Marygold Companies, Inc. - Quarter Report: 2017 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

OR

Commission File Number: 000-29913

CONCIERGE TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

29115 Valley Center Rd. K-206

Valley Center, CA 92082

866-800-2978

____________________________________________________

(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     ☐    No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  ☒   Yes     ☐    No

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.

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). ☐   Yes     ☒   No

As of May 15, 2017, there were 886,753,847 shares of the Registrant’s Common Stock, $0.001 par value, outstanding and 13,108,474 shares of its Series B Convertible Voting Preferred Stock, par value $0.001.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Index to Financial Statements

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

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Concierge Technologies, Inc., (the “Company” or “Concierge”), a Nevada corporation, was originally incorporated in California on August 18, 1993 as Fanfest, Inc. On March 20, 2002, the Company changed its name to Concierge Technologies, Inc. The Company’s principal operations include Wainwright Holdings, Inc. a Delaware corporation (“Wainwright”). Wainwright is a holding company that currently holds both United States Commodity Funds LLC (“USCF”), a registered commodity pool operator with the Commodity Futures Trading Commission (the "CFTC"), and USCF Advisers LLC (“Advisers”), an investment adviser registered under the Investment Advisers Act of 1940, as amended; Gourmet Foods, Ltd. (“Gourmet Foods”), a manufacturer and distributor of meat pies in New Zealand; Brigadier Security Systems (2000) Ltd. (“Brigadier”), a provider of security alarm installation and monitoring located in Canada; and Kahnalytics, Inc. a California corporation (“Kahnalytics”), providing vehicle-based live streaming video and event recording to online subscribers.

Organization and Business Overview

On May 26, 2015, a new wholly-owned subsidiary of Concierge named Kahnalytics was established in the State of California for the purpose of taking on the segment of the business retained in the spinoff of Janus Cam and to direct resources towards the further development of data processing capabilities intended for risk management used by vehicle insurance companies. As of September 30, 2016, Kahnalytics ended its sale of camera hardware to insurance companies and began providing an online platform where subscribers to the Kahnalytics Fleet Management Service ("FMS") can track their vehicles, view event video clips, see programmable alert functions and use the live-streaming function to operate in-vehicle cameras in real time.

On August 11, 2015, Concierge acquired all of the issued and outstanding stock in Gourmet Foods, a New Zealand corporation located in Tauranga, a commercial-scale manufacturer of New Zealand meat pies under the brand names "Ponsonby Pies" and "Pat's Pantry". Gourmet Foods distributes its products through major grocery store chains, convenience stores, small restaurants and gasoline station markets. The purchase price of $1.75 million was paid in cash.

On June 2, 2016, Concierge acquired all of the issued and outstanding stock in Brigadier, a Canadian corporation located in Saskatoon, Saskatchewan. Brigadier sells and installs alarm monitoring and security systems to commercial and residential customers under brand names "Brigadier Security Systems" and "Elite Security" throughout the province of Saskatchewan with offices in Saskatoon and Regina. The purchase price of $1.54 million was paid in cash.

On December 9, 2016, Concierge acquired all of the issued and outstanding stock in Wainwright, a Delaware corporation, controlled as a group by our CEO and majority shareholder Nicholas Gerber together with affiliated shareholder Scott Schoenberger. Wainwright, through its subsidiaries, operates 12 investment funds in the commodities market and two exchange traded funds ("ETFs") in the equity market with a total of approximately $4.3 billion in assets under management as of March 31, 2017. Wainwright earns revenues from contractual agreements providing investment management and advisory services charged against the funds. The purchase price was paid in a stock-for-stock exchange whereby the sellers of Wainwright shares received in the aggregate a total of 818,799,976 shares of our common stock and 9,354,119 shares of our Series B Voting, Convertible, Preferred stock.

Basis of Presentation and Accounting Principles

The Company has prepared the accompanying financial statements on a condensed consolidated basis. In the opinion of management, the accompanying unaudited condensed consolidated balance sheets and related interim statements of income and comprehensive income (loss), 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”). Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Company’s 2016 Form 10-K filed on October 21, 2016 with the U.S. Securities and Exchange Commission.

Principles of Consolidation

The accompanying unaudited condensed consolidated interim financial statements, which are referred herein as the “Financial Statements” include the accounts of Concierge and its wholly owned subsidiaries, Wainwright, Gourmet Foods, Brigadier and Kahnalytics.

Wainwright was acquired in December 2016 (Refer to Note 11). Due to the commonality of ownership and control between the two companies, the transaction has been accounted for as a transaction between entities under common ownership. As a result, the assets and liabilities of Wainwright have been considered at their carrying amounts.

The accompanying Financial Statements as of March 31, 2017 and June 30, 2016 and for the three and nine month periods ending March 31, 2017 and 2016 include the assets, liabilities and the results of operations of Wainwright at carrying amounts as though the transaction and exchange of equity interests has occurred at the beginning of the comparative period.

All significant 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.

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Other Comprehensive Income (Loss) and Foreign Currency

Comprehensive income (loss) is the total of net income (loss) and other comprehensive income (loss). 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 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 average exchange rate throughout the period. For the periods ended March 31, 2017 and June 30, 2016, other comprehensive income (loss) consisted of unrealized losses on investments and accumulated translation losses as noted above. Accumulated translation loss, classified as an item of accumulated other comprehensive loss in the stockholders’ equity section of the consolidated balance sheet, was $42,135 as of March 31, 2017.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Concierge’s corporate office maintains cash balances at a financial institution headquartered in San Diego, California. Accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per depositor. The corporation’s uninsured cash balance in the United States was $1,602,952 at March 31, 2017. The Company’s subsidiary, Wainwright, also maintains cash balances at various high credit quality institutions and from time to time those deposits exceed the FDIC coverage amount of $250,000. As of March 31, 2017 the uninsured amount totaled $2,659,349, though no losses have been realized and none are expected. Cash balances in Canada are maintained at a financial institution in Saskatoon, Saskatchewan by the Company’s subsidiary. Each account is insured up to CD$100,000 by Canada Deposit Insurance Corporation (CDIC). The Company’s subsidiary had an uninsured cash balance in Canada of CD$587,942 (approximately US$441,974) at March 31, 2017. Balances at financial institutions within certain foreign countries, including New Zealand where the Company’s subsidiary maintains cash balances, are not covered by insurance. As of March 31, 2017, the Company’s subsidiary had uninsured deposits related to cash deposits in uninsured accounts maintained within foreign entities of approximately $407,117. The Company has not experienced any losses in such accounts.

Accounts Receivable, Related Parties

Accounts receivable primarily consists of fund 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.

Management closely monitors receivables and records an allowance for any balances that are determined to be uncollectible. As of March 31, 2017 and June 30, 2016, the Company considered all remaining accounts receivable to be fully collectible.

Major Customers & Suppliers – Concentration of Credit Risk

Concierge, through Kahnalytics as a licensed user of a proprietary software application, is dependent on the continued support of this online platform and the adherence to the license contract terms between Kahnalytics and the foreign-based licensor. Kahnalytics is also largely dependent on its sales channel to continue to expand its dealer network of resellers who, in turn, activate subscribers to the Kahnalytics service. No single customer accounts for a significant percentage of sales or accounts receivable. Hardware sold by Kahnalytics is currently supplied by one source, however in the event this source proves to be inadequate there are other alternative sources of equal or comparable devices as needed by Kahnalytics. During the nine-month period ended March 31, 2016 Kahnalytics had just one customer accounting for 100% of its sales. Correspondingly, Kahnalytics had only one supplier of the hardware it sold and only one contractor supplying the labor component accounting for 72% and 28% respectively of the cost of goods sold for the nine-month period ended March 31, 2016. Sales of these products were discontinued during the current fiscal year.

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Concierge, through Brigadier, is dependent upon its contractual relationship with the alarm monitoring company who purchases the monitoring contracts and 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 two largest customers, which includes contracts and recurring monthly residuals from the monitoring company, totaled 50% of the total revenues for the nine months ended March 31, 2017, and accounted for approximately 38% of accounts receivable as of the balance sheet date of March 31, 2017. There is no comparison data for the prior year as the company was not acquired until June 2016.

Concierge, through Gourmet Foods, has three major customer groups comprising the gross revenues to Gourmet Foods; 1) grocery, 2) gasoline convenience stores, and 3) independent retailers. The grocery and food 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 the relationships have been in place for sufficient time to give management reasonable confidence in their continuing business. For the nine month period ending and balance sheet date of March 31, 2017, our largest customer in the grocery industry, who operates through a number of independently branded stores, accounted for approximately 18% of our gross sales revenues and 30% of our accounts receivable. The second largest in the grocery industry accounted for approximately 11% of our gross revenues and 10% of our accounts receivable. In the gasoline convenience store market we supply two major channels to market. The largest is a marketing consortium of gasoline dealers accounting for approximately 43% of our gross sales revenues however no single member of the consortium is responsible for a significant portion of our accounts receivable. The second largest are independent operators accounting for less than 10% of gross sales however no single independent operator is responsible for a significant portion of our accounts receivable. The third category of independent retailers and cafes accounted for the balance of our gross sales revenue however the group is fragmented and no one customer accounts for a significant portion of our revenues or account receivables.

For the eight months ended and the balance sheet date of March 31, 2016 our largest customer in the grocery industry accounted for approximately 13% of revenues and 31% of accounts receivable. For the gasoline convenience store sector, the largest customer is a consortium of independent owners who accounted for approximately 45% of revenues and 20% of accounts receivable (though no single member of the consortium accounted for more than 3% of accounts receivable). Independent retail stores accounted for approximately 11% of revenues however no single store accounted for any significant amount of the accounts receivable. The balance of the revenues and accounts receivable were not dominated by any significant single source for the eight months ended March 31, 2016. Gourmet Foods is not dependent upon any one major supplier as many alternative sources are available in the local market place should the need arise.

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 accounts receivable as of March 31, 2017 and June 30, 2016 as depicted below.

Reclassifications

For comparative purposes, prior year’s Financial Statements have been reclassified to conform to report classifications of the current year.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. This pronouncement is effective for annual reporting periods beginning after December 15, 2016, and is to be applied using one of two retrospective application methods, with early application not permitted. The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements.

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In January 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-01 Income Statement - Extraordinary and Unusual Items (Subtopic 225-20). ASU 2015-01 eliminates the concept of an extraordinary item from GAAP. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-01 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted.

In February, 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted.

In September, 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. Topic 805 requires that an acquirer retrospectively adjust provisional amounts recognized in a business combination, during the measurement period. To simplify the accounting for adjustments made to provisional amounts, the amendments in the Update require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.  In addition an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years beginning December 15, 2015. The adoption of ASU 2015-016 is not expected to have a material effect on the Company’s consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. This update is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The Company does not anticipate the adoption of this ASU will have a significant impact on its consolidated financial position, results of operations, or cash flows.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, to mainly change the accounting for investments in equity securities and financial liabilities carried at fair value as well as to modify the presentation and disclosure requirements for financial instruments. The ASU is effective for annual periods beginning after December 15, 2018, with early adoption permitted. Adoption of the ASU is retrospective with a cumulative adjustment to retained earnings or accumulated deficit as of the adoption date. The Company does not anticipate that the adoption of the ASU will have a material impact on its financial statements.

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in ASU No. 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance will be effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of this newly issued guidance to its consolidated financial statements.

On November 17, 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. It is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. The new standard requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017 including interim periods within those fiscal years. Earlier adoption is permitted. The adoption of ASU 2016-18 is not expected to have a material effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies and provides a more robust framework to use in determining when a set of assets and activities is a business. The amendments in this update should be applied prospectively on or after the effective date. This update is effective for annual periods beginning after December 15, 2017, and interim periods within those periods. Early adoption is permitted for acquisition or deconsolidation transactions occurring before the issuance date or effective date and only when the transactions have not been reported in issued or made available for issuance financial statements. The Company does not expect the adoption to have any significant impact on its Consolidated Financial Statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Under the new standard, goodwill impairment would be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. This ASU eliminates existing guidance that requires an entity to determine goodwill impairment by calculating the implied fair value of goodwill by hypothetically assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. This update is effective for annual periods beginning after December 15, 2019, and interim periods within those periods. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. The Company will apply this guidance to applicable impairment tests after the adoption date.

No other recently issued accounting pronouncements are expected to have a material impact on the Company’s consolidated financial statements.

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Inventories consisted of the following:

Property and equipment consisted of the following as of March 31, 2017 and June 30, 2016:

Depreciation expense amounted to $223,188 and $152,346 for the nine months ended March 31, 2017 and 2016, respectively.

Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in business combinations. Goodwill comprised of the following amounts:

 The Company tests for goodwill impairment at each reporting unit. There was no goodwill impairment for the three months and nine months ended March 31, 2017 and 2016

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Intangible assets consisted of the following:

CUSTOMER RELATIONSHIP

On August 11, 2015, the Company acquired Gourmet Foods. The fair value on the acquired customer relationships was estimated to be $66,153 and is amortized over the remaining useful life of 10 years. On June 2, 2016, the Company acquired Brigadier Security Systems. The fair value on the acquired customer relationships was estimated to be $434,098 and is amortized over the remaining useful life of 10 years.

BRAND NAME

On August 11, 2015, the Company acquired Gourmet Foods. The fair value on the acquired brand name was estimated to be $61,429 and is amortized over the remaining useful life of 10 years. On June 2, 2016, the Company acquired Brigadier Security Systems. The fair value on the acquired brand name was estimated to be $340,694 and is amortized over the remaining useful life of 10 years.

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

DOMAIN NAME

On August 11, 2015, the Company acquired Gourmet Foods. The fair value on the acquired domain name was estimated to be $21,601 and is amortized over the remaining useful life of 5 years. On June 2, 2016, the Company acquired Brigadier Security Systems. The fair value on the acquired domain name was estimated to be $15,312 and is amortized over the remaining useful life of 5 years.

RECIPES

On August 11, 2015, the Company acquired Gourmet Foods. The fair value on the recipes was estimated to be $21,601 and is amortized over the remaining useful life of 5 years.

NON-COMPETE AGREEMENT

On June 2, 2016, the Company acquired Brigadier Security Systems. The fair value on the acquired non-compete agreement was estimated to be $84,982 and is amortized over the remaining useful life of 5 years.

AMORTIZATION EXPENSE

The total amortization expense for the nine months ended March 31, 2017 was $89,284. No amortization was taken for the comparison period ending March 31, 2016.

Estimated amortization expenses of intangible assets for the next five twelve month periods ending March 31, are as follows:

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Other Current Assets

Other current assets totaling $1,389,413 as of March 31, 2017 and $262,084 as of June 30, 2016 are comprised of various components as listed below.

Investments

Investments are comprised mainly of investments in ETF funds. Wainwright, from time to time, provides initial investments in the creation of 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. Investments in which no controlling financial interest or significant influence exists are recorded at fair value with unrealized holding gains and losses included in accumulated other comprehensive income (loss) as a component of stockholders’ equity, except for unrealized losses determined to be other-than-temporary, which are included in the condensed consolidated statements of operations and comprehensive income (loss). Investments in which no controlling financial interest exists, but significant influence exists are recorded as per the equity method of acconting. As of March 31, 2017 and June 30, 2016, investments are approximately $3.3 million and $1 thousand, respectively.

Restricted Cash

At March 31, 2017 Gourmet Foods had on deposit NZ$20,000 (approximately US$14,028) securing a lease bond for one of its properties. The cash securing the bond is restricted from access or withdrawal so long as the bond remains in place. There was no bond posted by Gourmet Foods at June 30, 2016, thus the restricted cash amount was zero.

Long Term Assets

Other long term assets totaling $509,538 and $509,538 at March 31, 2017 and June 30, 2016, respectively, were attributed to Wainwright and consisted of

Accounts payable and accrued expenses consisted of the following:

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Notes Payable - Related Parties

Current related party notes payable consist of the following:

On July 7, 2016 the Company repaid the outstanding note due to a related party totaling $5,000 in principal and $5,000 in accrued interest. A total of $2,075 in accrued interest was forgiven by the noteholder in settlement of the debt.

Interest expense for all related party notes for the three-month period ending March 31, 2017 and 2016 were $5,987 and $3,400 (as adjusted) respectively and for the respective nine months ended March 31, 2017 and 2016 the interest expense was $18,227 and $3,800 (as adjusted).

Convertible Promissory Note Payable – Related Parties

On April 8, 2016 the Company entered into a convertible promissory note (the “Promissory Note”) with Gerber Irrevocable Family Trust, an affiliate of our shareholder and CEO that resulted in the funding of $350,000. The Promissory Note bears interest at four percent (4%) per annum and increases to nineteen percent (19%) in the event of default by the Company. The Company and the noteholder negotiated the interest rate at arm’s length relying upon the available market rate for long-term deposits at financial institutions as well as the current rate of return realized by the noteholder for cash deposits currently held. Larger deposits traditionally fall into a “Jumbo” rate category with marginally higher returns. Interest ranged from annual percentage rates of 0.01% at the lowest to 1.75% at the highest. Recognizing the unsecured nature of the promissory note, and the historical record of continued operating losses by the Company, a rate of 4 percent annual interest was agreed upon in light of the heightened default risk over traditional investment instruments. There was no beneficial conversion feature identified as of the date of issuance of the Promissory Note.

In connection with the acquisition of Wainwright Holdings on December 9, 2016 the convertible promissory note was subsequently amended to remove the conversion feature. The maturity date and interest rate remain the same and the liability is now reflected on the condensed consolidated balance sheet as a component of Notes Payable-Related Parties.

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On May 25, 2016 the Company entered into a convertible promissory note (the “Promissory Note”) with Schoenberger Family Trust, an affiliate of our shareholder and director that resulted in the funding of $250,000. The Promissory Note bears interest at four percent (4%) per annum and increases to nineteen percent (19%) in the event of default by the Company. The Company and the noteholder negotiated the interest rate at arm’s length relying upon the available market rate for long-term deposits at financial institutions as well as the current rate of return realized by the noteholder for cash deposits currently held. Larger deposits traditionally fall into a “Jumbo” rate category with marginally higher returns. Interest ranged from annual percentage rates of .01% at the lowest to 1.75% at the highest. Recognizing the unsecured nature of the promissory note, and the historical record of continued operating losses by the Company, a rate of 4 percent annual interest was agreed upon in light of the heightened default risk over traditional investment instruments. There was no beneficial conversion feature identified as of the date of issuance of the Promissory Note.

In connection with the acquisition of Wainwright Holdings on December 9, 2016 the convertible promissory note was subsequently amended to remove the conversion feature. The maturity date and interest rate remain the same and the liability is now reflected on the condensed consolidated balance sheet as a component of Notes Payable-Related Parties.

Interest expense for all related party convertible debentures, for the three months ended March 31, 2017 and 2016 amounted to $0 and $0 respectively.

Wainwright - Related Party Transactions

The Funds managed by USCF and Advisers are deemed by management to be related parties. The Company’s Wainwright revenues, totaled $18,477,486 and $17,085,983 for the nine months ended March 31, 2017 and 2016, respectively, were earned from these related parties. Accounts receivable, totaling $1,866,055 and $2,124,105 as of March 31, 2017 and June 30, 2016, respectively, were owed from these related parties. Fund expense waivers, totaling $779,688 and $583,767 for the nine months ended March 31, 2017 and 2016, respectively, were incurred on behalf of these related parties. Waivers payable, totaling $1,228,618 and $448,930 as of March 31, 2017 and June 30, 2016, respectively, were owed to these related parties.

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

An unsecured loan in the amount of $8,500 due a former director and shareholder who is now deceased has been reclassified as a note due unrelated party. The note is interest free, not deemed assignable to successors by the Company, and held as a contingent liability until resolved.

On May 28, 2015, the Company entered into an agreement to acquire the assets of Gourmet Foods, Ltd., a New Zealand corporation, subject to satisfactory completion of due diligence and other customary criteria for a transaction of this kind. Gourmet Foods is a baker of New Zealand meat pies and other confections distributed to major grocery stores, convenience stores, restaurants and other retailers throughout New Zealand. The Company placed a cash deposit with Gourmet Foods in accordance with the provisions of the asset purchase agreement, however the parties later elected to change the nature of the transaction to a stock purchase agreement. The Stock Purchase Agreement (the “SPA”) was entered into on July 28, 2015 and was set to close on July 31, 2015 subject to final adjustments to accounts receivable, accounts payable, inventory, employee entitlements and other current assets and liabilities. The Company paid a purchase consideration of NZ$2,597,535 (approximately US$1,753,428) in cash. An independent evaluation was conducted in order to obtain a fair market value of the fixed assets and intangible assets acquired. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

On August 11, 2015 the parties reached agreement to close the SPA based on the balance sheet information as of July 31, 2015, subject to further adjustments if necessary once certain balances became known without dispute, and the Company remitted the remainder of the purchase price in cash to an account in New Zealand established for the benefit of the shareholders of Gourmet Foods, Ltd. The operations of Gourmet Foods, Ltd. was consolidated going forward with those of the Company as of August 1, 2015.

The following table summarizes the value of the net assets acquired as of the Acquisition Date:

On June 2, 2016 the Company closed a Stock Purchase Agreement transaction which resulted in the acquisition of all the outstanding and issued stock of Brigadier Security Systems, a Canadian corporation located in Saskatoon, Saskatchewan. The total purchase price was CD$2,010,266 (approximately US$1,540,830) in cash, payable in several stages. The consideration of CD$1,000,000 (US$756,859) was paid in cash and CD$733,000 (US$569,935) was deposited in an attorney client trust account in Canadian currency (to be paid to Brigadier, on the 183rd day following the Closing Date if net sales meeting the minimum threshold of $1,500,000 CDN (the "Sales Goal") is achieved. The Sales Goal was achieved and the payment was released on November 23, 2016. The audit of Brigadier resulted in an upwards adjustment of the purchase price by CD$277,266 (US$214,035) which has been recorded as of September 30, 2016 as Purchase Consideration Payable and was subsequently paid in October 2016. Under the acquisition method of accounting, the total purchase consideration is allocated to Brigadier net tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. The following table summarizes the value of the net assets acquired as of the Acquisition Date:

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On December 9, 2016 the Company closed a Stock Purchase Agreement (the “Purchase Agreement”), by and among the Company and Wainwright and each of the shareholders of Wainwright common stock (the “Wainwright Sellers”), pursuant to which the Wainwright Sellers agreed to sell, and the Company agreed to purchase 1,741 shares of Wainwright common stock, par value $0.01 per share, (the “Wainwright Common Stock”), which represents all of the issued and outstanding Wainwright Common Stock, in exchange for: (i) 818,799,976 shares of Company Common Stock, and (ii) 9,354,119 shares of Company Preferred Stock (which preferred shares are convertible into 187,082,377 shares of Company Common Stock). Wainwright and the Company have a commonality of ownership and control as represented by the shareholdings, either directly or beneficially, of Nicholas Gerber and Scott Schoenberger as a group pursuant to the aforementioned Purchase Agreement and a voting agreement which gives them control of over 50% of Wainwright and over 50% of Concierge both before and after the business combination. Accordingly, the acquisition has been recorded as a transaction between entities under Common Control in the accompanying financial statements. Further, the accompanying financial statements have been adjusted to include the carrying value of assets, liabilities, equity and operations of Wainwright as if the transaction had concluded on July 1, 2015.

Lease Commitments

Gourmet Foods has operating leases for its office, factory and warehouse facilities located in Tauranga, New Zealand, as well as for certain equipment including vehicles. These leases are generally for three-year terms, with options to renew for additional three-year periods. The leases mature between August 2018 and August 2021, and require monthly rental payments of approximately US$11,531 translated to U.S. currency as of March 31, 2017.

Future minimum lease payments for Gourmet Foods are as follows:

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Gourmet Foods 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 NZ$110,000 (approximately US$77,155) to secure the lease of its primary facility. In addition, a NZ$20,000 (approximately US$14,028) bond has been posted through ANZ Bank and secured with a cash deposit of equal amount to secure a separate facilities lease. The General Security Agreement and the cash deposit will remain until such time as the respective leases are satisfactorily terminated in accordance with their terms. Interest from the cash deposit securing the lease accumulates to the benefit of Gourmet Foods and is listed as a component of interest income/expense on the accompanying Consolidated Statements of Operations.

Brigadier leases office and storage facilities in Saskatoon and Regina, Saskatchewan. The minimum lease obligations through their expiry dates are indicated as below and require monthly payments of approximately US$4,243 translated to U.S. currency as of March 31, 2017.

Future minimum lease payments for Brigadier are as follows:

Wainwright leases office space in Oakland, California under an operating lease, which expires in October 2018. Rent expense was $107,350 and $104,376 for the nine months ended March 31, 2017 and 2016, respectively.

Future minimum rental payments required under the operating lease, which has remaining non-cancellable lease terms in excess of one year, are as follows:

Litigation

On May 6, 2002, a default judgment was awarded to Brookside Investments Ltd. against, jointly and severally, Concierge, Allen E. Kahn, and The Whitehall Companies in the amount of $135,000 plus legal fees. As of May 7, 2012, the judgment had lapsed due to the passage of time and the creditor’s failure to renew. Although a new court action would be required by the plaintiff in order to seek legal remedies, the Company has accrued the amount of $135,000 in the accompanying financial statements as accrued expenses as of March 31, 2017.

From time to time, the Company is involved in legal proceedings arising mainly from the ordinary course of its business. In management’s opinion, the legal proceedings are not expected to have a material effect on the Company’s financial position or results of operations.

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Retirement Plan

Wainwright's wholly owned subsidiary USCF, has a 401(k) Profit Sharing Plan covering its employees who are over 21 years of age and who have completed a minimum of 1,000 hours of service and have worked for USCF for one or more years. Participants may make contributions pursuant to a salary reduction agreement. In addition, USCF makes a safe harbor matching contribution. Annual matching contributions paid totaled approximately $84,000 and $63,000 for the nine months ended March 31, 2017 and 2016, respectively.

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 March 31, 2017, the Company's total unrecognized tax benefits were approximately $0.03 million, which would affect the effective tax rate if recognized. The Company will recognize interest and penalties, when they occur, related to uncertain tax provisions as a component of tax expense. There is no interest or penalties to be recognized for the quarter ended March 31, 2017.

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 a tax provision of $1.7 million and $2.2 million from its continuing operations for the nine months ended March 31, 2017 and March 31, 2016, respectively. The Company recorded a tax provision of $0.05 million and $0.8 million from its continuing operations for the three months ended March 31, 2017 and March 31, 2016, respectively.

As of each reporting date, the Company's management considers new evidence, both positive and negative, that could impact management's view with regard to future realization of deferred tax assets. As of March 31, 2017, management determined that sufficient positive evidence exists to conclude that it is more likely than not that additional deferred tax assets will be realizable, and therefore, a partial valuation allowance was released accordingly.

The effective tax rate for the nine months ended March 31, 2017 differed from the statutory rate primarily due to the mix of nondeductible meals and entertainment expenses, imputed interest income and the reversal of a valuation allowance related to the U.S. federal net loss carryforward. The effective tax rate could fluctuate in the future due to changes in the taxable income mix between various jurisdictions.

The Company is subject to income taxes in the U.S. federal, California, 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 tax years 2012 through 2016 will remain open for examination by the federal and state authorities for three and four years, respectively. As of March 31, 2017, there were no active taxing authority examinations.

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

With the acquisition of Wainwright Holdings, Gourmet Foods, Ltd. and Brigadier, the Company has identified four segments for its products and services; U.S. investment fund management, U.S. data streaming and hardware, New Zealand and Canada. Our reportable segments are business units located in different global regions. The Company’s operations in the U.S.A. include the gathering of live-streaming video recording data displayed online to subscribers through our wholly owned subsidiary Kahnalytics, Inc. and the income derived from management of various investment funds by our subsidiary Wainwright. In New Zealand operations include the production, packaging and distribution on a commercial scale of gourmet meat pies and related bakery confections through our wholly owned subsidiary Gourmet Foods, Ltd. and in Canada we provide security alarm system installation and monitoring to residential and commercial customers sold through our wholly owned subsidiary Brigadier. Separate management of each segment is required because each business unit is subject to different operational issues and strategies due to their particular regional location. The Company accounts for intra-company sales and expenses as if the sales or expenses were to third parties and eliminates them in the consolidation. Amounts are adjusted for currency translation as of the balance sheet date and presented in US dollars.

The following table presents a summary of identifiable assets as of March 31, 2017 and June 30, 2016:

The following table presents a summary of operating information for the three months ended March 31, 2017 and 2016: (note: Canadian interests had not yet been acquired in 2016)

CONCIERGE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table presents a summary of operating information for the nine months ended March 31, 2017 and 2016: (note: New Zealand interests were present for only 8 months in 2016 and Canadian interests had not yet been acquired in 2016)

The following table presents a summary of capital expenditures for the nine months ended March 31:

On November 11, 2015, the Board of Directors (the “Board’) of the Company approved the implementation of a one-for-ten (1:10) reverse stock split of all of the Company’s issued and outstanding common and preferred stock (the “Reverse Stock Split”). The Reverse Stock Split became effective when trading opened on December 15, 2015. The Reverse Stock Split was previously approved by the Company’s shareholders pursuant to a majority written consent and by the Board pursuant to unanimous written consent on February 26, 2015. The approvals provided discretion to the Board to implement the Reverse Stock Split by the end of 2015. The number of the Company’s authorized shares of common stock did not change. All figures have been presented on the basis of reverse split wherever applicable for all the periods presented in these financial statements.

The following discussion and analysis should be read in conjunction with the condensed 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."

Forward-Looking Information

This quarterly report on Form 10-Q, including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding the plans and objectives of management for future operations. This information may involve known and unknown risks, uncertainties and other factors that may cause Concierge Technologies, Inc.’s (“Concierge” or the “Company”) actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe Concierge’s future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project,” the negative of these words, other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and Concierge cannot assure investors that the projections included in these forward-looking statements will come to pass. Concierge’s actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors.

Concierge has based the forward-looking statements included in this quarterly report on Form 10-Q on information available to it on the date of this quarterly report on Form 10-Q, and Concierge assumes no obligation to update any such forward-looking statements. Although Concierge undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, investors are advised to consult any additional disclosures that Concierge may make directly to them or through reports that Concierge in the future files with the U.S. Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Some of the information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report includes forward-looking statements based on our current management’s expectations. There can be no assurance that actual results, outcomes or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, among others, our limited operating history, unpredictability of future operating results, competitive pressures and the other potential risks and uncertainties.

Introduction

Concierge Technologies, Inc. (“Concierge”) or the (“Company”) conducts business through its wholly-owned operating subsidiaries operating in the U.S., New Zealand and Canada, respectively. The operations of the Company’s wholly-owned subsidiaries are more particularly described herein but are summarized as follows:

Results of Operations

Kahnalytics

The nine months ended March 31, 2017 involved a different business model than that of the corresponding period in 2016. By obtaining an exclusive software license and partnering with a camera importer/distributor as a channel-to-market, Kahnalytics began the business of hosting a web-based server that subscribers could access to view their camera video files, vehicle location, speed and event triggers in real time. To facilitate the sales process and entice customers to the online subscription service, Kahnalytics implemented a hardware subsidy program and offered a wireless data plan that was resold to subscribers of the service, called the Kahnalytics Fleet Management Service or “FMS”. Two types of services were offered, 1) a FMS basic subscription plan where subscribers provided their own wireless connection to the FMS and 2) a FMS data plan where subscribers were provided hardware needed to connect wirelessly to the Internet and also charged a monthly fee for the air time usage. Kahnalytics also charged a subsidized price of $50 per each wireless hardware device used in creating the wireless connection. Kahnalytics purchases data plans from a network reseller and, in turn, resells that plan to its subscribers.

During the nine months ended March 31, 2016, Kahnalytics purchased cameras, various other hardware items, and installation services for sale to specific insurance companies, and ultimately for installation into insured’s vehicles. The hardware items were either listed in inventory if held beyond the close of the current accounting period, or summarized as “cost of goods sold” when sold. Inventory orders which had been paid for, or partially paid for, in advance of receipt are classified as “Advance to Suppliers.” Generally, hardware is sold to customers who require delivery and installation of the product in their vehicles. The charges for services such as these are included in the bundled, installed, sales price reflected on sales invoices and accounts receivable.

Due to these differences in the business model of Kahnalytics, the comparative results below will not be a true representation of Kahnalytics operating trends.

For the Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016

For the three months ended March 31, 2017 sales of FMS basic subscriptions were $2,504 and FMS data plans were $22,646. There were no FMS related subscription sales for the three months ended March 31, 2016. Hardware sales of wireless connection devices for the three months ended March 31, 2017 were $1,850 as compared to $0 for the three months ended March 31, 2016.

Total revenues (including other income) for the three month periods ended March 31, 2017 and 2016 were $27,000 and $0 respectively. Net income for the three months ended March 31, 2017 was $266 as compared to a net loss for the three months ended March 31, 2016 of $3,055.

For the Nine Months Ended March 31, 2017 Compared to the Nine Months Ended March 31, 2016

For the nine months ended March 31, 2017 sales of FMS basic subscriptions were $7,329 and FMS data plans were $54,625. There were no FMS related subscription sales for the nine months ended March 31, 2016. Hardware sales of wireless connection devices for the nine months ended March 31, 2017 were $12,487 as compared to $117,700 in camera sales for the nine months ended March 31, 2016. Other income for the nine months ended March 31, 2017 was $7 for reimbursed shipping charges as compared to $81 for the nine months ended March 31, 2016 as an adjustment to sales tax liability. Obsolete camera inventory was also liquidated during the nine months ended March 31, 2017 for a total of $42,124. Total revenues (including other income) for the nine month periods ended March 31, 2017 and 2016 were $116,573 and $117,781 respectively.

Net loss for the nine months ended March 31, 2017 after income tax of $800 and a downward revaluation to inventory as a result of selling subsidies of $2,090 was $32,601 as compared to a net loss for the nine months ended March 31, 2016 of $4,872.

Accounts receivable as of March 31, 2017 were $45,856 as compared to $2,640 as of June 30, 2016. The difference is attributed to the sale of discontinued hardware at a discount to a distributor on a deferred payment plan rather than any significant change in the aging of accounts receivable.

Gourmet Foods, Ltd.

Gourmet Foods Limited (“GFL”), 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 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. Concierge purchased all of the issued and outstanding shares of Gourmet Foods as of August 1, 2015 even though the transaction did not officially close until August 11, 2015.

The accompanying financial statements include the operations of Gourmet Foods for the period August 1, 2015 through March 31, 2016 as compared to the operations for the period July 1, 2016 through March 31, 2017. Due to these differences in the accounting periods, the comparative results below will not be a true representation of GFL’s operating trends.

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. 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 the foreign currency translations are included in Accumulated Other Comprehensive Expense found on the Condensed Consolidated Balance Sheets.

For the Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016

Net revenues for the three months ended March 31, 2017 were $1,127,950 with cost of goods sold of $817,517, resulting in a gross profit of $310,433 for an approximate 28% gross margin as compared to net revenues for the three months ended March 31, 2016 of $970,654 with a cost of goods sold for the three months ended March 31, 2016 of $684,703 producing a 29% gross profit of $285,951.

General and administrative expenses for the three months ended March 31, 2017 were $143,367 plus depreciation expense of $71,822, marketing expense $42,419, wages $44,183 and interest income of $270 producing a pre-tax net income of $8,911 as compared to a pre-tax net income of $60,033 for the three months ended March 31, 2016. General and administrative expenses for the three months ended March 31, 2016 were $120,594, marketing expense $7,138, wages $44,528, and depreciation was $55,170 which produced an operating income of $58,521 before interest income of $1,114, other income of $398 and income tax provision of $17,634.

For the Nine Months Ended March 31, 2017 Compared to the Eight Months Ended March 31, 2016

Net revenues for the nine months ended March 31, 2017 were $3,524,527 with cost of goods sold of $2,465,604 resulting in a gross profit of $1,058,924 as compared to the eight months ended March 31, 2016 where net revenues were $2,588,664; cost of goods sold were $1,823,778; and gross profit was $764,886.

General and administrative expenses for the nine months ended March 31, 2017 and 2016 were $681,132 and $321,050, respectively, plus marketing expenses of $42,420 compared to $39,367, and wages of $132,548 compared to $156,057 producing operating income of $202,824 and $248,412, respectively, or approximately 5.7% net operating profit for nine months ended March 31, 2017 as compared to 10% for the eight months ended March 31, 2016.

The depreciation expense, income tax provision and other income totaled $201,562 for the nine months ended March 31, 2017 as a compared to $176,341 for the eight months ended March 31, 2016, resulting in a net income of $1,263 as compared to a net income of $72,071, respectively.

Accounts receivable as of March 31, 2017 were $297,147 as compared to $285,673 at June 30, 2016.

Overall, profit margins for the comparative periods are consistent and differences are attributed to depreciation expense, varying income tax provisions and the fluctuation of currency exchange rates with the New Zealand dollar.

Brigadier Security Systems

Brigadier Security Systems (“Brigadier”) was founded in 1985 and through internal growth and acquisitions the core business of Brigadier began in 1998. Today Brigadier is one of the largest SecurTek dealers in Saskatchewan with offices in both major urban areas of Regina (under the fictitious business name of “Elite Security”) and Saskatoon. Brigadier is also a Honeywell Certified Access Control Distributor, Kantech Global Dealer and UTC Interlogix Security Pro dealer and the largest independent security contractor in the province. Brigadier provides comprehensive security solutions including access control, camera monitoring, motion detection, and intrusion alarms to home and business owners as well as government offices, schools and public buildings. Brigadier typically sells hardware to customers and a full-time monitoring of the premises. The contract for monitoring the premise is then conveyed to a third-party telecom in exchange for an upfront payment and recurring residuals based on subscriber contracts.

The accompanying Condensed Consolidated Statements of Operations include the operations of Brigadier only for the three and nine months ended March 31, 2017 because Concierge did not acquire Brigadier until June 2, 2016, and thus there is no comparison data to be supplied for the three and nine months ended March 31, 2016.

Brigadier operates exclusively in Canada and thus the Canadian dollar is its functional currency. In order to consolidate Concierge’s reporting currency, the US dollar, with that of Brigadier, Concierge records foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830. 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. Gains and losses resulting from the foreign currency translations are included in Accumulated Other Comprehensive Expense found on the Condensed Consolidated Balance Sheets.

Brigadier purchases various component parts and accessories anticipated to be required in near-term installations of systems pursuant to sales forecasts. These parts are listed in inventory until sold, which is determined by a sales contract, delivery of the product, and a reasonable expectation of payment under typical terms of sale are in evidence. Inventories are valued at the lower of cost (determined on a FIFO basis) or market. Inventories include product cost, inbound freight and warehousing costs. Concierge compares the cost of inventories with the market value and an allowance is made for writing down the inventories to their market value, if lower.

For the Three Months Ended March 31, 2017

Net sales for the three months ended March 31, 2017 were $701,980 with cost of goods sold recorded as $202,839, resulting in a gross profit of $499,141 with a gross margin of approximately 71%.

General and administrative expenses for the three months ended March 31, 2017 were $111,979 plus marketing expense $6,462 and wages $289,652 providing net operating income before income tax provision, depreciation and other income and expense of $91,049 or approximately 13%.

The depreciation expense for Brigadier for the three months ended March 31, 2017 was $11,295; income tax provision at March 31, 2017 was $22,363; net interest expense was $218; commission income was $197 resulting in a net profit of $57,369.

For the Nine Months Ended March 31, 2017

The net sales for the nine months ended March 31, 2017 were $2,313,088 with cost of goods sold recorded as $627,837, resulting in a gross profit of $1,685,251 with a gross margin of approximately 73%.

General and administrative expenses for the nine months ended March 31, 2017 were $397,789 plus marketing expense $56,082 and wages $838,035 providing net operating income before tax provision, depreciation and other income and expense of $393,345 or approximately 17%.

The depreciation expense for Brigadier for the nine months ended March 31, 2017 was $13,634; income tax provision for the nine months ended March 31, 2017 at $101,268; interest expense was $493; commission income was $625; and loss on disposal of fixed assets was $6,106, resulting in a net profit of $272,469.

Accounts receivable at March 31, 2017 were $311,096 as compared to $550,907 at June 30, 2016.

Wainwright Holdings

Wainwright was founded 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, United States Commodity Funds, LLC (“USCF”), a wholly-owned subsidiary of Wainwright, was formed as a single member limited liability company in the State of Delaware. USCF is a registered commodity pool operator with the Commodity Futures Trading Commission (“CFTC”) and a member of the National Futures Association (“NFA”) and serves as the General Partner (“General Partner”) for various limited partnerships (“LP”) as noted below. In June 2013, USCF Advisers, LLC (“Advisers”), a wholly-owned subsidiary of Wainwright, 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 Advisers board of managers formed USCF ETF Trust (“ETF Trust”) as an open-end management investment company registered under the Investment Company Act of 1940, as amended ('the 1940 Act"). In October 2016, the Advisers board of managers formed USCF Mutual Funds Trust ("Mutual Funds Turst") as an open-end management investment company registered under the 1940 Act. Wainwright and subsidiaries USCF and Advisers are collectively referred to as the “Wainwright” hereafter.

Wainwright’s operating activities consist primarily of providing management and investment advisory services to eleven public LP funds and two exchange-traded funds (“ETF’s”).

USCF is currently the General Partner in the following Securities Act of 1933 LP commodity based index funds and Sponsor (“Sponsor”) for the fund series within the United States Commodity Index Funds Trust (“USCIF Trust”):

The USCIF Trust currently has a new fund, USCF Canadian Crude Oil Index Fund (“UCCO”), in registration and has not commenced operations.

In addition, USCF is the sponsor of the USCF Funds Trust, a Delaware statutory trust, and each of its series, the REX S&P MLP Fund, the REX S&P MLP Inverse Fund, the United States 3X Oil Fund and the United States 3X Short Oil Fund, all of which are funds that are currently in registration and have not commenced operations. 

Advisers serves as the investment adviser to the fund(s) within the ETF Trust and the Mutual Funds Trust and has overall responsibility for the general management and administration for each respective trust. Pursuant to the current Investment Advisory Agreement, Advisers provides an investment program for the ETF Trust fund(s) and the Mutual Funds Trust  fund and manages the investment of the assets.

All USCF funds and ETF Trust or Advisers funds are collectively referred to as the “Funds” hereafter.

For the Three Months Ended March 31, 2017, Compared to the Three Months Ended March 31, 2016

Wainwright’s revenue and expenses are primarily driven by the amount of Fund assets under management (“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.

Average AUM for the three months ended March 31, 2017 decreased to $4.293 billion, or 14.2%, from the three month average of $5.005 billion for the three months ended March 31, 2016 primarily due to a $786 million decrease in USO average AUM offset by a $63 million increase in USCI average AUM. As a result of the combined overall Fund net decrease in AUM revenues decreased 8.3%, or $0.506 million , to $5.637 million from $6.143 million over the respective three month period.

Wainwright’s total operating expenses for three months ended March 31, 2017 increased $0.521 million to $4.290 million, or 13.8%, from $3.769 million for the three months ended March 31, 2016. Expected reductions in variable operating expenses, as described above, as a result of decreased AUM were offset by higher expenses gearing up for the launch of the new USCF mutual fund and other new funds producing an overall increase in fund operating expenses of $0.102 million over the respective three month period of the prior year. These variable expenses also included increased sub-adviser fees as a result of increased average AUM for the USCI fund as noted above. Other expense increases for the three months ended March 31, 2017 as compared to the three months ended March 31, 2016 included increases in employee headcount from 12 to 16 compared to the prior year totaling $0.216 million, a $0.193 million increase in general and administrative spend which included increases in new fund launch costs, one-time legal and professional service expenses and fund expense waiver reimbursements. Marketing and distribution expenses remained flat due to offsetting of decreases in variable distribution costs, as result of lower average AUM ,against increases in new fund marketing expenses.

Net income before taxes for the three months ended March 31, 2017 decreased $1.027 million to $1.349 million from $2.376 million for the three months ended March 31, 2016. The decrease was primarily due to decreases in revenue as a result of lower average AUM coupled with increased general and administrative expenses and an increase in employee headcount as noted above.

For the Nine Months Ended March 31, 2017, Compared to the Nine Months Ended March 31, 2016

Average AUM for the nine months ended March 31, 2017 increased to $4.603 billion, or 2.3%, from the nine month average of $4.498 billion for the nine months ended March 31, 2016. As a result of increased AUM revenues increased 8.1%, or $1.392 million, to $18.478 million from $17.086 million over the respective nine month period.

Wainwright’s total operating expenses for nine months ended March 31, 2017 increased $2.091 million to $13.075 million, or 19.0%, from $10.984 million for the nine months ended March 31, 2016. Variable expenses, as described above, increased $0.776 million over the respective nine month period as a result of increased AUM. Wainwright incurred an increase of $0.745 million in general and administrative expense which included and increase in one-time professional and legal fees during the nine month ended March 31, 2017 related to the launch of new funds and the acquisition by Concierge. General and administrative expenses increased for the nine months ended March 31, 2017 as compared to the nine months ended March 31, 2016 also included increases in new fund startup costs of $0.147 million compared to the prior yea and an increase of $0.196 million increase of $0.196 million in fund expense waiver reimbursements based on contractual expense thresholds for certain funds. Marketing and distribution expense increased  by $0.334 million related to new fund launches and increased marketing efforts. Employee costs increased by $0.233 million over the prior year comparable period due to increases in headcount from 12 to 16 which inclued both new and replacment position hires.

Net income before taxes for the nine months ended March 31, 2017 decreased $0.701 million to $5.405 million from $6.106 million for nine months ended March 31, 2016 due to increases in general and administrative expense which included new fund launch costs, one-time acquistion expenses for the prior quarter, employee headcount increase and increased marketing efforts, partially offset by increases in revenue due to higer average AUM .

Concierge Technologies and Subsidiaries

With the acquisition of Wainwright, where Wainwright and Concierge have a commonality of ownership and control as represented by the shareholdings, the acquisition has been recorded as a transaction between entities under Common Control on the Condensed Consolidated Balance Sheets of the Company. Further, the Condensed Consolidated Statements of Operations and Comprehensive Income have been adjusted to include the carrying value of operations of Wainwright as if the transaction had concluded on July 1, 2015.

For the Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016

Concierge incurred an operating income (before provisions for income taxes, other income and expenses, and other comprehensive gains/losses) for the three months ended March 31, 2017 of $1,099,992 as compared to an operating income of $2,385,676 for the three months ended March 31, 2016. This represents a decrease in operating income of $1,285,684 over the three months ended March 31, 2017 when compared to the three months ended March 31, 2016.

Other income and (expenses) for the three months ended March 31, 2017 and 2016 were ($3,851) and $7,555, where the expense realized in 2017 was primarily a result of interest accruing on outstanding loan balances that did not exist for the same period in 2016. Income tax provisions for the three months ended March 31, 2017 and 2016 were $51,620 and $819,234, respectively, resulting in a net income of $1,044,521 and $1,573,997, respectively. After giving consideration to currency translation gain of $53,407, the comprehensive income for the three months ended March 31, 2017 was $1,097,928 as compared to the three months ended March 31, 2016, where currency translation gain of $15,274 resulted in a comprehensive income of $1,589,271.

Overall, the net income, before currency translation gains and losses, between the three months ended March 31, 2017 as compared to the three months ended March 31, 2016 decreased by $529,476 or approximately 34% even though gross profit differences were insignificant. Contributing to the difference in net income between the comparison periods are the one-time transaction costs to acquire Wainwright during the prior period and also additional transaction costs related to Brigadier Security Systems and Gourmet Foods financial audits arising from prior periods.

For the Nine Months Ended March 31, 2017 Compared to the Nine Months Ended March 31, 2016

Concierge incurred an operating income (before provisions for income taxes, other income and expenses, and other comprehensive gains/losses) for the nine months ended March 31, 2017 of $5,079,312 as compared to an operating income of $6,029,603 for the nine months ended March 31, 2016. This represents a decrease in operating income of $950,291 for the nine months ended March 31, 2017 when compared to the nine months ended March 31, 2016, or approximately 16%.

Other income(expense) for the nine months ended March 31, 2017 and 2016 were ($4,680) and $15,254 respectively, where the expense recorded in 2017 was primarily a result of accruing interest on outstanding loan balances that did not exist for the same period in 2016. Income tax provisions for the nine months ended March 31, 2017 and 2016 were $1,707,200 and $2,183,339, respectively, resulting in a net income of $3,367,433 and $3,861,518, respectively. After giving consideration to currency translation loss of $73,820 the comprehensive income for the nine months ended March 31, 2017 was $3,293,613 as compared to the nine months ended March 31, 2016 where the currency translation loss was $1,083 and the comprehensive income was $3,860,435. Comprehensive loss is comprised of fluctuations in foreign currency exchange rates and effects the valuation of our holdings in New Zealand and Canada as a result.

Overall, the net income, before currency translation gains and losses, between the nine months ended March 31, 2017 as compared to the nine months ended March 31, 2016 decreased by $494,085 or approximately 13%. Contributing to the difference in net income and reducing the profits for the nine months ended March 31, 2017 by increasing general and administrative costs are the one-time transaction costs to acquire Brigadier Security Systems and Wainwright Holdings. Management continues to pursue an agressive acquisition strategy and expects the transaction costs to continue for the balance of the current fiscal year. While net income decreases as a result of the transaction costs, the corporation's gross revenues and gross profits are increasing incrementally with the inclusion of profit generating subsidiaries.

Liquidity

During the previous 12 months Concierge has invested approximately $3.5 million in cash towards purchasing and assimilating Gourmet Foods and Brigadier Security Systems into the Concierge Technologies group of companies. Concierge also acquired Wainwright, which provides a significant revenue stream and value. Concierge continues to pursue alternative business strategies with Kahnalytics and intends to grow that opportunity as the situation develops while limiting its capital expenditures. Management forecasts Wainwright, Gourmet Foods and Brigadier to all produce a profit during the current fiscal year and the realization of those profits by Concierge is not expected to be significantly impacted by foreign currency fluctuations against the U.S. dollar during the current fiscal 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. Management believes these acquisitions can be completed with available cash resources with no further equity dilution or debt instruments. 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.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk.

Concierge is a smaller reporting company and is 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 if Concierge had any officers, have evaluated the effectiveness of Concierge’s disclosure controls and procedures and have concluded that the disclosure controls and procedures of Concierge  have been 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.

PART II - OTHER INFORMATION

None.

Concierge is a smaller reporting company and is not required to provide the information required by this item.

None.

None.

Not applicable.

On September 19, 2016, Concierge Technologies, Inc. (“Concierge” or the “Company”) entered into a conditional Stock Purchase Agreement (the “Agreement”), dated September 19, 2016, with Wainwright Holdings, Inc., a Delaware corporation (“Wainwright”) and certain shareholders of Wainwright (the “Sellers”), pursuant to which the Sellers conditionally agreed to sell, and the Company conditionally agreed to purchase, shares representing approximately 97% of the total issued and outstanding common stock of Wainwright (the “Wainwright Shares”). The Company subsequently, on December 8, 2016, obtained the joiner agreements to include the entirety of the Wainwright shareholders as Sellers. As a result of the transaction, all shareholders of Wainwright have become shareholders of the Company.

Prior to the transaction Mr. Gerber, along with certain family members and certain other Wainwright shareholders, owned the majority of the voting stock in the Company as well as Wainwright. Following the closing of this transaction, he and those shareholders continue to own the majority of the Company voting shares.

Wainwright owns all of the issued and outstanding limited liability company membership interests of United States Commodity Funds LLC, a Delaware limited liability company (“USCF”) and USCF Advisers, LLC (“USCF Advisers”). USCF is a commodity pool operator registered with the Commodity Futures Trading Commission. USCF Advisers is an SEC registered investment adviser. USCF and USCF Advisers act as the advisers to the Funds set forth in the Agreement (each, a “Fund”, and collectively, the “Funds”).

The Closing of the transaction occurred on December 9, 2016 with the issuance of 818,799,976 shares of our common stock and 9,354,119 shares of our Series B Voting, Convertible, Preferred stock in exchange for all the outstanding and issued shares held by the Wainwright Shareholders.

The details to the acquisition of Wainwright Holdings are more particularly described in the Form 8K submitted on December 12, 2016 and incorporated herein by this reference.

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

*Previously filed with Form 8-K12G3 on March 10, 2000; Commission File No. 000-29913, incorporated herein.

**Previously filed with Form 8-K on April 2, 2002; Commission File No. 000-29913, incorporated herein.

***Previously filed with Form 10-KSB on October 20, 2004; Commission File No. 000-29913, incorporated herein.

+Previously filed with Form 10-KSB FYE 06-30-06 on October 20, 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 10-30-07; Commission File No. 000-29913, incorporated herein.

****Previously filed with Current Report on Form 8-K on January 29, 2015 and incorporated by reference herein.

***** Previously filed with Current Report on Form 8-K on March 4, 2015 and incorporated by reference herein.

****** Previously filed with Current Report on Form 8-K on February 2, 2016 and incorporated by reference herein.

******* Previously filed with Current Report on Form 8-K on June 8, 2016 and incorporated by reference herein.

******** Previously filed with Current Report on Form 8-K on September 19, 2016 and incorporated by reference herein.

********* Previously filed with Current Report on Form 8-K on December 12, 2016 and incorporated by reference herein.

********** Previously filed with Current Report on Form 8-K on March 24, 2017 and incorporated by reference herein.

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.

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.

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