Concierge Technologies 10QSB 9-30-04

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2004

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________


CONCIERGE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
 
Commission File No. 000-29913

State of Incorporation: California
IRS Employer I.D. Number: 95-4442384


22048 Sherman Way, Suite 301
Canoga Park, CA 91303
818-610-0310
____________________________________________________
(Address and telephone number of registrant's principal
executive offices and principal place of business)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]    No [   ]

As of November 4, 2004, there were 141,292,749 shares of the Registrant’s Common Stock, $0.001 par value, outstanding.

Transitional Small Business Disclosure Format (check one): Yes [   ]    No [X]
 
 

 
     
 


PART I - FINANCIAL INFORMATION
   
Item 1 Financial Statements
  
 
Page
   
Balance Sheet September 30, 2004 (Unaudited)
3
Statements of Operations Three Month Period Ended
  
September 30, 2004 and 2003 and the
  
Period from September 20, 1996 (Inception) to
  
September 30, 2004 (Unaudited)
4
Statements of Cash Flows Periods Ended September 30, 2004
  
and 2003 and the Period from September 20, 1996
  
(Inception) to September 30, 2004 (Unaudited)
5
Notes to Unaudited Financial Statements
6



 

 
   2  
 
 

CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2004
(Unaudited)
         
ASSETS
         
CURRENT ASSETS:
        
Cash & cash equivalents
  
$
10,761
  
         
GOODWILL
    
496,843
 
         
   
$
507,604
  
         
   LIABILITIES AND STOCKHOLDERS' DEFICIT
         
CURRENT LIABILITIES:
        
Accrued expenses
  
$
384,145
  
Note Payable
    
20,000
 
Loans Payable-Shareholders
    
340,709
 
Total current liabilities
    
744,854
 
         
SUBSCRIPTIONS RECEIVED FOR COMMON STOCK
       
SUBJECT TO CONTINGENCY
   
1,663,290
 
         
COMMON STOCK ISSUED SUBJECT TO CONTINGENCY
    
266,610
 
         
STOCKHOLDERS' DEFICIT:
        
Preferred stock, par value $.001 per share; 10,000,000
        
shares authorized; none issued
    
-
 
Common stock, $.001 par value; 190,000,000 shares
    
 
authorized; issued and outstanding 142,292,747
    
142,293
 
Additional paid in capital
    
1,026,726
 
Shares to be issued
        
Deficit accumulated during the development stage
    
(3,336,169
)
Total stockholders' deficit
    
(2,167,150
)
   
$
507,604
  
         

 The accompanying notes are an integral part of these financial statements.

  

 
   3  
 
 

CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 2004 AND 2003 AND
THE PERIOD FROM SEPTEMBER 20, 1996 (INCEPTION) TO SEPTEMBER 30, 2004
(Unaudited)
                     
   
Three month periods ended  
    
September 20,
 
   
September 30, 
    
September 30,
    
1996 (Inception) to
  
     
2004
    
2003
    
September 30, 2004
  
                     
REVENUE
  
$
-
  
$
-
  
$
-
  
                     
COSTS AND EXPENSES
          
       
Product launch Expenses
    
-
   
-
   
1,077,785
 
General & Administrative Expenses
    
14,093
   
6,458
   
1,888,657
 
TOTAL COSTS AND EXPENSES
    
14,093
   
6,458
   
2,966,442
 
                     
OTHER INCOME/(EXPENSES)
                    
Settlement income, net
    
-
   
-
   
52,600
 
Litigation settlement
    
-
   
-
   
(135,000
)
TOTAL OTHER INCOME/(EXPENSES)
    
-
   
-
   
(82,400
)
                     
NET LOSS BEFORE INCOME TAXES
    
(14,093
)
  
(6,458
)
  
(3,048,842
)
                     
Provision of Income Taxes
    
1,600
   
800
    
8,800
 
                     
NET LOSS
  
$
(15,693
)
$
(7,258
)
$
(3,057,642
)
                     
WEIGHTED AVERAGE SHARES OF COMMON STOCK
                    
OUTSTANDING, BASIC AND DILUTED
    
142,292,747
   
126,292,749
       
                     
BASIC AND DILUTED NET LOSS PER SHARE
  
$
(0.00
)
$
(0.00
)
      
                     
                     

 The accompanying notes are an integral part of these financial statements.


 
  4   
 


CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 2004 AND 2003 AND
THE PERIOD FROM SEPTEMBER 20, 1996 (INCEPTION) TO SEPTEMBER 30, 2004
(Unaudited)
                     
   
Three month periods ended  
September 20,
September 30, 
September 30,
1996 (Inception) to
2004
2003
September 30, 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
                    
Net loss
  
$
(15,693
)
$
(7,258
)
$
(3,057,642
)
Adjustments to reconcile net loss to net cash used in
                   
operating activities:
                    
Impairment of asset
    
-
   
-
   
245,800
 
Depreciation and amortization
    
245
   
-
   
13,155
 
Stock issued for services
    
-
   
-
   
496,352
 
Increase in current assets:
                    
Prepaid expense
    
-
   
-
   
(245,800
)
Increase in current liabilities:
                    
Accrued expenses
    
2,443
   
(2,474
)
  
299,614
 
Net cash used in operating activities
    
(13,005
)
  
(9,732
)
  
(2,248,521
)
                     
CASH FLOWS FROM INVESTING ACTIVITIES:
                    
Cash received on acquisition of subsidiary
    
-
   
-
   
2,912
 
Note receivable - related party
    
-
   
-
   
(100,000
)
Acquisition of property & equipment
    
-
   
-
   
(12,910
)
Net cash used in investing activities
    
-
   
-
   
(109,998
)
                     
CASH FLOWS FROM FINANCING ACTIVITIES:
                    
Proceeds from Issuance of Shares
    
-
   
-
   
587,007
 
Proceed from stock to issued for cash
    
-
   
-
   
10,000
 
Proceeds from advance subscriptions
   
-
   
-
   
1,772,983
 
Costs and expenses of advance subscriptions
    
-
   
-
   
(79,710
)
Proceeds from (repayments of) related party loans
    
(80,000
)
  
14,000
   
79,000
 
Net cash provided by (used in) financing activities
    
(80,000
)
  
14,000
   
2,369,280
 
                     
NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS
    
(93,005
)
  
4,268
   
10,761
 
                     
CASH & CASH EQUIVALENTS, BEGINNING BALANCE
    
103,766
   
1,437
   
-
 
                     
CASH & CASH EQUIVALENTS, ENDING BALANCE
  
$
10,761
  
$
5,705
  
$
10,761
  
                     
The accompanying notes are an integral part of these financial statements.

 
   5  
 

CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS

 

1.  

 DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Concierge Technologies, Inc. (the "Company"), a California corporation, was incorporated on August 18, 1993 as Fanfest, Inc. In August 1995 the Company changed its name to Starfest, Inc. During 1998, the Company was inactive, just having minimal administrative expenses. During 1999 the Company attempted to pursue operations in the online adult entertainment field. There were no revenues from this endeavor. On March 20, 2002, the Company changed its name to Concierge Technologies, Inc.

In March 2000, the Company acquired approximately 96.83 percent (8,250,000 shares) of the common stock of MAS Acquisition XX Corp. (MAS XX) for $314,688. This amount was expensed in March 2000, as at the time of the acquisition MAS XX had no assets or liabilities and was inactive. On March 21, 2002, the Company consummated a merger with Concierge, Inc. (see note 10).

Concierge, Inc. ("CI") was a development stage enterprise incorporated in the state of Nevada on September 20, 1996. The CI had undertaken the development and marketing of a new technology, a unified messaging product "The Personal Communications Attendant" ("PCA™"). "PCA™" will provide a means by which the user of Internet e-mail can have e-mail messages spoken to him/her over any touch-tone telephone or wireless phone in the world. To-date, the Company has not earned any revenue.

The accounting policies of the Company are in accordance with generally accepted accounting principles and conform to the standards applicable to development stage companies.

Basis of Preparation

The accompanying Interim Condensed Financial Statements are prepared in accordance with rules set forth in Retaliation SB of the Securities and Exchange Commission. As said, these statements do not include all disclosures required under generally accepted principles and should be read in conjunction with the audited financial statements for the year ended June 30, 2004. In the opinion of management, all adjustments consisting of normal reoccurring accruals have been made to the financial statements. The results of operation for the nine months ended September 30, 2004 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2005.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current period presentation.

 
2.     RECENT PRONOUNCEMENTS
 
On May 15 2003, the FASB issued FASB Statement No. 150 ("SFAS 150"), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS 150 changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or "mezzanine" equity, by now requiring those instruments to be classified as liabilities (or assets in some circumstances) in the statement of financial position. Further, SFAS 150 requires disclosure regarding the terms of those instruments and settlement alternatives. SFAS 150 affects an entity's classification of the following freestanding instruments: a) Mandatorily redeemable instruments b) Financial instruments to repurchase an entity's own equity instruments c) Financial instruments embodying obligations that the issuer must or could choose to settle by issuing a variable number of its shares or other equity instruments based solely on (i) a fixed monetary amount known at inception or (ii) something other than changes in its own equity instruments d) SFAS 150 does not apply to

 
   6  
 

CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS

features embedded in a financial instrument that is not a derivative in its entirety. The guidance in SFAS 150 is generally effective for all financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. For private companies, mandatorily redeemable financial instruments are subject to the provisions of SFAS 150 for the fiscal period beginning after December 15, 2003. The adoption of SFAS No. 149 does not have a material impact on the Company’s financial position or results of operations or cash flows.

In December 2003, the Financial Accounting Standards Board (FASB) issued a revised Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46R). FIN 46R addresses consolidation by business enterprises of variable interest entities and significantly changes the consolidation application of consolidation policies to variable interest entities and, thus improves comparability between enterprises engaged in similar activities when those activities are conducted through variable interest entities. The Company does not hold any variable interest entities.

In March 2004, the Emerging Issues Task Force ("EITF") reached a consensus on Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments." The EITF reached a consensus about the criteria that should be used to determine when an investment is considered impaired, whether that impairment is other-than-temporary, and the measurement of an impairment loss and how that criteria should be applied to investments accounted for under SFAS No. 115, "ACCOUNTING IN CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES." EITF 03-01 also included accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. Additionally, EITF 03-01 includes new disclosure requirements for investments that are deemed to be temporarily impaired. In September 2004, the Financial Accounting Standards Board (FASB) delayed the accounting provisions of EITF 03-01; however the disclosure requirements remain effective for annual reports ending after June 15, 2004. The Company will evaluate the impact of EITF 03-01 once final guidance is issued.

In April of 2004, the EITF reached consensus on the guidance provided in EITF Issue No. 03-6, "Participating Securities and the Two-Class Method under SFAS No. 128 Earnings Per Share" ("EITF 03-6"). EITF 03-6 clarifies whether a security should be considered a "participating security" for purposes of computing earnings per share ("EPS") and how earnings should be allocated to a "participating security" when using the two-class method for computing basic EPS. The adoption of EITF 03-6 does not have a significant impact on the Company's financial position or results of operations.

In May of 2004, the FASB revised FASB Staff Position ("FSP") No. 106-1, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003" and issued FSP No. 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003" ("FSP No. 106-2"). FSP 106-2 provides accounting guidance to the employers who sponsor post retirement health care plans that provide prescription drug benefits; and the prescription drug benefit provided by the employer is "actuarially equivalent" to Medicare Part D and hence qualifies for the subsidy under the Medicare amendment act. The adoption of FSP 106-2 does not have a significant impact on the Company's financial position or results of operations.

SEC Staff Accounting Bulletin (SAB) No. 105, "APPLICATION OF ACCOUNTING PRINCIPLES TO LOAN COMMITMENTS," summarizes the views of the staff of the SEC regarding the application of generally accepted accounting principles to loan commitments accounted for as derivative instruments. SAB No.105 provides that the fair value of recorded loan commitments that are accounted for as derivatives under SFAS No. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," should not incorporate the expected future cash flows related to the associated servicing of the future loan. In addition, SAB No. 105 requires registrants to disclose their

 
   7  
 

CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS

 
accounting policy for loan commitments. The provisions of SAB No. 105 must be applied to loan commitments accounted for as derivatives that are entered into after March 31, 2004. The adoption of this accounting standard does not have a material impact on the Company's financial statements.

3.  

 GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern. However, the Company’s did not earn any revenue through the period ended September 30, 2004 and the Company has accumulated deficit of $3,336,169 including a net loss of $15,693 during the three month period ended September 30, 2004. The continuing losses have adversely affected the liquidity of the Company. Losses are expected to continue for the immediate future. The Company faces continuing significant business risks, including but not limited to, its ability to maintain vendor and supplier relationships by making timely payments when due.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. Management devoted considerable effort from inception through the period ended September 30, 2004, towards (i) obtaining additional financing (ii) management of accrued expenses and accounts payable (iii) Development of the software "PCA™" and (vi) evaluation of its distribution and marketing methods.

Management believes that the above actions will allow the Company to continue operations through the next twelve months.
   
4.  NOTES PAYABLE

On September 13, 2004, the Company signed a promissory note and borrowed $20,000 from a Company based in Hong Kong. The Note is due before or on October 1, 2005. and bears an interest rate of 8%. Upon default, the holder has the right to foreclose or otherwise enforce all liens or security interests securing payment hereof from the Company.

5.  NOTES PAYABLE - RELATED PARTIES

Notes payable consisted of the following at September 30, 2004:

Notes payable consisted of the following at September 30, 2004:
     
 
        
Note payable to shareholder, non interest bearing, unsecured,
        
and due on demand
  
$
290,209
  
         
Notes payable to shareholder, interest rate of 10%, unsecured,
        
and payable on July 31, 2004 (past due)
    
5,000
 

 
   8  
 
CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS

         
Notes payable to shareholder, bearing interest rate of 10%, unsecured
        
and payable on demand
    
28,000
  
         
Notes payable to shareholder bearing interest rate of 8%, unsecured
        
and payable on October 1, 2004
    
14,000
  
         
Notes payable to director/shareholder bearing interest rate of 8%,
       
unsecured and payable on September 1, 2004 (past due)
    
3,500
  
         
Total Notes payable
  
$
340,709
  
 
The Company has recorded interest expense payable to related parties, amounting $1,588 and 2,122 for the three month periods ended September 30, 2004 and 2003, respectively.

6.  

 INCOME TAXES

No provision was made for Federal income tax since the Company has significant net operating loss carryforward. Through September, 2004, the Company incurred net operating losses for tax purposes of approximately $3,055,000. Differences between financial statement and tax losses consist primarily of amortization allowance, was immaterial at September 30, 2004. The net operating loss carryforward may be used to reduce taxable income through the year 2025. The availability of the Company’s net operating loss carryforward is subject to limitation if there is a 50% or more positive change in the ownership of the Company’s stock. The provision for income taxes consists of the state minimum tax imposed on corporations.

The net deferred tax asset balance, due to net operating loss carryforwards, as of September 30, 2004 was approximately $1,222,000. A 100% valuation allowance has been established against the deferred tax assets, as the utilization of the loss carrytforwards cannot reasonably be assured.

7.  

 SHARES OF CONCIERGE, INC. ISSUED SUBJECT TO CONTINGENCY

Concierge, Inc. (CI) issued 117,184 shares for cash totaling $202,061 and 354,870 shares for services of $3,549 during the year ended June 30, 2000. Since December 1998, CI sold securities to persons in six states in the U. S. CI did not file Form D or other filings in any of the states or with the SEC for such shares and did not properly follow the requirements for complying with available exemptions in each state. Accordingly, all such shares are subject to the contingency that they may have been issued without the availability of an exemption from registration under the Securities Act of 1933 and under the securities laws of each of the six states. Therefore, CI has treated all such shares issued since December 1998, as Common stock issued subject to contingency. Total shares issued subject to contingency through September 30, 2004, were 680,504 for cash and services amounting to $266,610.

8.  

 SUBSCRIPTIONS RECEIVED FOR COMMON STOCK SUBJECT TO CONTINGENCY

Concierge, Inc. (CI) entered into subscription agreements to issue "post merger" shares in exchange for cash. Through December 31, 2000, CI had received advance subscriptions for a gross amount of $1,255,500 before deducting associated costs of $79,710, for 5,928,750 post merger shares. In the event the merger between CI and the Company is not completed prior to November 31, 2000, the obligation of the Company under this agreement may be satisfied by the issuance of shares in the Company equivalent on a pro-rata basis to the number of shares in "post merger" Corporation that are subject to this agreement.

 
   9  
 
CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS

 
As mentioned in Note 10, CI merged with the Company on March 20, 2002. The Company filed a registration statement with the Securities and Exchange Commission ("the Commission") on June 8, 2000 related to the proposed merger, naming CI as the entity proposed to be merged into the Company. From July 1, 2000 through September 15, 2000, CI received additionally $487,500 as advance subscription for 2,127,500 post merger shares in an offering intended to be exempt from registration pursuant to the provisions of Section 4(2) of the Securities Act of 1933 and of Regulation D, Rule 506 of the Commission. It is possible, but not certain, that the filing of the registration statement by the Company and the manner in which CI conducted the sale of the 2,127,500 post merger shares of common stock constituted "general advertising or general solicitation" by CI. General advertising and general solicitation are activities that are prohibited when conducted in connection with an offering intended to be exempt from registration pursuant to the provisions of Regulation D, Rule 506 of the Commission. CI does not concede that there was no exemption from registration available for this offering. Nevertheless, should the aforementioned circumstances have constituted general advertising or general solicitation, CI would be denied the availability of Regulation D, Rule 506 as an exemption from the registration requirements of the Securities Act of 1933 when it sold the 2,127,500 post merger shares of common stock after June 8, 2000. Should no exemption from registration have been available with respect to the sale of these shares, the persons who bought them would be entitled, under the Securities Act of 1933, to the return of their subscription amounts if actions to recover such monies should be filed within one year after the sales in question. Accordingly, the amounts received by CI from the sale of these shares are set apart from Stockholders' Equity as "Subscription received for common stock subject to contingency" to indicate this contingency. The total contingent liabilities related to such shares amounted to $1,929,900 ($2,009,610 less cost and expenses of $79,710) as of September 30, 2004.

9.  

 COMMON STOCK

In October 2003, the Company issued 1,000,000 shares of common stock, restricted under Rule 144, in exchange for $10,000 in cash per subscription agreement. On January 5, 2004, the Company issued 1,000,000 shares of common stock, restricted under Rule 144, in exchange for $10,000 in cash to a former officer of an entity acquired by the Company subsequent to March 31, 2004. Subsequently, the former officer of the acquired entity was appointed to the Board of directors of the Company.

On January 5, 2004 the company issued 4 million shares of its common stock to Ryan Consultants Ltd. of St. Helier Jersey, U.K. The shares were issued in settlement of an invoice in the amount of $80,000. The invoice was tendered by Ryan Consultants for the services performed by the president of the Company on behalf of Ryan Consultants through March 31, 2004. The president of the Company is retained by Ryan Consultants as an agent in the U.S. to oversee their investments and other activities. Ryan Consultants has also agreed to pursue financing in Europe for Concierge Technologies and Planet Halo. The shares are unregistered and their sale is restricted under SEC Rule 144. The president of the Company disclaims any beneficial ownership in the shares. The stocks were valued at the average fair market value of the shares of the Company as quoted on OTCBB on the date of issuance. The Company recorded the issuance of shares valued at $216,000 as consulting expense, as a part of General and administrative expense in the accompanying financials statements.

On May 5, 2004 the Company issued 9,999,998 shares of its common stock valued at $500,000 in exchange for Planet Halo’s 100% outstanding and issued shares on a ratio of, 8.232 shares of the Company to each share of Planet Halo stock.

 
   10  
 
CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS


 

10.  

 MERGER AGREEMENT

On January 26, 2000 the Company entered into an agreement of merger with Concierge, Inc. (CI), a California Corporation. Under the agreement, the outstanding 1,376,380 share of common stock of the CI were converted into 96,957,713 common stock of the Company on the basis of 70.444 shares of the Company for each share outstanding of the CI. The 96,957,713 post merger shares were distributed to the shareholders of CI on a pro-rata basis. For accounting purposes, the transaction was treated as a recapitalization of the CI, with CI as the accounting acquirer (reverse acquisition), and was accounted for in a manner similar to a pooling of interests. The operations of the Company have been included with those of the CI from the acquisition date. The Company had minimal assets before the merger and did not have significant operations prior to the merger. The merger was subject to approval by shareholders of both companies and Securities and Exchange Commission. The merger was consummated on March 20, 2002.

11.  

 SUPPLEMENTAL DISCLOSURE OF CASH FLOWS

The Company prepares its statements of cash flows using the indirect method as defined under the Financial Accounting Standard No. 95.

The Company paid $0 for income tax in the three month periods ended September 30, 2004 and 2003. The Company paid $0 for interest during the three month periods ended September 30, 2004 and 2003.

12.  

 COMMITMENT

The Company sub-leased office space in Los Angeles, California from Ardent, Ltd. The term of the lease was 26 months with monthly payments of $1,542. The lease expired on August 31, 2002. The Company is currently co-located with the president of the Company and pays no rent.

13.     LITIGATIONS

On May 6, 2002, a default judgment was awarded to Brookside Investments Ltd against, jointly and severally, Concierge, Inc, Allen E. Kahn, and The Whitehall Companies in the amount of $135,000 plus legal fees. The Company did not defend against the complaint by Brookside, which alleged that Brookside was entitled to a refund of their investment as a result of a breach of contract. Brookside had entered into a subscription agreement with Concierge, Inc., which called for, among other things, the pending merger between Starfest and Concierge to be completed within 180 days of the investment. The merger was not completed within 180 days and Brookside sought a refund of their investment, which Concierge was unable to provide. The Company has accrued the judgment amount of $135,000 as litigation settlement in the accompanying financial statements.

14.     ACQUISITION

On April 6, 2004 the Company and Planet Halo entered into Stock Purchase agreement whereby, when consummated, the Company would purchase all of the outstanding and issued shares of Planet Halo in exchange for 10 Million shares of the Company's common stock valued at $500,000. On April 20, 2004 all of the conditions of the acquisition were met apart from the issuance of the shares. On May 5, 2004, the Company issued the shares on a ratio of 8.232 shares of the Company to each share of Planet Halo stock. The shares were issued directly to the shareholders of Planet Halo. The existing Planet Halo shares were retired and cancelled. The Company is now a sole shareholder of Planet Halo, a Nevada corporation. On May 5, 2004 the President of Planet Halo was officially appointed to the Board of Directors of the Company along with one other Planet Halo named appointee.

 
   11  
 
CONCIERGE TECHNOLOGIES, INC.
(A development stage company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS


Planet Halo is a development stage company involved in the wireless telecommunications industry through the design, manufacture, sale and distribution of hardware and services that include a hand-held wireless Internet appliance/cell phone known as the "Halo", and an integrated wireless gateway interface to the Internet named "Halomail."

The purchase price was determined in arms-length negotiations between the parties. The assets acquired in this acquisition include without limitation computer hardware and goodwill. A summary of the Planet Halo assets acquired and consideration for is as follows:
 
 
  
Allocated amount
  
         
Cash
  
$
2,912
  
Equipment, net
    
245
  
Goodwill
    
496,843
  
 
  
$
500,000
  
         
 
    
Consideration  paid 
  
         
10,000,000 shares of common stock
  
$
500,000
  


 
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Item 2.    Plan of Operation

Our plan of operation for the next twelve months is to do the following:

·   exploit the opportunities afforded us through our acquisition of Planet Halo by implementing the continued development of the "Halo" device and its subsequent production,

·   source the needed capital for the Halo development through an equity offering, or a debenture instrument convertible into equity,

·   seek other synergistic companies suitable for partnering with the distribution of the Halo and its operation on Wi-Fi networks,

·   Continue efforts to liquidate our existing, pre-paid, inventory of the PCA product and utilize the proceeds for working capital.

Through a combination of product offerings including the Halo Internet appliance/cellular telephone device, the Halomail wireless gateway, broadband wireless Internet access, software offerings (such as the upgraded PCA product), and subscription services, we hope to build a vertically integrated company able to respond in timely fashion to the consumer demand for communications services. Critical to this endeavor will be our ability to resolve outstanding issues of debt and other liabilities through the sale of our existing inventory.

On April 6, 2004, our company signed a definitive agreement to acquire the privately-held company, Planet Halo, in a cash-free stock transaction. On April 20, 2004 the companies completed the necessary documentation to effect the acquisition. On May 5, 2004 Concierge Technologies instructed its transfer agent to issue the purchase price in shares of common stock to the shareholders of Planet Halo. The transaction was officially closed and the shares considered issued as of May 5, 2004.

Planet Halo is a development-stage company that has developed a prototype, hand-held, wireless Internet appliance named the "Halo". The Halo is able to send and receive email, short messages, run applications such as address book, calculator, scheduler, etc and operates as a fully functional cellular telephone. In addition to the Halo device Planet Halo also has an exclusive license to deploy a proprietary wireless gateway in North America. The gateway, named "Halomail", provides a secure interface for wireless access to the Internet, and to the worldwide web. Users of the Halo or other wireless devices may use Halomail as their email client, a secure connection for monetary transactions, browse the worldwide web, connect to their own Intranets, and essentially use the gateway as a secure on-ramp to the Internet in much the same way as a wired connection operates. Concierge plans to move the Halo device into production readiness and to seek partners for the launch of the Halomail gateway on service provider networks.

Planet Halo will continue to be operated from offices located in Ventura, California, and as a wholly-owned subsidiary of Concierge Technologies. Marc Angell is the President of Planet Halo and is also responsible for administering the operating budget, which is approved by the Board of Directors of Concierge Technologies.

On June 17, 2002, David W. Neibert became our President and Chief Operations Officer. Upon assuming that role, he moved the general accounting and administrative offices of our company to a co-location with his firm, The Wallen Group. We do not currently pay rent and have no lease for the facilities being provided by Mr. Neibert.

As of September 30, 2004, we had no employees and no fixed overhead other than the variable cost of web hosting, legal and professional fees, fees charged by our transfer agent and minimum tax payments. We own no office fixtures, furniture or appliances. Our president, CEO and directors are continuing to provide services without cash compensation, however, there are no assurances that this situation will continue for the indefinite future. In the event our President is unwilling to continue in his capacity without compensation, our CEO and/or the President of Planet Halo will assume those duties on behalf of the Company.

 
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Liquidity

Our primary source of operating capital has been funding sourced through insiders or shareholders under the terms of unsecured promissory notes. In two instances we have sold shares of our common stock in exchange for cash. The amount of borrowed funds and funds from equity sales has been sufficient to pay the cost of legal and accounting fees as necessary to maintain a current reporting status with the Securities and Exchange Commission. However, sufficient funds have been unavailable to significantly pay down commercial and vendor accounts payable. We have also been unable to pay salaries to our officers and several of our outside consultants who had performed services during the past and present fiscal years.

Although our management is continuing to provide services to the Company for the near term without cash compensation, we will still require additional funding to maintain the corporation and market the remaining inventory of the PCA product. With the acquisition of Planet Halo there are added demands for operating capital. As part of the conditions for the closing of the acquisition, Marc Angell has agreed to loan the amount of money required to fund the approved Planet Halo operating budget for at least the next 6 months. The Company has been aggressively pursuing financing for the funding of the Halo device project targeted for this year and has retained a financial advisor to assist with the effort. Until such time as definitive agreements are reached with investors, such a financing remains speculative. If the financing is not available, the Halo may not be put into production. In the event the financing is not completed, our funds and inventory assets will be exhausted at some point and continuing operations may be impossible.

Item 3.      Controls and Procedures

Evaluation of disclosure controls and procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2004. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective for gathering, analyzing and disclosing the information the Company is required to disclose in the reports it files under the Securities Exchange Act of 1934, within the time periods specified in the SEC’s rules and forms.

Changes in internal controls. There were no significant changes in internal controls or other factors that could significantly affect our internal controls subsequent to the date of our evaluation.

Item 6.      Exhibits and Reports on Form 8-K

(a)   Exhibits

The following exhibits are filed, by incorporation by reference, as part of this Form 10-QSB:

Exhibit
Item
   
2
Stock Purchase Agreement of March 6, 2000 between Starfest, Inc. and MAS Capital, Inc.*
   
3.1
Certificate of Amendment of Articles of Incorporation of Starfest, Inc. and its earlier articles of incorporation.*
   
3.2
Bylaws of Concierge, Inc., which became the Bylaws of Concierge Technologies upon its merger with Starfest, Inc. on March 20, 2002.*
   
3.5
Articles of Merger of Starfest, Inc. and Concierge, Inc. filed with the Secretary of State of Nevada on March 1, 2002.**
 

 
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3.6
Agreement of Merger between Starfest, Inc. and Concierge, Inc. filed with the Secretary of State of California on March 20, 2002.**
   
10.1
Agreement of Merger between Starfest, Inc. and Concierge, Inc.*
   
14
Code of Ethics for CEO and Senior Financial Officers.***
   
31
 
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
31.1
 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32
 
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
32.1
 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
*Previously filed with Form 8-K12G3 on March 10, 2000; Commission File No. 000-29913, incorporated herein.
   
 
**Previously filed with Form 8-K on April 2, 2002; Commission File No. 000-29913, incorporated herein.
   
 
***Previously filed with Form 10-K FYE 06-30-04 on October 13, 2004; Commission File No. 000-29913, incorporated herein.
   
 
(a)   Forms 8-K

None

SIGNATURES


Pursuant to the requirements of the Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
     
  CONCIERGE TECHNOLOGIES, INC.
 
 		  
 		  
 
Date: November 11, 2004 By:   /s/ David W. Neibert
 
David W. Neibert
   President

 

 
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CONCIERGE TECHNOLOGIES, INC.
Commission File No. 000-29913
 

Index to Exhibits to Form 10-QSB 03-31-04

The following exhibits are filed, by incorporation by reference, as part of this Form 10-QSB:
 

Exhibit
Item
   
2
Stock Purchase Agreement of March 6, 2000 between Starfest, Inc. and MAS Capital, Inc.*
   
3.1
Certificate of Amendment of Articles of Incorporation of Starfest, Inc. and its earlier articles of incorporation.*
   
3.2
Bylaws of Concierge, Inc., which became the Bylaws of Concierge Technologies upon its merger with Starfest, Inc. on March 20, 2002.*
   
3.5
Articles of Merger of Starfest, Inc. and Concierge, Inc. filed with the Secretary of State of Nevada on March 1, 2002.**
   
3.6
Agreement of Merger between Starfest, Inc. and Concierge, Inc. filed with the Secretary of State of California on March 20, 2002.**
   
10.1
Agreement of Merger between Starfest, Inc. and Concierge, Inc.*
   
14
Code of Ethics for CEO and Senior Financial Officers.***
   
31
 
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
31.1
 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32
 
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
32.1
 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
*Previously filed with Form 8-K12G3 on March 10, 2000; Commission File No. 000-29913, incorporated herein.
   
 
**Previously filed with Form 8-K on April 2, 2002; Commission File No. 000-29913, incorporated herein.
   
 
***Previously filed with Form 10-K FYE 06-30-04 on October 13, 2004; Commission File No. 000-29913, incorporated herein.
   
 

 
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