to difficulties with supply chains and the rising costs of raw materials and inbound freight, which were likely brought about due to the ongoing COVID-19 effects both domestically and internationally.
Expenses
Operating expenses were approximately $0.4 million resulting in an operating income near breakeven at $4 thousand, as compared to $0.4 million of operating expenses resulting in operating income of $64 thousand for the three months ended September 30, 2020, or approximately 7%.
Income (Loss)
After consideration given to other income, the net income for the three months ended September 30, 2021 was approximately $5 thousand as compared to $65 thousand net income for the three months ended September 30, 2020.
Plan of Operation for the Next Twelve Months
Our plan of operation for the next twelve months is to apply necessary resources, which may include experienced personnel, cash, or synergistic acquisitions made with cash, equity or debt, into growing each of our business units to their potential. Original Sprout is in the initial stages of transitioning from a largely boutique offering distributed through specialty wholesalers to a more mainstream product available at traditional outlets and online and as such we anticipate measurable growth in revenues for the coming years, though there may be one-time initial expenses associated with the launch of new sales channels. Additionally, we are expecting moderate growth in Brigadier through focused management initiatives and consolidation within the security industry coupled with expanded product offerings. Similarly, we expect Gourmet Foods to be operating more efficiently under current management and continue to increase market share through additional product offerings and channels to market, including the printing and sale of food wrappers by their newly acquired subsidiary, Printstock. Wainwright will continue to develop innovative and new fund products to grow its portfolio. In addition to our long-term mission that is an acquisition strategy based upon identifying and acquiring profitable, mature, companies of a diverse nature and with in-place management that produces increased revenue streams, the Company is also focused upon building expertise and developing Fintech opportunities in the financial services sector through its development stage subsidiary Marygold and Co. In a more general sense, the Company is characterizing its business in two categories: 1) financial services and 2) other consumer-based operating units. The purpose is to isolate the cyclical, and sometimes volatile, nature of the financial services business from our other industry segments. As revenues from financial services fluctuate over time due to varying performance of the commodities markets, our other operations are expected to be stable and sustainable by comparison. By these initiatives we seek to:
| ● |
continue to gain market share for our wholly owned subsidiaries’ areas of operation, |
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| ● |
increase our gross revenues and realize net operating profits, |
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| ● |
lower our operating costs by unburdening certain selling expenses to third party distributors, |
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| ● |
have sufficient cash reserves to pay down accrued expenses and losses, |
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| ● |
attract parties who have an interest in selling their privately held companies to us, |
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| ● |
achieve efficiencies in accounting and reporting through adoption of standards used by all subsidiaries on a consistent basis, |
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| ● |
strategically pursue additional company acquisitions, and |
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| ● |
explore opportunities as may present themselves in the Fintech space, including the launch of services by Marygold and Marygold Advisory Services, and the creation of new corporate entities as focused subsidiary holdings. |
Liquidity and Capital Resources
Concierge is a holding company that conducts its operations through its subsidiaries. At the holding-company level, its liquidity needs relate to operational expense, the funding of additional business acquisitions and new investment opportunities. Our operating subsidiaries' principal liquidity requirements arise from cash used in operating activities, debt service, and capital expenditures, including purchases of equipment and services, operating costs and expenses, and income taxes. Cash is managed at the holding company or the subsidiary level. There are no limitations or constraints on the movement of funds between the entities.
As of September 30, 2021, we had $17.3 million of cash and cash equivalents on a consolidated basis as compared to $16.1 million as of June 30, 2021.
During the past five fiscal years combined, Concierge has invested approximately $8.2 million in cash towards purchasing and assimilating Gourmet Foods and its Printstock subsidiary, Brigadier Security Systems and the Original Sprout assets into the Concierge Technologies group of companies as well as the acquisition through a stock-for-stock exchange of Wainwright, which provides a significant revenue stream and value. We have also invested approximately $3.6 million in the development of Fintech applications through our newly organized subsidiary, Marygold. Despite these cash investments, our working capital position remains strong at $17.3 million and our position has strengthened year-to-year. While Concierge intends to maintain and improve its revenue stream from wholly owned subsidiaries, Concierge continues to pursue acquisitions of other profitable companies which meet its target profile. Provided Concierge’s subsidiaries continue to operate as they are presently, and are projected to operate, Concierge has sufficient capital to pay its general and administrative expenses for the coming fiscal year and to adequately pursue its long-term business objectives. However, given the significant economic and financial market disruptions associated with the COVID-19 pandemic, the Company’s results of operations could be adversely impacted.
Borrowings
As of September 30, 2021, we had $1.0 million of related-party and third-party indebtedness on a consolidated basis as compared to $1.0 million as of June 30, 2021. Approximately $380,678 is owed by Brigadier and secured with the land and building in Saskatoon purchased in July 2019. The initial principal balance was approximately $401,000 (CAD$525,000 translated as of the loan date July 1, 2019) with an annual interest rate of 4.14% maturing June 30, 2024. The short-term portion of principal for this loan due within 12 months as of September 30, 2021 is approximately US$14,840 and the long-term principal amount due is approximately US$365,838. Interest on the loan is expensed or accrued as it becomes due. Interest expense on the loan for the three months ended September 30, 2021 and September 30, 2020 was $4,048 and US$3,963, respectively. Concierge, without inclusion of its subsidiary companies, as of September 30, 2021 and June 30,2021, had $0.6 million of related-party indebtedness. We are not required to make interest payments on our related party notes until the maturity date.
Current related party notes payable consist of the following:
| September 30, |
June 30, |
|||||||
| 2021 |
2021 |
|||||||
| Notes payable to shareholder, interest rate of 8%, unsecured and payable on December 31, 2012 (past due) |
3,500 | 3,500 | ||||||
| Notes payable to shareholder, interest rate of 4%, unsecured and payable on May 25, 2022 |
250,000 | 250,000 | ||||||
| Notes payable to shareholder, interest rate of 4%, unsecured and payable on April 8, 2022 |
350,000 | 350,000 | ||||||
| $ | 603,500 | $ | 603,500 | |||||
Investments
Wainwright, from time to time, provides initial investments in the creation of ETP and ETF funds that Wainwright manages. Wainwright classifies these investments as current assets as these investments are generally sold within one year from the balance sheet date. As of September 30, 2021 and June 30, 2021, Wainwright did not hold any initial investment positions. These investments, as applicable, are described further in Note 7 to our Financial Statements.
Dividends
Our strategy on dividends is to declare and pay dividends only from retained earnings and only when our Board of Directors deems it prudent and in the best interests of the Company to declare and pay dividends. We have paid no dividends and we do not expect to pay any dividends over the next fiscal year.
| Item 3. |
Quantitative and Qualitative Disclosures about Market Risk. |
As a "smaller reporting company", we are not required to provide the information required by this Item.
| Item 4. |
Controls and Procedures |
Disclosure Controls and Procedures
Concierge maintains disclosure controls and procedures that are designed to provide reasonable assurances that the information required to be disclosed in Concierge’s periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms.
The duly appointed officers of Concierge, including its chief executive officer and chief financial officer, who perform functions equivalent to those of a principal executive officer and principal financial officer of Concierge, have evaluated the effectiveness of Concierge’s disclosure controls and procedures and have concluded that the disclosure controls and procedures of Concierge were effective as of the end of the period covered by this quarterly report on Form 10-Q.
Change in Internal Control Over Financial Reporting
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.
| Legal Proceedings |
From time to time, the Company and its subsidiaries may be involved in legal proceedings arising primarily from the ordinary course of their respective businesses. Except as described below there are no pending legal proceedings against the Company. USCF, is an indirect wholly owned subsidiary of the Company. USCF, as the general partner of USO and the general partner and sponsor of the related public funds may, from time to time, be involved in litigation arising out of its operations in the ordinary course of business. Except as described herein, USO and USCF are not currently party to any material legal proceedings.
SEC and CFTC Wells Notices
On November 8, 2021, one of Concierge Technologies, Inc.'s (the "Company") indirect subsidiaries, the United States Commodity Funds LLC (“USCF”), together with United States Oil Fund, LP (“USO”), for which USCF is the general partner, announced a resolution with each of the U.S. Securities and Exchange Commission (the “SEC”) and the U.S. Commodity Futures Trading Commission (the “CFTC”) relating to matters set forth in certain Wells Notices issued by the staffs of each of the SEC and CFTC, as detailed below.
On August 17, 2020, USCF, USO, and John Love received a “Wells Notice” from the staff of the SEC (the “SEC Wells Notice”). The SEC Wells Notice relates to USO's disclosures in late April 2020 and early May 2020 regarding constraints imposed on USO's ability to invest in Oil Futures Contracts. The SEC Wells Notice states that the SEC staff has made a preliminary determination to recommend that the SEC file an enforcement action against USCF, USO, and Mr. Love alleging violations of Sections 17(a)(1) and 17(a)(3) of the 1933 Act and Section 10(b) of the 1934 Act and Rule 10b-5 thereunder, in each case with respect to its disclosures and USO’s actions.
Subsequently, on August 19, 2020, USCF, USO, and Mr. Love received a Wells Notice from the staff of the CFTC (the “CFTC Wells Notice”). The CFTC Wells Notice states that the CFTC staff has made a preliminary determination to recommend that the CFTC file an enforcement action against USCF, USO, and Mr. Love alleging violations of Sections 4o(1)(A) and (B) and 6(c)(1) of the CEA, 7 U.S.C. §§ 6o(1)(A), (B), 9(1) (2018), and CFTC Regulations 4.26, 4.41, and 180.1(a), 17 C.F.R. §§ 4.26, 4.41, 180.1(a) (2019), in each case with respect to its disclosures and USO’s actions.
On November 8, 2021, acting pursuant to an offer of settlement submitted by USCF and USO, the SEC issued an order instituting cease-and-desist proceedings, making findings, and imposing a cease-and-desist order pursuant to Section 8A of the 1933 Act, directing USCF and USO to cease and desist from committing or causing any violations of Section 17(a)(3) of the 1933 Act, 15 U.S.C. § 77q(a)(3) (the “SEC Order”). In the SEC Order, the SEC made findings that, from April 24, 2020 to May 21, 2020, USCF and USO violated Section 17(a)(3) of 1933 Act, which provides that it is “unlawful for any person in the offer or sale of any securities . . . to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.” USCF and USO consented to entry of the SEC Order without admitting or denying the findings contained therein, except as to jurisdiction.
Separately, on November 8, 2021, acting pursuant to an offer of settlement submitted by USCF, the CFTC issued an order instituting cease-and-desist proceedings, making findings, and imposing a cease-and-desist order pursuant to Section 6(c) and (d) of the CEA, directing USCF to cease and desist from committing or causing any violations of Section 4o(1)(B) of the CEA, 7 U.S.C. § 6o(1)(B), and CFTC Regulation 4.41(a)(2), 17 C.F.R. § 4.41(a)(2) (the “CFTC Order”). In the CFTC Order, the CFTC made findings that, from on or about April 22, 2020 to June 12, 2020, USCF violated Section 4o(1)(B) of the CEA and CFTC Regulation 4.41(a)(2), which make it unlawful for any commodity pool operator (“CPO”) to engage in “any transaction, practice, or course of business which operates as a fraud or deceit upon any client or participant or prospective client or participant” and prohibit a CPO from advertising in a manner which “operates as a fraud or deceit upon any client or participant or prospective client or participant,” respectively. USCF consented to entry of the CFTC Order without admitting or denying the findings contained therein, except as to jurisdiction.
Pursuant to the SEC Order and the CFTC Order, in addition to the command to cease and desist from committing or causing any violations of Section 17(a)(3) of the 1933 Act, Section 4o(1)(B) of the CEA, and CFTC Regulation 4.14(a)(2), civil monetary penalties totaling two million five hundred thousand dollars ($2,500,000) in the aggregate must be paid to the SEC and CFTC, of which one million two hundred fifty thousand dollars ($1,250,000) will be paid by USCF to each of the SEC and the CFTC, respectively, pursuant to the offsets permitted under the orders. The SEC Order can be accessed at www.sec.gov and the CFTC Order can be accessed at www.cftc.gov.
In re: United States Oil Fund, LP Securities Litigation
On June 19, 2020, USCF, USO, John P. Love, and Stuart P. Crumbaugh were named as defendants in a putative class action filed by purported shareholder Robert Lucas (the “Lucas Class Action”). The Court thereafter consolidated the Lucas Class Action with two related putative class actions filed on July 31, 2020 and August 13, 2020, and appointed a lead plaintiff. The consolidated class action is pending in the U.S. District Court for the Southern District of New York under the caption In re: United States Oil Fund, LP Securities Litigation, Civil Action No. 1:20-cv-04740.
On November 30, 2020, the lead plaintiff filed an amended complaint (the “Amended Lucas Class Complaint”). The Amended Lucas Class Complaint asserts claims under the 1933 Act, the 1934 Act, and Rule 10b-5. The Amended Lucas Class Complaint challenges statements in registration statements that became effective on February 25, 2020 and March 23, 2020 as well as subsequent public statements through April 2020 concerning certain extraordinary market conditions and the attendant risks that caused the demand for oil to fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The Amended Lucas Class Complaint purports to have been brought by an investor in USO on behalf of a class of similarly-situated shareholders who purchased USO securities between February 25, 2020 and April 28, 2020 and pursuant to the challenged registration statements. The Amended Lucas Class Complaint seeks to certify a class and to award the class compensatory damages at an amount to be determined at trial as well as costs and attorney’s fees. The Amended Lucas Class Complaint named as defendants USCF, USO, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes III, as well as the marketing agent, ALPS Distributors, Inc., and the Authorized Participants: ABN Amro, BNP Paribas Securities Corporation, Citadel Securities LLC, Citigroup Global Markets, Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Goldman Sachs & Company, J.P. Morgan Securities Inc., Merrill Lynch Professional Clearing Corporation, Morgan Stanley & Company Inc., Nomura Securities International Inc., RBC Capital Markets LLC, SG Americas Securities LLC, UBS Securities LLC, and Virtu Financial BD LLC.
The lead plaintiff has filed a notice of voluntary dismissal of its claims against BNP Paribas Securities Corporation, Citadel Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Morgan Stanley & Company, Inc., Nomura Securities International, Inc., RBC Capital Markets, LLC, SG Americas Securities LLC, and UBS Securities LLC.
USCF, USO, and the individual defendants in In re: United States Oil Fund, LP Securities Litigation intend to vigorously contest such claims and has moved for their dismissal.
Mehan Action
On August 10, 2020, purported shareholder Darshan Mehan filed a derivative action on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes, III (the “Mehan Action”). The action is pending in the Superior Court of the State of California for the County of Alameda as Case No. RG20070732.
The Mehan Action alleges that the defendants breached their fiduciary duties to USO and failed to act in good faith in connection with a March 19, 2020 registration statement and offering and disclosures regarding certain extraordinary market conditions that caused demand for oil to fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The complaint seeks, on behalf of USO, compensatory damages, restitution, equitable relief, attorney’s fees, and costs. All proceedings in the Mehan Action are stayed pending disposition of the motion(s) to dismiss in In re: United States Oil Fund, LP Securities Litigation.
USCF, USO, and the other defendants intend to vigorously contest such claims.
In re United States Oil Fund, LP Derivative Litigation
On August 27, 2020, purported shareholders Michael Cantrell and AML Pharm. Inc. DBA Golden International filed two separate derivative actions on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Andrew F Ngim, Gordon L. Ellis, Malcolm R. Fobes, III, Nicholas D. Gerber, Robert L. Nguyen, and Peter M. Robinson in the U.S. District Court for the Southern District of New York at Civil Action No. 1:20-cv-06974 (the “Cantrell Action”) and Civil Action No. 1:20-cv-06981 (the “AML Action”), respectively.
The complaints in the Cantrell and AML Actions are nearly identical. They each allege violations of Sections 10(b), 20(a) and 21D of the 1934 Act, Rule 10b-5 thereunder, and common law claims of breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets. These allegations stem from USO’s disclosures and defendants’ alleged actions in light of the extraordinary market conditions in 2020 that caused demand for oil to fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The complaints seek, on behalf of USO, compensatory damages, restitution, equitable relief, attorney’s fees, and costs. The plaintiffs in the Cantrell and AML Actions have marked their actions as related to the Lucas Class Action.
The Court entered and consolidated the Cantrell and AML Actions under the caption In re United States Oil Fund, LP Derivative Litigation, Civil Action No. 1:20-cv-06974 and appointed co-lead counsel. All proceedings in In re United States Oil Fund, LP Derivative Litigation are stayed pending disposition of the motion(s) to dismiss in In re: United States Oil Fund, LP Securities Litigation.
USCF, USO, and the other defendants intend to vigorously contest the claims in In re United States Oil Fund, LP Derivative Litigation.
| Item 1A. |
Risk Factors |
Concierge and its subsidiaries (referred to herein as “we,” “us,” “our” or similar expressions) are subject to certain risks and uncertainties in its business operations. In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” in the September 22, 2021 filing of our Annual Report on Form 10-K, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
There have been no material changes since our September 22, 2021 filing of our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 to the risk factors discussed in “Risk Factors”. These risk factors should be read in connection with the other information included in this quarterly report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and the related notes.
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
None.
| Item 3. |
Defaults Upon Senior Securities |
None.
| Item 4. |
Mine Safety Disclosures |
Not applicable.
| Item 5. |
Other Information |
As more fully detailed in Item 1 Legal Proceedings of this Form 10-Q and in the Company’s Current Report on Form 8-K, filed with the U.S. Securities and Exchange Commission on November 9, 2021, on November 8, 2021, one of the "Company’s indirect subsidiaries, the United States Commodity Funds LLC (“USCF”), together with United States Oil Fund, LP (“USO”), for which USCF is the general partner, announced a resolution with each of the U.S. Securities and Exchange Commission (the “SEC”) and the U.S. Commodity Futures Trading Commission (the “CFTC”) relating to matters set forth in certain Wells Notices issued by the staffs of each of the SEC and CFTC.
| Item 6. |
Exhibits |
The following exhibits are filed or incorporated by reference as part of this Form 10-Q:
| 31.1(1) |
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| 31.2(1) |
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| 32.1(1) |
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| 32.2(1) |
| 101.INS |
Inline XBRL Instance Document# |
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| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document# |
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| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document# |
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| 101.LAB |
Inline XBRL Taxonomy Extension Labels Linkbase Document# |
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| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document# |
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| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document# |
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| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * | Filed herewith. | |
| + | Management contract or compensatory plan or arrangement. | |
| ** | This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filing, except to the extent the Company specifically incorporates it by reference. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CONCIERGE TECHNOLOGIES, INC. |
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| Dated: November 15, 2021 |
By: |
/s/ Nicholas Gerber |
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| Nicholas Gerber |
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| Principal Executive Officer |
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A signed original of this written statement required by Section 906 has been provided to Concierge Technologies, Inc. and will be retained by Concierge Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 3.3
Exhibit 3.4
EXHIBIT 31.1
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
I, Nicholas Gerber, certify that:
1. I have reviewed this report on Form 10-Q of the 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 officer(s) 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 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 annual 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(s) 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: November 15, 2021
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/S/Nicholas Gerber/ |
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Nicholas Gerber, Chief Executive Officer, Principal Executive Officer |
EXHIBIT 31.2
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial and Accounting Officer
I, Stuart Crumbaugh, certify that:
1. I have reviewed this report on Form 10-Q of the 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 officer(s) 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 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 annual 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(s) 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: November 15, 2021
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/S/Stuart Crumbaugh/ |
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Stuart Crumbaugh, Chief Financial Officer |
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Principal Financial and Accounting Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Concierge Technologies, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Nicholas Gerber, Principal Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 15, 2021
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/S/Nicholas Gerber |
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Nicholas Gerber, Chief Executive Officer |
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Principal Executive Officer |
A signed original of this written statement required by Section 906 has been provided to Concierge Technologies, Inc. and will be retained by Concierge Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Concierge Technologies, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Stuart Crumbaugh, Principal Financial and Accounting Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 15, 2021
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/S/Stuart Crumbaugh |
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Stuart Crumbaugh, Chief Financial Officer |
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Principal Financial and Accounting Officer |
A signed original of this written statement required by Section 906 has been provided to Concierge Technologies, Inc. and will be retained by Concierge Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.