Business Context and Reporting Period
Company: Concierge Technologies, Inc. (OTC: CNCG)
Filing Type: Form 8-K (Current Report)
Date of Report: January 23, 2008
Event: Completion of the acquisition of Wireless Village, Inc. (Wireless Village).
Context: Concierge, previously a shell company, acquired 100% of Wireless Village's outstanding common stock (1,667 shares) from 12 shareholders. The transaction was not a reverse acquisition; Concierge remains the reporting entity. Wireless Village is a wireless internet provider and technical support firm based in Cleveland, Ohio.
Key Financial Metrics
Acquisition Consideration: 5,000,000 shares of Concierge Series A Convertible Voting Preferred Stock issued to Wireless Village shareholders.
Valuation: Based on a recent bid price of $0.01 per share (assuming 5:1 conversion), the transaction value was approximately $250,000.
Wireless Village Financials (as of Sept 30, 2007):
- Total Assets: $58,158 (Cash: $50,364; Property & Equipment: $7,794)
- Total Liabilities: $14,608 (Accounts Payable & Accrued Expenses)
- Stockholders' Equity: $43,550
- Net Revenue (9 months ended Sept 30, 2007): $9,280
- Net Loss (9 months ended Sept 30, 2007): $(17,240)
- Accumulated Deficit (Inception to Sept 30, 2007): $(18,795)
Concierge Pro Forma Financials (as of Sept 30, 2007):
- Total Assets: $343,896 (Includes $241,087 Goodwill)
- Total Liabilities: $426,859 (Includes $142,500 Notes Payable to related parties)
- Stockholders' Equity: $(82,963)
- Net Loss (3 months ended Sept 30, 2007): $(49,030)
Material Changes
- Shell Company Status: Concierge changed from a shell company to an operating company with two subsidiaries (Planet Halo and Wireless Village).
- Capital Structure: Issuance of 5,000,000 shares of Series A Preferred Stock. Each share carries 5 votes and converts into 5 shares of Common Stock after 270 days, subject to an amendment of articles of incorporation.
- Related Party Transactions: Two Concierge affiliates (David Neibert and Marc Angell) were shareholders of Wireless Village. They exchanged 130 shares each of Wireless Village stock for 390,000 shares of Concierge Preferred Stock each.
- Management: Wireless Village principals Bill Robb and Daniel Britt are required to remain as officers for one year. New directors and officers were appointed to reflect the combined entity.
Outlook, Risks, and Management Commentary
Plan of Operations: Wireless Village plans to expand its subscriber base in Cleveland via advertising and business contracts. Revenue streams include wireless access fees, localized advertising on its web portal, and consulting/engineering services for municipalities. A technical support agreement with Planet Halo provides a monthly fee of $1,500.
Risks and Contingencies:
- Going Concern: Wireless Village's auditors expressed substantial doubt about its ability to continue as a going concern prior to the acquisition due to an accumulated deficit and net losses. The company relies on raising additional capital and securing contracts.
- Customer Concentration: Through December 31, 2007, Planet Halo accounted for nearly 100% of Wireless Village's revenues.
- Competition: The company operates in a highly competitive environment against major wired internet providers and other wireless specialists.
- Liquidity: Concierge reported no cash compensation for officers in 2006 or 2007. The company has no long-term compensation plans.
Investor Verification Checklist
- Conversion Mechanics: Verify the timeline and conditions for converting the 5,000,000 Series A Preferred shares into 25,000,000 Common shares, including the requirement to amend articles of incorporation.
- Related Party Valuation: Review the valuation of the $250,000 transaction price given the stock did not trade on the closing day and the reliance on a $0.01 bid price.
- Revenue Sustainability: Assess the risk of revenue concentration given that Planet Halo was the sole significant customer for Wireless Village prior to the acquisition.
- Going Concern Status: Monitor the combined entity's ability to generate positive cash flow to address the pro forma deficit of approximately $83,000 and related party debt of $142,500.
- Management Retention: Confirm the retention of Wireless Village's key technical officers (Robb and Britt) as required by the purchase agreement.