U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
———————
FORM 10-Q
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2009
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)
Nevada
000-29913
95-4442384
State of Incorporation
Commission File No.
IRS Employer I.D. Number
3615 Superior Avenue, Suite 3100A
Cleveland, OH 44114
866-921-9434
(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 þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer ¨ Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
As of November 6, 2009, there were 178,231,867 shares of the Registrant’s Common Stock, $0.001 par value, outstanding and 5 million shares of its Series A Convertible Voting Preferred Stock, par value $0.001, outstanding and 1,000,000 shares of its Series B Convertible Voting Preferred Stock, par value $0.001.
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
1
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)
Consolidated Statements of Operations For The Three Month
Periods Ended September 30, 2009 and 2008
and the Period from September 20, 1996 (Inception) to
September 30, 2009 (Unaudited)
2
Statements of Changes in Stockholders' Deficit For The
Three Month Periods Ended September 30, 2009 and 2008
3
Consolidated Statements of Cash Flows For The Three Month Periods Ended
September 30, 2009 and 2008 and the Period from
September 20, 1996 (Inception) to September 30, 2009
(Unaudited)
5
Notes to Unaudited Financial Statements
6
Item 2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
12
Item 4. Controls and Procedures
13
PART II — Other Information
14
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits
15
SIGNATURES
16
i
PART I – FINANCIAL INFORMATION
Item 1.
Financial Statements
CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES
(A development stage company)
CONSOLIDATED BALANCE SHEETS
September 30, 2009
June 30, 2009
ASSETS
CURRENT ASSETS:
Cash & cash equivalents
$
4,203
2,566
Account Receivable
2,963
4,145
Due from Related Party
5,565
—
Inventory
196
Total current assets
12,731
6,907
Property and Equipment, net
14,840
20,744
Total Assets
27,571
27,651
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses
301,134
308,525
Due to related party
2,398
Sales paid in advance
1,917
1,976
Notes payable - related parties
142,500
Other liabilities
30,000
Total current liabilities
475,551
455,399
COMMITMENT
STOCKHOLDERS' DEFICIT:
Preferred stock, 10,000,000 authorized par $0.001
Series A: 5,000,000 shares issued
5,000
Series B: 1,000,000 shares issued
1,000
Common stock, $0.001 par value; 190,000,000 shares authorized;178,231,867 shares issued and outstanding
178,232
Additional paid-in capital
3,682,896
Deficit accumulated during the development stage
(4,315,108
)
(4,294,876
Total stockholders' deficit
(447,980
(427,748
Total Liabilities and Stockholders' Deficit
The accompanying notes are an integral part of these unaudited financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE-MONTH PERIODS ENDED SEPTEMBER 30, 2009 AND 2008
AND FOR THE PERIOD FROM SEPTEMBER 20, 1996 (INCEPTION) TO SEPTEMBER 30, 2009
For The Three-Month Periods Ended
September 30,
For The Period From
September 20, 1996
(Inception)
to September 30, 2009
2009
2008
NET REVENUE
8,241
6,556
65,863
Cost of Revenue
14,823
8,464
106,024
GROSS PROFIT (LOSS)
(6,582
(1,908
(40,161
COSTS AND EXPENSES
Product Launch Expenses
1,077,785
Impairment of Assets
1,196,383
General & Administrative Expenses
9,981
8,653
1,716,529
TOTAL COSTS AND EXPENSES
3,990,697
OTHER INCOME (EXPENSES)
Other Income
241
Interest Expense
(2,869
(37,056
Unallocated accrued expenses reversed
150,123
Settlement Income/(Loss)
52,600
Loss on debt settlement
(23,033
Litigation Settlement
(135,000
TOTAL OTHER INCOME (EXPENSES)
7,875
NET LOSS BEFORE INCOME TAXES
(19,432
(13,430
(4,022,983
Provision of Income Taxes
800
13,600
NET LOSS
(20,232
(14,230
(4,036,583
WEIGHTED AVERAGE SHARES OF COMMON STOCKOUTSTANDING, BASIC AND DILUTED
223,231,867
203,231,867
*BASIC AND DILUTED NET LOSS PER SHARE
(0.00
*
Weighted average number of shares used to compute basic and diluted loss per share is the same as the effect of dilutive securities are anti dilutive.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
Preferred Stock
Common Stock
Number
of
Shares
Par
Value
Additional
Paid In
Capital
to Be
Issued
Accumulated
Deficit
Stockholders'
Advance
Subscriptions
Common
Stock
Subject to
Contingency
Common Stock issued for cashthrough June 30, 1997
176,306
1,763
106,162
107,925
Common stock issued for servicesthrough June 30, 1997
621,545
6,215
Net loss through June 30, 1997
(96,933
Balance at June 30, 1997
797,851
7,978
17,207
Common Stock issued for cashin the year ended June 30, 1998
137,475
1,375
194,650
196,025
Common stock issued for servicesin the year ended June 30, 1998
22,550
226
Net loss for the year ended June 30, 1998
(283,891
Balance at June 30, 1998
957,876
9,579
300,812
(380,824
(70,433
Common Stock issued for cashin the year ended June 30, 1999
208,000
60,996
Common stock issued for servicesin the year ended June 30, 1999
450
4
Net loss for the year ended June 30, 1999
(89,919
Balance at June 30, 1999
1,166,326
(470,743
(160,352
61,000
Acquisition and retirement of Common shares
(262,000
(2,620
Common Stock issued for cashin the year ended June 30, 2000
117,184
202,061
Common stock issued for servicesin the year ended June 30, 2000
354,870
3,549
Post acquisition stock subscription fundsreceived net of costs & expenses of $79,710
1,175,790
Net loss for the year ended June 30, 2000
(986,986
Balance at June 30, 2000
1,376,380
6,959
(1,457,729
(1,149,958
266,610
Post acquisition stock subscription funds
487,500
Net loss for the year ended June 30, 2001
(544,080
Balance at June 30, 2001
(2,001,809
(1,694,038
1,663,290
Recapitalization upon merger
118,681,333
113,099
(300,812
(278,527
(466,240
Stock subscription received for 500,000 shares
29,983
Stock issued for services
2,532,581
119,031
Stock to be issued for services-3,275,472 shares
153,947
Adjustment to paid in capital on merger
(116,499
116,499
Net loss for the year ended June 30, 2002
(478,229
Balance at June 30, 2002
122,590,294
122,590
183,930
(2,758,565
(2,335,546
(Unaudited) (continued)
Stock issued for subscription received in the prior year
500,000
500
29,483
(29,983
Stock issued for services included in the prior period
3,275,472
3,275
150,672
(153,947
Forfeiture of stock subscription
10,000
Cancellation of over issued shares on recapitalization
(73,017
Net loss for the year ended June 30, 2003
(47,272
Balance at June 30, 2003
126,292,749
126,365
306,654
(2,805,837
(2,372,818
Adjustment to par value
(72
72
Issuance of shares for cash
2,000,000
2,000
18,000
20,000
Issuance of shares for services
4,000,000
4,000
212,000
216,000
Issuance of shares for acquisition of Planet Halo
9,999,998
490,000
Net loss for the year ended June 30, 2004
(514,639
Balance at June 30, 2004
142,292,747
142,293
1,026,726
(3,320,476
(2,151,457
Reclassify contingent liabilities to AdditionalPaid In Capital
1,929,900
(1,663,290
(266,610
Net loss for the year ended June 30, 2005
(544,284
Balance at June 30, 2005
2,956,626
(3,864,761
(765,841
Loans converted to Paid in Capital
281,708
Net loss for the year ended June 30, 2006
(44,552
Balance at June 30, 2006
3,238,334
(3,909,313
(528,686
5,000,000
35,000
27,027,027
27,027
62,973
90,000
Issuance of shares for debt settlement
3,003,003
3,003
30,030
33,033
Net income for the year ended June 30, 2007
38,214
Balance at June 30, 2007
177,322,777
177,323
3,361,337
(3,871,095
(332,434
Net loss for the year ended June 30, 2008
(350,866
Shares issued for cash
909,090
909
9,091
Issuance of Shares for Purchase of Wireless Village
245,000
250,000
Balance at June 30, 2008
178,231,867
3,615,428
(4,221,961
(423,301
1,000,000
49,000
50,000
Debt settlement with a shareholder
18,468
Net loss for the year ended June 30, 2009
(72,915
Balance at June 30, 2009
6,000,000
6,000
Net loss for the quarter ended September 30, 2009
Balance at September 30, 2009
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Month Periods Ended
For the period from
(inception) to
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash used inoperating activities:
Impairment of goodwill/asset
950,583
Depreciation and amortization
5,904
3,007
40,517
531,352
Loss on settlement of debts
23,033
Unallocated accrued expense reversed
(150,123
Increase (decrease) in current assets:
Accounts Receivable
1,182
(1,003
(2,963
(245,801
Increase (decrease) in current liabilities:
Advance subscription
(59
(783
Accounts payable & Accrued expense
(7,391
(6,981
372,078
Net cash used in operating activities
(20,400
(19,990
(2,515,990
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash received on acquisition of subsidiary
34,421
Note Due - related party
(81,808
Purchase of equipment
(55,111
Net cash provided by (used in) investing activities
(102,498
CASH FLOWS FROM FINANCING ACTIVITIES:
Due from/to related party
(7,963
(24,428
(89
Proceeds from Shares to be Issued
737,007
Proceeds from Related Party Prepayment for Preferred Stocks
Proceeds from stock subscription forfeited
Proceeds from advance subscriptions
1,772,983
Costs and expenses of advance subscriptions
(79,710
Proceeds from related party loans
152,500
Net cash provided by financing activities
22,037
25,572
2,622,691
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
1,637
5,582
CASH & CASH EQUIVALENTS, BEGINNING BALANCE
5,820
CASH & CASH EQUIVALENTS, ENDING BALANCE
11,402
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1.
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Concierge Technologies, Inc., (the “Company”), a California corporation, was incorporated on August 18, 1993 as Fanfest, Inc. In August 1995 the Company changed its name to Starfest, Inc. During 1998, the Company was inactive, just having minimal administrative expenses. During 1999 the Company attempted to pursue operations in the online adult entertainment field. There were no revenues from this endeavor. On March 20, 2002, the Company changed its name to Concierge Technologies, Inc.
In March 2000, the Company acquired approximately 96.83 percent (8,250,000 shares) of the common stock of MAS Acquisition XX Corp. (MAS XX) for $314,688. This amount was expensed in March 2000 as at the time of the acquisition, MAS XX had no assets or liabilities and was inactive. On March 21, 2002, the Company consummated a merger with Concierge, Inc.
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 from this venture.
On April 6, 2004 the Company entered into a Stock Purchase Agreement with Planet Halo, Inc. (PHI) whereby, the Company purchased all of the outstanding and issued shares of PHI in exchange for 10 million shares of the Company’s common stock valued at $500,000. On May 5, 2004 the Company issued the shares on a ratio of 8.232 shares of its common stock to each share of PHI stock to the former shareholders of PHI. The existing PHI shares were then retired and cancelled. The Company is now the sole shareholder of PHI, a Nevada corporation. On May 5, 2004 the President of PHI was officially appointed to the Board of Directors of the Company along with one other PHI named appointee.
PHI is a development stage company in the wireless telecommunications industry and plans to design, construct, and operate wireless networks providing subscribers with access to the Internet and related services. Planet Halo also retains an exclusive North America license to a proprietary integrated wireless gateway interface to the Internet named "Halomail”, which the company plans to implement across its developing wireless networks.
On October 30, 2007 the Company entered into a definitive Stock Purchase Agreement to acquire all of the issued and outstanding shares of privately held Wireless Village, a Nevada corporation based in Cleveland, Ohio. The transaction closed and the purchase price was paid with 5,000,000 shares of a new class of stock, Series A Convertible, Voting Preferred Stock, $0.001 par value, issued pro-rata to the shareholders of Wireless Village on January 23, 2008.
Wireless Village is a privately held Nevada corporation based in Cleveland, Ohio and has been providing technical services to Planet Halo on an ongoing basis since May 2007. Wireless Village designs, installs, maintains and operates wireless network providing high speed Internet access to consumers and businesses. Wireless Village also hosts web sites, provides customer service and billing platforms for Planet Halo and other clientele.
The Company is a development stage company as defined in Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by Development Stage Enterprises.” The Company is devoting substantially all of its present efforts to establishing its new business, and its planned principal operations have not yet commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The accompanying Interim Consolidated Financial Statements are prepared in accordance with rules set forth in Regulation S-K of the Securities and Exchange Commission. Accordingly, these statements do not include
ONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES
all disclosures required under generally accepted principles and should be read in conjunction with the audited financial statements included in the Company’s Form 10-K for the year ended June 30, 2009. 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 three-month period ended September 30, 2009 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2010.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of Concierge Technologies, Inc. (parent) and its wholly owned subsidiaries, Planet Halo, Inc. and Wireless Village from the date of acquisition. All significant inter-company transactions and accounts have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements is in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
BASIC AND DILUTED NET LOSS PER SHARES
Net loss per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), “Earnings per share”. SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for all periods presented has been restated to reflect the adoption of SFAS No. 128. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. As of September 30, 2009 the Com pany does not have any options or warrants, but has issued 5,000,000 shares of Series A preferred stock that can be converted to common stock at a ratio of 1:5 and 1,000,000 shares of Series B preferred stock that can be converted to common stock at a ratio of 1:20. The company has also accepted payment for 600,000 shares of Series B preferred stock but has yet to issue the shares as of September 30, 2009. The calculation of the weighted average number of shares outstanding takes into account these shares as though they have already been converted. There are no other dilutive securities outstanding.
REVENUE RECOGNITION
The company did not earn any revenue related to the PCA product or software since inception through September 30, 2009 and does not intend to offer the product for sale in the future. The remaining inventory of product has been reduced to zero value on the financial statements.
The Company, through Planet Halo and Wireless Village, sells subscriptions to its wireless Internet access service in various increments, including daily, weekly, monthly and yearly. Transactions are completed online through credit card entries by the customer. Sales are recorded at the time the transaction is approved by the financial institution and revenues are earned over the life of the service term. Unearned or deferred revenues received or accounts receivable accrued, are recorded as advance subscriptions. For the three-month periods ending September 30, 2008 and 2009, subscription sales for Planet Halo were recorded as $838 and $3,759 respectively, and unearned, advance subscriptions, as $0 and $1,017 respectively. Accounts receivable at June 30, 2009 and September 30, 2009 was recorded as $166 and $241, respectively.
Planet Halo occasionally purchases consumer hardware for configuration or testing prior to release to subscribers. These items are listed in inventory or under Cost of Goods Sold and, when sold, recorded as hardware sales. Inventory amounts are expected to remain insignificant as most hardware sale invoices are paid by the customers immediately upon presentation. The Company recorded inventory at zero and $196 at September 30, 2009 and June 30, 2009, respectively.
Wireless Village also purchases consumer hardware for configuration prior to release to end users. These items are either listed in inventory if held beyond the close of the current accounting period, or summarized as “cost
7
of goods sold” when sold with resulting revenues recorded as hardware sales. These amounts have historically been insignificant, but are expected to increase over time. During the prior fiscal year, Wireless Village began selling hardware such as printers, flat screen TVs and computers. Subcontractors supplied installation of parts and labor. Revenue was recognized after the subcontractors performed their services and/or the hardware was delivered, and the collectibility was reasonably assured. For the three-month periods ending September 30, 2008 and September 30, 2009, Wireless Village subscription sales were recorded as $3,719 and $652 respectively, support services were recorded as $950 and $1,158 respectively, hardware sales were recorded as $119 for September 30, 2008 and $1,238 for the three-month period ending September 30, 2009, and web hosting services were recorded as $930 and $784 respectively. Advanced, unear ned, subscriptions of web hosting and Internet access were recorded on September 30, 2008 as $598 and for the three-month period ending September 30, 2009 as $900, including customer deposits for support services not yet delivered. Accounts receivable at June 30, 2009 and September 30, 2009 was recorded at $2,242 and $2,722 (net of bad debt allowance of $1,345), respectively.
INCOME TAXES
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform to the current period’s presentation.
3.
RECENT PRONOUNCEMENTS
In June 2009, the FASB issued ASC 105 (previously SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles ("GAAP") - a replacement of FASB Statement No. 162), which will become the source of authoritative accounting principles generally accepted in the United States recognized by the FASB to be applied to nongovernmental entities. The Codification is effective in the third quarter of 2009, and accordingly, the Quarterly Report on Form 10-Q for the quarter ending September 30, 2009 and all subsequent public filings will reference the Codification as the sole source of authoritative literature. The Company does not believe that this will have a material effect on its consolidated financial statements.
In June 2009, the FASB issued amended standards for determining whether to consolidate a variable interest entity. These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary. These amended standards are effective for us beginning in the first quarter of fiscal year 2010 and we are currently evaluating the impact that adoption will have on our consolidated financial statements.
In June 2009, the FASB issued ASC 855 (previously SFAS No. 165, Subsequent Events), which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or available to be issued. It is effective for interim and annual periods ending after June 15, 2009. There was no material impact upon the adoption of this standard on the Company’s consolidated financial statements.
In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value. These amended standards clarify that in circumstances in which a quoted price in an active market for the identical liability is not available, we are required to use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, or quoted prices for similar liabilities when traded as assets. If these quoted prices are not available, we are required to use another valuation technique, such as an income approach or a market approach. These amended standards are effective for us beginning in the fourth quarter of fiscal year 2009 and are not expected to have a significant impact on our consolidated financial statements.
8
4.
GOING CONCERN
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern. However, the Company did not earn significant revenue during the three-month period ended September 30, 2009. The Company has accumulated a deficit of $4,315,108 and a net loss of $20,232 during the three-month period ended September 30, 2009. The continuing losses have adversely affected the liquidity of the Company. Losses are expected to continue for the immediate future. The Company faces continuing significant business risks, which include but are 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, 2009, towards (i) obtaining additional equity, (ii) management of accrued expenses and accounts payable, (iii) initiation of the business strategies of the Planet Halo and Wireless Village subsidiaries, and (vi) searching for suitable synergistic partners for future business combinations that generate immediate revenues.
Management believes that the above actions will allow the Company to continue operations through the next fiscal year.
5.
DUE FROM/TO RELATED PARTY
Concierge Technologies, Inc. has no bank account in its own name. Wallen Group, a consulting company headed by the C.E.O. and director of the Company, maintains an administrative account for the Company. As of September 30, 2009, the Wallen Group was holding $5,565 on behalf of Concierge, and as of June 30, 2009, the Company had $2,398 due to the Wallen Group.
6.
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following as of September 30, 2009 and June 30, 2009:
Account payable
82,299
98,526
Accrued judgment
135,000
Accrued interest
60,335
57,499
Accrued accounting fees
23,500
17,500
Total
9
7.
NOTES PAYABLE – RELATED PARTIES
Notes payable consisted of the following at:
June 30,
Notes payable to shareholder, interest rate of 8%, unsecured and payable on October 1, 2006 (past due)
Notes payable to director/shareholder, non-interest bearing unsecured and payable on demand
8,500
Notes payable to shareholder, interest rate of 10%, unsecured and payable on July 31, 2004 (past due)
Notes payable to shareholder, interest rate of 10%, unsecured and payable on October 1, 2004 (past due)
28,000
Notes payable to shareholder, interest rate of 8%, unsecured and payable on October 1, 2004 (past due)
14,000
Notes payable to director/shareholder, interest rate of 8%,
unsecured and payable on September 1, 2004 (past due)
3,500
Notes payable to shareholder, interest rate of 8%, unsecured and payable on October 1, 2005 (past due)
Notes payable to director/shareholder, interest rate of 8%, unsecured and payable on February 1, 2006 (past due)
Notes payable to director/shareholder, interest rate of 8%, unsecured and payable on June 1, 2006 (past due)
2,500
Notes payable to director/shareholder, interest rate of 6%, unsecured and payable on September 1, 2007 (past due)
Notes payable to shareholder, interest rate of 8%, unsecured and payable on November 1, 2007 (past due)
15,000
Total Notes Payable
The Company has recorded interest expenses amounting to $2,869 for each of the three-month periods ended September 30, 2009 and September 30, 2008.
8.
COMMON STOCK
In September 2009, the company sold 600,000 shares of its Series B Convertible, Voting, Preferred stock, par value $0.001. Although the company received full payment of the subscription from a venture capital firm that was associated with a shareholder, the share certificates were not issued as of September 30, 2009. The Company recorded the proceeds at $30,000 as other liabilities. The shares will be subsequently issued during the current quarter and the previous recording will be adjusted to $29,400 additional paid in capital and $600 at par value issued preferred Series B stock.
9.
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 amount reserved for income tax in the accompanying financial statements has been appropriately adjusted to reflect the current status of Planet Halo as a foreign corporation in the state of California.
During the three months ended September 30, 2009 and 2008 the Company did not pay any interest or income taxes.
10
10.
LITIGATION
On May 6, 2002, a default judgment was awarded to Brookside Investments Ltd against, jointly and severally, Concierge, Inc, Allen E. Kahn, and The Whitehall Companies in the amount of $135,000 plus legal fees. The Company did not defend against the complaint by Brookside, which alleged that Brookside was entitled to a refund of their investment as a result of a breach of contract. Brookside had entered into a subscription agreement with Concierge, Inc., which called for, among other things, the pending merger between Starfest and Concierge to be completed within 180 days of the investment. The merger was not completed within 180 days and Brookside sought a refund of their investment, which Concierge was unable to provide. The Company has accrued the judgment amount of $135,000 in the year 2002 as litigation settlement in the accompanying financial statements. This amount is included in accrued expenses as of September 30, 2009.
11
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Company, through Planet Halo and Wireless Village, sells subscriptions to its wireless Internet access service in various increments, including daily, weekly, monthly and yearly. Transactions are completed online through credit card entries by the customer. Sales are recorded at the time the transaction is approved by the financial institution and revenues are earned over the life of the service term. During a brief period during the fiscal year ended June 2009, subscriber billing and customer care for Planet Halo was handed off to Wireless Village in an attempt to streamline operating costs. Therefore, the differences in subscriber revenues for the periods ending September 30, 2008 and September 30, 2009 were primarily attributed to allocation of those revenues between the two subsidiaries rather than a change in overall sales performance. For the three-month periods ending September 30, 2008 and 2009, s ubscription sales for Planet Halo were recorded as $838 and $3,759, respectively, whereas the subscription sales for Wireless Village for the same periods were $3,719 and $652, respectively. Total subscription sales were, therefore, $4,557 and $4,411, respectively, demonstrating insignificant change over the year of -3%.
Wireless Village also purchases consumer hardware for configuration prior to release to end users. These items are either listed in inventory if held beyond the close of the current accounting period, or summarized as “cost of goods sold” when sold with resulting revenues recorded as hardware sales. These amounts have historically been insignificant, but are expected to increase over time. During the prior fiscal year, Wireless Village began selling hardware such as printers, flat screen TVs and computers. Subcontractors supplied installation of parts and labor. Revenue was recognized after the subcontractors performed their services and/or the hardware was delivered, and the collectibility was reasonably assured. Support services for the three-month periods ending September 30, 2008 and 2009 were recorded as $950 and $1,158, respectively, an increase of 21%. Hardware sales were recorded as $119 for September  ;30, 2008 and $1,238 for the three-month period ending September 30, 2009, an increase of 940% or approximately 10 times the gross amount. Web hosting services were recorded as $930 and $784 respectively, or a 16% decline. Advanced, unearned, subscriptions of web hosting and Internet access were recorded on September 30, 2008 as $598 and for the three-month period ending September 30, 2009 as $900, including customer deposits for support services not yet delivered. Accounts receivable for the three-month periods ending September 30, 2008 and September 30, 2009 recorded at $2,242 and $2,722, respectively, a 21% increase due to an increase in support service sales.
Overall, net revenues for the three-month period ending September 30, 2009 were up $1,685 over the three-month period ending September 30, 2008, an increase of 26%.
Liquidity
Our primary source of operating capital has been funding sourced through insiders or shareholders under the terms of unsecured promissory notes. In several instances we have sold shares of our common stock, or preferred stock, in exchange for cash. With the acquisition of Wireless Village we also acquired approximately $30,000 in cash. The amount of borrowed funds, cash through acquisitions, 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 other commercial and vendor accounts payable. We have also been unable to pay significant 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 may still require additional funding to realize the business objectives of the Company. Planet Halo and Wireless Village are each in need of working capital to expand their market presence and to purchase additional network equipment into long-term service. Until such time as definitive agreements are reached with investors, any form of financing remains speculative. If the financing is not available, Wireless Village may not be able to proceed with its planned development, and Planet Halo may not be able to afford further expansion of its wireless networks. In the event financing is not completed, liquidity will depend upon increased operating profits from the existing infrastructure. In the event we are unable to raise working capital, the current profits do not increase, or we fail to source new business op portunities our funds will be exhausted at some point and continuing operations may be impossible.
Item 4.
Controls and Procedures
Evaluation of disclosure controls and procedures. The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective and are designed to provide reasonable assurances that the information the Company is required to disclose in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time period required by the Commission's rules and forms. Further, the Company’s officers concluded that its disclosure controls and procedures are also effective to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is accumulated and communicated to its management, including its chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. 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.
PART II - OTHER INFORMATION
Legal Proceedings
Item 5.
Other Information
There remain 2 positions vacant on the Board of Directors of Concierge Technologies, Inc. as of November 6, 2009.
Item 6.
Exhibits
The following exhibits are filed, by incorporation by reference, as part of this Form 10-Q:
Exhibit
Item
-
Stock Purchase Agreement of March 6, 2000 between Starfest, Inc. and MAS Capital, Inc.*
Stock Purchase Agreement among Concierge Technologies, Inc., Wireless Village, Inc., Bill Robb and Daniel Britt.++
3.1
Certificate of Amendment of Articles of Incorporation of Starfest, Inc. and its earlier articles of incorporation.*
3.2
Bylaws of Concierge, Inc., which became the Bylaws of Concierge Technologies upon its merger with Starfest, Inc. on March 20, 2002.*
3.5
Articles of Merger of Starfest, Inc. and Concierge, Inc. filed with the Secretary of State of Nevada on March 1, 2002.**
3.6
Agreement of Merger between Starfest, Inc. and Concierge, Inc. filed with the Secretary of State of California on March 20, 2002.**
3.7
Articles of Incorporation of Concierge Technologies, Inc. filed with the Secretary of State of Nevada on April 20, 2005.+
3.8
Articles of Merger between Concierge Technologies, Inc., a California corporation, and Concierge Technologies, Inc., a Nevada corporation, filed with the Secretary of State of Nevada on March 2, 2006 and the Secretary of State of California on October 5, 2006.+
10.1
Agreement of Merger between Starfest, Inc. and Concierge, Inc.*
Code of Ethics for CEO and Senior Financial Officers.***
31.1
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.
31.2
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.
32.1
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.
32.2
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.
+
Previously filed with Form 10-K FYE 06-30-06 on October 13, 2006; Commission File No. 000-29913, incorporated herein.
++
Previously filed on November 5, 2007 as Exhibit 10.2 to Concierge Technologies’ Form 8-K for the Current Period 10-30-07; Commission File No. 000-29913, incorporated herein.
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.
Date:
November 16, 2009
By:
/s/ DAVID W. NEIBERT
David W. Neibert
Chief Executive Officer