**SECURITIES
        AND EXCHANGE COMMISSION**
 Washington,
        D.C. 20549
 
 **FORM
        10-KSB**
 Amendment
        No. 1
 (Mark
        One)
 
 x ANNUAL
        REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934
 
 For
        the
        Fiscal Year Ended September 30, 2006
 
 o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
        OF
        1934
 
 For
        the
        transition period from ____________ to _____________
 
 Commission
        File No. 333-90682
 
 **TechnoConcepts,
        Inc.**
 (Formerly
        known as Technology Consulting Partners, Inc.)
 (Name
        of
        Small Business Issuer in its charter)
 
 Colorado
              84-1605055(State
                  or other jurisdiction of
                incorporation
                  or organization)
              (I.R.S.
                  Employer Identification No.)
 
 6060
        Sepulveda Blvd. #202
 Van
        Nuys,
        Ca. 91411
 (Address
        of principal executive offices)(Zip code)
 
 Issuer's
        telephone number, including area code:   (818) 988-3364
 
 Securities
        registered pursuant to Section 12(b) of the Act:
 
 Title
                  of each class
              Name
                  of each exchange on which
                each
                  is registeredNone
              None
 
 Securities
        registered pursuant to Section 12(g) of the Act:
 
 Common
        Stock, no par value
 (Title
        of
        Class)
 
 Check
        whether the issuer: (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such shorter
        period
        that the registrant was required to file such reports); and (2) has been
        subject
        to such filing requirements for the past 90 days. Yes x No o
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B contained in this form, and no disclosure will be contained,
        to
        the best of registrant’s knowledge, in definitive proxy or information
        statements incorporated by reference in Part III of this Form 10-KSB or any
        amendment to this Form 10-KSB. x
 
 Indicate
        by check mark whether the registrant is a shell company as defined in Rule
        12b-2
        of the Exchange Act. Yes o No x
 
 The
        Issuer’s revenues for the fiscal year ended September 30, 2006 were
        $2,808,924.
 
 The
        number of shares of the registrant’s common stock, no par value per share,
        outstanding as of January 13, 2007 was 31,391,316. The aggregate market value
        of
        the voting and non-voting common equity held by non-affiliates of the registrant
        on January 13, 2007, based on the last sales price on the OTC Bulletin Board
        as
        of such date, was approximately $52,831,584.
  
 
 DOCUMENTS
        INCORPORATED BY REFERENCE
  None
 
 Transition
        Small Business Disclosure Format: Yes o No x
  
  **TABLE
        OF CONTENTS**
 
 PagePART
                  IITEM
                  1.
              DESCRIPTION
                  OF BUSINESS
              
              1ITEM
                  2.
              DESCRIPTION
                  OF PROPERTY
              
              11ITEM
                  3.
              LEGAL
                  PROCEEDINGS
              
              12ITEM
                  4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              
              12PART
                  IIITEM
                  5.
              MARKET
                  FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
              
              13ITEM
                  6.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
              
              18ITEM
                  7.
              FINANCIAL
                  STATEMENTS
              
              23ITEM
                  8.
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE
              
              23ITEM
                  8A.
              CONTROLS
                  AND PROCEDURES
              
              23ITEM
                  8B.
              OTHER
                  INFORMATION
              
              24PART
                  IIIITEM
                  9.
              DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSON
              
              24ITEM
                  10.
              EXECUTIVE
                  COMPENSATION
              
              30ITEM
                  11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
              
              31ITEM
                  12.
              CERTAIN
                  RELATIONSHIPS AND RELATED TRANSACTIONS
              
              34ITEM
                  13.
              EXHIBITS
              
              35ITEM
                  14.
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES
              
              38SIGNATURES
              
              39
  
  **FORWARD-LOOKING
        STATEMENTS**
 *This
          annual report on Form 10-KSB contains forward-looking statements
          that*  *involve
          risks and uncertainties. These forward-looking statements are
          not*  *historical
          facts but rather are based on current expectations, estimates
          and*  *projections
          about our industry, our beliefs and assumptions. We use words
          such*  *as
          “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,”
“estimate”*  *and
          variations of these words and similar expressions to identify*  *forward-looking
          statements. These statements are not guarantees of future*  *performance
          and are subject to certain risks, uncertainties and other
          factors,*  *some
          of which are beyond our control, are difficult to predict and could
          cause*  *actual
          results to differ materially from those expressed or forecasted in
          the*  *forward-looking
          statements. These risks and uncertainties include those*  *described
          in “Risk Factors” and elsewhere in*  *this
          annual report. You should not place undue reliance on these*  *forward-looking
          statements, which reflect our view only as of the date of this* a *annual
          report.*
 
 **PART
        I**
 
 **ITEM
        1. DESCRIPTION OF BUSINESS**
 
 **Overview**
 
 We
        are
        engaged in the business of designing, developing, manufacturing and marketing
        wireless communications semiconductors, or microchips.
 
 We
        are in
        the process of attempting to commercialize proprietary technology that we
        refer
        to as True Software RadioTM. True Software RadioTM is an advanced delta-sigma
        microchip architecture that converts radio frequency, or RF, signals directly
        into digital data. The technology is designed to dramatically improve the
        way
        that wireless signals are received and transmitted, by making possible
        device-to-device communication across otherwise incompatible networks and
        competing wireless standards (e.g., CDMA, TDMA, GSM, GPRS, G3, Bluetooth,
        WiFi,
        WiMAX, WiBro, etc.), creating true convergence for the wireless industry.
        “Software radio" is an industry term, referring to wireless receivers and
        transmitters that can be controlled and reconfigured by software commands
        and
        that can process radio signals digitally for better performance. To date,
        we
        have not generated any revenues from the sale of such microchips or the
        licensing of rights to the underlying technology. We are currently in the
        process of seeking to arrange financing to further our efforts to commercialize
        this technology.
 
 Through
        our wholly-owned subsidiary, Jinshilin Techno Ltd., or Jinshilin Techno,
        formed
        in December 2005 and based in Shanghai, China, we are seeking to provide
        marketing, sales and technical support for our True Software RadioTM technology
        in China. On April 21, 2006, Jinshilin Techno acquired Internet Protocol
        television (IPTV) set-top box (STB) technology through license agreements
        with
        Jinshilin Technologies Development Company Ltd. Jinshilin Techno currently
        offers an IPTV set-top box that also features Voice over Internet Protocol,
        or
        VOIP, capability and can receive IP data transmissions through the household
        electrical power grid. Jinshilin Techno expects that future generation set-top
        boxes will support multi-protocol wireless connectivity with television,
        DVD
        players and other multi-media devices, by integrating True Software RadioTM into
        IPTV set-top boxes.
 
 We
        also
        own a controlling interest in Asanté Networks Inc., based in San Jose,
        California. Asanté provides Ethernet networking solutions for Apple Computer and
        the small-to-medium business retail markets, offering the IntraCore® and
        FriendlyNET® product families, integrating voice, data, and video over wireless
        and wired networks with unified management and authentication. In fiscal
        2006,
        Asanté Networks’ net sales were lower by $2,272,953, or 44.26%, than in the
        comparable twelve-month period of fiscal 2005. This was primarily the result
        of
        decreases in orders and sales of products into the business retail
        markets.
 
 **Our
        History and Development**
 
 We
        were
        organized under the name Technology Consulting Partners, Inc., or TCP, in
        September 2001. At the time of TCP’s incorporation, its intention was to provide
        high technology consulting services to its clients. Through September 30,
        2003,
        most of TCP’s efforts were devoted to organizing the company and raising
        approximately $120,000 in a private offering. On December 15, 2003, TCP entered
        into an agreement and plan of merger with TechnoConcepts Inc., a Nevada
        corporation, or TCI Nevada, under which TCP acquired all of the issued and
        outstanding shares of capital stock of TCI Nevada in exchange for shares
        of TCP
        representing a controlling interest in TCP. This transaction was completed
        on
        February 17, 2004. TCP acquired TCI Nevada primarily for TCI Nevada’s
        intellectual property (and other intangible assets), including pending, expired
        provisional and issued patents, trademarks, certain maskrights, semiconductor
        devices, and prototype hardware and software, which underlie our True Software
        RadioTM technology. At the time of this acquisition, the acquired assets had a
        book value of approximately $7.0 million, net of an adjustment of approximately
        $1.0 million to the initial valuation of such assets related to the expired
        provisional patents and trademarks. We have taken an impairment charge equal
        to
        the full book value of the other intellectual property and intangible assets
        acquired in the transaction, as of the fiscal year ended September 30, 2005.
        The
        impairment charge reflects the absence of revenue-generating contracts following
        our conducting demonstrations of the True Software RadioTM technology to
        potential industry partners in July 2005. At the time we conducted those
        demonstrations, we had hoped to generate funding from prospective partners
        to
        further our research and development efforts to produce commercial products
        utilizing the technology.
  1
 
 In
        May
        2005, we formed Techno (Hong Kong) Limited, a wholly-owned subsidiary organized
        to perform production design and application-specific engineering and to
        provide
        product support in Asia for our microchip products.
 
 In
        June
        2005, we acquired the assets and significant liabilities of Asanté Technologies
        Inc. in exchange for 1,161,170 shares of our common stock, valued at $4.306
        per
        share, such that the aggregate value of the transaction was $5 million. In
        October 2005, we restructured Asanté, merging it into RegalTech Inc., a publicly
        traded Delaware corporation. RegalTech's name was changed to Asanté Networks
        Inc. (PNK:ASTN). We own shares of Asanté Networks’ preferred stock, which are
        convertible into eighty five (85%) percent of Asanté Networks common stock on a
        non-dilutable basis.
 
 In
        December 2005, we formed Jinshilin Techno Ltd. as a wholly owned subsidiary,
        based in Shanghai, to provide marketing, sales and technical support for
        our
        True Software RadioTM technology in China.
 
 **Wireless
        Communications Market**
 
 According
        to a publicly available forecast by the World Semiconductor Trade Statistics
        organization, or WSTS, in October 2006, the global semiconductor market was
        expected to reach $247 billion by the end of 2006. The WSTS forecast predicts
        that the worldwide market will grow by 8.6% in 2007 and 12.1% in 2008, with
        Asia-Pacific as the fastest growing regional market, with a continuously
        growing
        demand for electronic products such as PCs, digital consumer appliances and
        mobile communications. We believe that more and better wireless receivers
        and
        transmitters will be required to operate these electronic products, which
        include mobile phones, personal digital assistants (PDAs), Bluetooth and
        WiFi-enabled laptop and handheld computers, and other consumer devices. For
        example, the automotive industry now requires more wireless receiver and
        transmitter microchips for their communications, navigation and “infotainment”
components, including telematics, GPS, multimedia systems, audio systems,
        rear
        seat entertainment and gaming, in addition to AM/FM/XM radio tuners. We believe
        that the dramatic increase of these and other wireless applications presents
        growing opportunities for our reconfigurable microchips that can serve multiple
        purposes.
 
 Global
        sales of mobile phones are expected to experience another year of strong
        growth
        in 2007, with estimated consumer demand for 1.1 billion phones, according
        to a
        survey done by The Gartner Group, which was published in the International
        Herald Tribune, November 22, 2006. Gartner estimates there will be 2.6 billion
        mobile phones in use by the end of 2009. While consumer demand for mobile
        phones
        grows, the handset electronics and wireless infrastructure is still supported
        by
        competing protocols, frequencies, data rate standards and other incompatible
        transceiver technologies, making multi-band multi-mode technology a virtual
        necessity. Further, ultra-wideband services will begin to penetrate the mobile
        phone market in 2007, rising to an annual penetration rate of 20% by 2011,
        according to a July 2006 report from IMS Research. We believe that True Software
        RadioTM microchips, providing software-reconfigurable multi-band, multi-mode, and
        ultra-wideband capabilities, will provide the single-chipset solution that
        the
        market will need.
 
 **Product
        Development**
 
 ***True
        Software RadioTM***
 
 In
        August
        2006, we produced our first engineering run of wireless transmitter and receiver
        microchips, based on our True Software RadioTM technology. On November 29, 2006,
        we announced the finalization of the product datasheet that will serve as
        the
        baseline for our initial commercial production run of the True Software RadioTM
wireless receiver and transmitter chips. The datasheet was based on the
        completion of parametric characterization of the first silicon germanium
        (SiGe)
        microchips we fabricated. The characterization process measured the function
        and
        performance parameters of the transmitter and receiver chips as they operated
        continuously across multiple frequency bands. We are now in position to offer
        the True Software RadioTM (TSRTM) TC-RX1000ES / TC-TX1000ES 0.18μ SiGe transceiver
        chip sets, which convert full-spectrum data from RF to digital signals and
        digital to RF signals. The part number suffix ES indicates engineering samples,
        which can be used by original design manufacturers (ODMs) and original equipment
        manufacturers (OEMs) to develop their applications and products. We believe
        these microchips will provide the key to flexible software defined radio
        (SDR)
        systems.
 
 "Software
        radio" and “software defined radio” are industry terms which refer to wireless
        receivers and transmitters that can be controlled and reconfigured by software
        commands and that can process radio signals digitally for better performance.
        However, in today's wireless devices, only the RF signal processing (information
        interpretation) can be performed digitally. Wireless transmitters and receivers
        still utilize conventional analog transceiver circuitry based on technology
        first developed in the early 1900s. Existing SDR systems rely on single and
        multiband RF transceivers that do not cover a wide and continuous frequency
        range. Our True Software RadioTM technology makes it possible for wireless
        transmitters and receivers, as well as the radio signal processing, to be
        fully
        controlled and reconfigured by software commands across a wide range of
        frequencies and frequency bands. Our patented and patent-pending True Software
        RadioTM technology is an advanced delta-sigma microchip architecture that
        converts RF signals directly into digital data for the wireless receiver
        and
        directly from digital data into radio signals for the wireless transmitter.
        We
        believe that direct conversion wireless technology will replace current
        conventional analog transceiver circuitry, providing fully software-controlled
        single-transceiver wireless devices that can operate across different networks
        and frequency bands, in multiple modes and with multiple wireless standards,
        with higher resolution and greater bandwidth than conventional circuitry.
        True
        Software RadioTM microchips replace the analog front end, intermediate frequency
        (I/F) processing, analog-to-digital conversion (ADC), and digital filtering
        sections of today’s conventional wireless transmitters and receivers. Because
        the technology simplifies design and reduces component costs, we believe
        that
        True Software RadioTM is an ideal platform for OEMs and ODMs to develop new
        wireless broadband, mobile data, cellular, and other next-generation wireless
        applications.
  2
 
 ***Set-top
        Boxes***
 
 On
        April
        21, 2006, Jinshilin Techno acquired IPTV set-top box technology through license
        agreements with Jinshilin Technologies Development Company Ltd. Jinshilin
        Techno
        also designs and sells products for Internet Television (IPTV), Stream Media
        Protocol Processing, and Broadcasting Software for IPTV-Set-Top Boxes. We
        expect
        future generation set-top boxes to support multi-protocol wireless connectivity
        with television, DVD players and other multi-media appliances, by integrating
        True Software RadioTM into Jinshilin Techno's IPTV-STB. In July 2006, we received
        final approval for the subsidiary from the People’s Republic of
        China.
 
 In-Stat,
        a provider of research, market analysis and forecasts, projects that China’s
        IPTV market will experience a gradual but solid increase from 2006 to 2010,
        with
        annual unit shipments of digital cable set-top boxes projected to grow to
        12
        million in 2010. We believe we are poised to take advantage of this projected
        demand. In September 2006, Jinshilin Techno entered into a three-year agreement
        of cooperation with Shanghai Forest Electronics Technology Co. Ltd., or Shanghai
        Forest. On November 20, 2006, Jinshilin Techno provided 60 set-top boxes
        to
        Shanghai Forest which were integrated into a demonstration network built
        by
        Shanghai Forest, together with Shanghai Alcatel Network Support System Company
        Inc., for the Television and Broadcast Bureau. As of December 15, 2006, the
        demonstration network had successfully completed all scheduled demonstrations
        and tests.
 
 **Asanté**  **Networks’
        Product Offerings**
 
 Asanté
        Networks’ solutions consist of the IntraCore® and FriendlyNET® product families,
        integrating voice, data, and video over wireless and wired networks with
        unified
        management and authentication. In April 2006, Asanté announced the release of
        its most advanced, state-of-the-art 2-chip switch solution, the IntraCore®
38480. The IntraCore® 38480 provides no frame loss and full-wire speed with
        minimized latency. Designed to be a space-saver in the rack and wiring closet,
        it can also eliminate cross switch traffic. With 96-gigabit switching fabric,
        the IntraCore 38480 supports full-wire speed on all ports. It has advanced
        traffic control based on L2-L7 data of incoming frames. Asanté Networks is also
        pursuing discussions with several network equipment manufacturers regarding
        the
        establishment of a strategic business relationship for the design, development,
        marketing and sales of equipment through Asanté Networks’ distribution
        channels.
 
 **Sales
        and Marketing**
 
 ***True
        Software Radio***  **TM**
 
 We
        are
        working to develop relationships with a number of industry leading OEMs and
        ODMs
        to design True Software RadioTM technology into next-generation components and
        products, in order to incorporate our proprietary technology into a large
        variety of consumer, industrial, and government applications. To that end,
        we have signed a number of nonbinding memoranda of understanding (MOUs) with,
        and provided demonstrations to, various Asian manufacturers and distributors
        of
        telecommunications equipment, including a preliminary nonbinding MOU with
        an
        Asian distributor of electronic components and consumer products, signed
        in
        December 2006. This MOU provides for both parties to collaborate in developing
        and marketing True Software RadioTM based reconfigurable wireless communications
        systems, which are fully software-programmable in both the base-band processing
        and the RF processing sections.
 
 The
        distributor expects to introduce us to customers who need to develop
        reconfigurable wireless communications systems. Both the distributor and
        we plan
        to collaborate on proposals for providing technical support and to design
        and
        develop customer products incorporating True Software RadioTM. The distributor
        expects to initially target the inclusion of the True Software RadioTM RF
        microchips in cellular phone components for a major ODM and for other potential
        customers yet to be identified. In addition, we and the distributor expect
        to
        provide support for a number of potential customers’ feasibility studies for
        multi-mode terminals and for automotive infotainment and communication
        applications, including telematics, navigation, GPS, and multimedia systems,
        audio systems, and rear seat entertainment, gaming, and radio
        tuners.
 
 We
        are
        also in very preliminary discussions directly with a major U.S.-based
        manufacturer in the radio manufacturing industry, an Asian-based manufacturer
        of
        high definition (HD) radios, and two developers of reconfigurable, multi-mode
        digital signal processing circuits. True Software RadioTM has been included in a
        number of proposals to the U.S. Defense Advanced Research Projects Agency
        (DARPA), and we continue to demonstrate our technology to major U.S. defense
        contractors.
 
 ***IPTV
        Set-top Boxes***
 
 Jinshilin
        Techno is cooperating with Shanghai Alcatel Network Support System Co., Inc.
        to
        jointly develop, produce and distribute IPTV set-top boxes. Alcatel advised
        us
        that it chose the Jinshilin Techno set-top box after evaluating many other
        companies possessing similar technologies because the Jinshilin Techno set-top
        box provided a good image and multiple functions at low cost. In addition,
        Alcatel noted that the set-top box can comply with various protocol standards.
        We understand that Alcatel expects to purchase the Jinshilin Techno set-top
        boxes, integrate them into Alcatel’s network and sell the set-top boxes to China
        Telecom, the largest broadband network service provider in China. We also
        understand that Alcatel plans to include Jinshilin’s set-top box in product
        sales to Europe and regions in Asia other than mainland China.
  3
 
 Jinshilin
        Techno is also cooperating with Shanghai Forest in the deployment of IPTV
        for
        in-home television service to two million rural residents of the Henan Province.
        Shanghai Forest is working on the project with the Television and Broadcast
        Bureau of the Henan Province. The project contemplates the initial deployment
        of
        100,000 set-top boxes by the end of July 2007, with a total of two million
        units
        to be provided by the end of 2009. Jinshilin Techno provided 60 set-top boxes
        to
        Shanghai Forests, which were integrated into a demonstration network built
        by
        Shanghai Forests, in cooperation with Alcatel Network Support System Company
        Inc., for the Television and Broadcast Bureau. As of December 15, 2006, the
        demonstration network had successfully completed all scheduled demonstrations
        and tests.
 
 **Manufacturing
        and Production**
 
 ***True
        Software Radio***
 
 We
        have
        established a business relationship with Jazz Semiconductor, an independent
        wafer foundry located in Newport Beach, California, to fabricate the True
        Software RadioTM microchips. Fabrication of the first engineering run of our
        microchips was completed in August 2006. We anticipate additional engineering
        runs prior to our first commercial production run, now expected in the first
        half of 2007. Jazz Semiconductor offers successive generations of its SiGe
        BiCMOS microchip fabrication process, which supports the features that
        facilitate our reconfigurable, frequency agile designs.
 
 In
        the
        fourth quarter of calendar 2006, we finalized the preliminary product datasheet
        that will serve as the baseline for our initial commercial production run
        of our
        True Software RadioTM wireless receiver and transmitter microchips and the
        completion of the microchips’ parametric characterization. The characterization
        process measured the function and performance parameters of the microchips
        as
        they operated continuously across multiple frequency bands.
 
 We
        have
        also entered into preliminary discussions with a large Taiwan-based
        semiconductor manufacturing company for the future production of our lower
        power
        microchip designs, using their CMOS microchip fabrication process.
 
 ***IPTV
        Set-top Boxes***
 
 In
        December 2006, Jinshilin Techno entered into an MOU with Changzhou Xingqiu
        Electronic Co., Ltd. (Xingqiu), a manufacturing company that concentrates
        on the
        design, sale and production of high-quality communication devices, high-volume
        electronics, and audio and video products. Xingqiu earned the ISO9001:2000
        International Accreditation for strict and effective quality assurance, and
        for
        products that comply with international authority safety standards, such
        as
        America's UL and European Union's CE. The MOU establishes the framework in
        which
        Xingqiu will fabricate Jinshilin Techno's IPTV set-top box products. Xingqiu
        will finance and manufacture Jinshilin Techno's IPTV set-top boxes in accordance
        with delivery requirements and project specifications provided by Jinshilin
        Techno's customers. We believe that Xingqiu possesses the expertise and capacity
        to deliver Jinshilin Techno's products in a timely and cost effective manner.
        Further, Jinshilin Techno plans to work with Xingqiu to co-develop, market,
        and
        sell successive generations of IPTV set-top boxes, including those that will
        integrate the True Software RadioTM technology.
 
 **Technology**
 
 Our
        True
        Software RadioTM technology is a semiconductor architecture that defines the
        electrical conductivity of microchips and how the electrical conductivity
        is
        controlled, so that radio signals are converted directly into digital data
        by
        the wireless receiver and are converted directly from digital data into radio
        signals by the wireless transmitter. We believe that direct conversion wireless
        technology will replace current conventional analog transceiver circuitry,
        providing fully software-controlled single-transceiver wireless devices that
        can
        operate across different networks and frequency bands, in multiple modes
        and
        with multiple wireless standards. True Software RadioTM microchips can replace
        the analog front end, intermediate frequency (I/F) processing, analog-to-digital
        conversion (ADC), and digital filtering sections of today’s conventional
        wireless transmitters and receivers. Because the technology simplifies design
        and reduces component costs, we believe that True Software RadioTM is an ideal
        platform for original equipment manufacturers (OEMs) and original design
        manufacturers (ODMs) to develop new wireless broadband, mobile data, cellular,
        and other next-generation wireless applications.
 
 **Intellectual
        Property**
 
 Under
        U.S. patent law, a “provisional patent application” is an application for patent
        filed in the U.S. Patent and Trademark Office, which will not mature into
        an
        issued patent unless a non-provisional application is filed within twelve
        months. A provisional patent application can establish an early effective
        filing
        date for subsequent non-provisional applications. The provisional filing
        also
        allows the term "Patent Pending" to be applied to the invention.
 
 From
        January through October 2006, we have filed both provisional and non-provisional
        patent applications with the U.S. Patent and Trademark Office,
        including:
 
 ·
              a
                  provisional patent application for the "Single Input, Single Output,
                  Multi-Band RF Front End." The invention makes it possible for a
                  single
                  radio frequency, or RF, receiver microchip to replace multiple-tuned
                  RF
                  front end transceivers, reducing both cost and power
                  consumption.
  4
 
 ·
              a
                  provisional patent application for a new method to reduce power
                  in
                  high-speed digital wireless devices. The "Low Power, Low Voltage,
                  Digitally Trim-able Active Back-termination LVDS driver" is a low
                  voltage
                  differential signaling (LVDS), low noise, low power, low amplitude
                  circuit
                  for high-speed (gigabits per second) data transmission. We anticipate
                  that
                  this invention can be used in the digital interface circuits of
                  many high
                  speed microchips, including digital wireless receivers and
                  transmitters.
 
 ·
              a
                  patent application for the "Adaptive Narrowband Interference Canceller
                  for
                  Broadband Systems." This invention cancels unwanted radio signals
                  that
                  interfere with wireless reception, is fully software programmable,
                  can be
                  adapted for use in many digital radio receivers, and claims the
                  benefit of
                  a provisional patent filing in September
                  2005.
 
 ·
              a
                  provisional patent application for a proprietary innovation that
                  dramatically reduces noise and distortion in high dynamic range
                  RF
                  amplifiers, enabling wireless devices to receive weak radio
                  signals.
 
 ·
              a
                  patent application for a circuit that automatically eliminates
                  quantization noise while adjusting to the correct frequency.
  We
        currently have additional applications in process and anticipate future patent
        filings to establish a full family of patents, comprising the basis for our
        overall True Software RadioTM technology.
 
 In
        addition to patent protection, we rely on the laws of trade secrets and of
        unfair competition to protect our proprietary rights. We attempt to protect
        our
        trade secrets and other proprietary information through confidentiality
        agreements with prospective strategic partners, customers and suppliers.
        We also
        require proprietary information and/or inventors’ assignment and non-disclosure
        agreements from all of our employees and consultants. Although we intend
        to
        protect our rights vigorously, there can be no assurance that all these measures
        will be successful.
 
 We
        believe that, because of the rapid pace of technological change in the wireless
        communications industry, patent and trade secret protections are extremely
        important - but they must also be supported by other dynamics such as expanding
        the knowledge, ability and experience of our personnel, new product
        introductions and continual product enhancements.
 
 **Competition**
 
 There
        are
        several companies that have successfully developed multiple-frequency front-end
        transceiver modules based upon integrating several analog circuits into a
        single
        integrated component. Certain companies have created integrated circuits
        with
        multiple radio transceivers that can work with multiple networks. Many of
        these
        companies have financial, technical, marketing, sales, manufacturing,
        distribution and other resources substantially greater than ours. However,
        the
        solutions offered by most of these companies are restricted to predefined
        frequencies and frequency bands and therefore are limited to specific protocols
        and standards. Further, if either the fixed frequency band(s) or fixed
        standard(s) changes, then a new hardware component has to be designed and
        installed, thus increasing the product and maintenance cost. This is similar
        in
        concept to designing a radio receiver that selects only two, three or four
        stations out of the full frequency band to listen to. By analogy, our True
        Software RadioTM microchips allow the radio to be tuned to any frequency in the
        band and in any frequency band, as determined by software programming that
        can
        be changed by a simple software upgrade or revision.
 
 Certain
        competitors are developing methods to combine some of the discrete analog
        components and to enable portions of the circuit architecture to be
        software-programmed for filtering specific diverse signals. While this
        technology may provide greater programmability, it is nonetheless based on
        conventional superheterodyne (analog) architecture and therefore not truly
        frequency agile and still not fully programmable.
 
 Another
        group of competitors are developing “Low-IF” and “Zero-IF” conversion
        technologies, to minimize or even eliminate intermediate frequency processing
        sections of the radio circuit. However, these competitors still use analog-based
        semiconductor architecture that is slower and less flexible than our True
        Software RadioTM microchip architecture. Because of the slower speed of the
        competitors’ microchips, these competitors are forced to use “undersampling”
methods to convert the RF signal from analog to digital. We believe that
        “undersampling” inherently limits the resolution that can be achieved in digital
        signal produced by our “oversampling” direct conversion method. In other words,
        we believe that True Software RadioTM produces cleaner, quieter radio signals, as
        required by the wireless industry.
 
 Another
        company is developing a superconductor microelectronic device for direct
        conversion of radio signals to digital, which may match or exceed the
        performance of the True Software RadioTM microchip. However, the method being
        developed requires a “compact cryocooler,” because the electronic components
        will have to be super-cooled to 4 degrees Kelvin to attain this level of
        performance. In contrast, True Software RadioTM requires no special environmental
        accommodations.
  We
        plan
        to compete on the basis of product features, quality, reliability, price,
        and
        dedicated customer support. We believe our technology provides a significant
        competitive advantage with respect to each of these factors.
 **Employees**
 
 As
          of
          September 30, 2006, the Company had 52 full-time employees and 3 independent
          contractors. We intend to recruit and hire qualified additional personnel
          as
          needed to execute our strategy. None of our current employees are represented
          by
          labor unions or are subject to collective bargaining agreements We believe
          that
          our relationship with our employees is excellent.
  5
 
 **RISK
        FACTORS**
 
 ***We
        have not yet generated any revenues from the sale of our core True Software
        RadioTM or IPTV Set-Top Box products and we may not generate any significant
        revenues from these products.***
 
 Our
        limited historical performance may make it difficult for you to evaluate
        the
        success of our business to date and to assess its future viability. We are
        an
        early stage development company whose business is focused on the wireless
        communications industry. We may not achieve our objectives or be able to
        successfully implement our strategy. We may never be able to successfully
        commercialize our products. Accordingly, we may never generate significant
        revenues from these products. As noted in our financial statements included
        in
        this annual report, our independent auditors have noted that there is
        substantial doubt regarding our ability to continue as a going concern. In
        addition, our early stage of development means that we have less insight
        into
        how market and technology trends may affect our business. The revenue and
        income
        potential of our business is unproven and the market we are addressing is
        rapidly evolving. You should consider our business and prospects in light
        of the
        risks, expenses and challenges that we will face as an early-stage company
        seeking to develop and manufacture new products in a growing and rapidly
        evolving market.
  ***We
        expect to continue to incur losses and experience negative cash
        flows.***  **
 
 We
        expect
        to have significant operating losses and to record significant net cash outflow
        in the near term. Our business has not generated sufficient cash flow to
        fund
        the commercialization of our proprietary technology and our planned operations
        without resorting to external sources of capital. We anticipate that finishing
        product commercialization and establishing market share for our True Software
        RadioTM technology will require substantial capital and other expenditures. Since
        our inception, we have incurred net losses in each year of our operations.
        As a
        result of ongoing operating losses, we had an accumulated deficit of
        approximately $17.8 million as of September 30, 2006. We expect to incur
        substantial losses for the foreseeable future, and may never recognize
        significant revenues or become profitable. Even if we do achieve profitability,
        we may be unable to sustain or increase our profitability in the future,
        which
        could materially decrease the market value of our common stock. We expect
        to
        continue to incur significant capital expenditures and anticipate that our
        expenses will increase substantially in the foreseeable future as we seek
        to
        continue to research and develop our products, attempt to implement our business
        strategy, implement internal systems and infrastructure in conjunction with
        our
        growth, and hire additional personnel. We do not know whether we will ever
        recognize significant revenues and, if we do, whether revenues will grow
        rapidly
        enough to absorb these expenses.
 
 ***We
                  will need additional capital to fund our operations and finance
                  our
                  growth, and we may not be able to obtain it on terms acceptable
                  to us or
                  at all.***
 
 While
        we
        believe that our existing assets, anticipated debt and equity financing,
        and
        expected revenue growth should be sufficient to fund our operations in fiscal
        year 2007, it is quite likely that we will need additional capital to fund
        our
        operations and finance our growth. If we expand more rapidly than currently
        anticipated, if our working capital needs exceed our current expectations,
        or if
        we make acquisitions, we will need to raise additional capital from equity
        and/or debt sources. If we cannot obtain financing on terms acceptable to
        us or
        at all, we may be forced to curtail our planned business expansion and may
        be
        unable to fund our ongoing operations.
 
 ***Our
                  success depends on the acceptance and use of our True Software
                  RadioTM********technology.***
 
 Our
        success will depend, to a large extent, on the acceptance of our True Software
        RadioTM technology in a market that is only beginning to define itself. Our
        strategy is currently to consummate relationships with strategic partners
        that
        can facilitate our entry into a variety of markets in North America and Asia.
        Eventual success will also depend on our ability to deliver reliable products
        and services to interested wireless products/service providers on time and
        within required performance parameters. There can be no assurances that any
        market for our products and services will ever develop.
 
 ***Adoption
                  of a universal wireless telecommunications transmissions protocol
                  may
                  significantly diminish the need for our products and
                  technology.***
  If
        a
        universal mobile telecommunications protocol, such as UMTS or W-CDMA, is
        adopted
        internationally for cellular communications, the industry may no longer need
        the
        capabilities of technologies such as True Software RadioTM to address competing
        wireless protocols. While True Software RadioTM would continue to provide
        frequency agility and a more efficient utilization of bandwidth, the demand
        for
        our technology may be significantly diminished, impacting anticipated sales
        and
        revenues.
 
 ***Jinshilin
        Techno is conducting significant operations in China, and for at least an
        interim period, the majority of our consolidated revenues may be derived
        from
        these operations.***
  Our
        subsidiary, Jinshilin Techno, based in Shanghai, China, is in the process
        of
        seeking to develop, produce and distribute IPTV set-top boxes for the Chinese
        market. Jinshilin Techno has entered into commercial arrangements with third
        parties based in China. In the short term, we expect that these activities
        will
        represent the source of the majority of our revenues other than from the
        operations of Asanté ’ Networks.
  6
  Although
        the Chinese government owns the majority of productive assets in China, since
        1979 the government has continued to implement economic reform measures that
        emphasize decentralization and encourage private economic activity. Many
        experts
        believe that China will continue to open its economy and increase enforcement
        of
        intellectual property rights; however, the government’s economic reform measures
        may be inconsistent or ineffectual, and there are no assurances
        that:
 
 ·
              we
                  will be able to capitalize on the economic
                  reforms;
 
 ·
              the
                  Chinese government will continue its pursuit of economic reform
                  policies;
 
 ·
              the
                  economic policies, even if pursued, will be
                  successful;
 
 ·
              economic
                  policies will not be significantly altered from time to time;
                  and
 
 ·
              business
                  operations in China will not become subject to the risk of
                  nationalization.
 
 Negative
        impact upon economic reform policies or nationalization could result in a
        total
        investment loss in our subsidiary.
 
 Further,
        because many reforms are unprecedented or experimental, they are expected
        to be
        refined and improved. Other political, economic and social factors, such
        as
        political changes, changes in the rates of economic growth, unemployment
        or
        inflation, or in the disparities in per capita wealth between regions within
        China, could lead to further readjustment of the reform measures. This refining
        and readjustment process may negatively affect our operations.
 
 China's
        economy has a high growth rate, has experienced high rates of inflation,
        and the
        rate of inflation may continue to increase. In response, the Chinese government
        has taken measures to restrain its expansive economy. These measures have
        included restrictions on the availability of domestic credit (including credit
        available from manufacturers), reducing the purchasing capability of certain
        customers, and limited re-centralization of the approval process for purchases
        of some foreign products. These measures alone may not succeed in slowing
        down
        the economy’s perceived excessive expansion or in controlling inflation, and may
        result in severe disturbances in the Chinese economy. The Chinese government
        may
        adopt additional measures to further combat inflation, including the
        establishment of freezes or restraints on certain projects or
        markets.
 
 To
        date,
        reforms to China's economic system have not adversely impacted our operations
        and are not expected to adversely impact our operations in the foreseeable
        future. However, there can be no assurance that the reforms to China's economic
        system will continue or that we will not be adversely affected by changes
        in
        China's political, economic and social conditions and by changes in policies
        of
        the Chinese government, such as changes in laws and regulations, measures
        which
        may be introduced to control inflation, changes in the rate or method of
        taxation, imposition of additional restrictions on currency conversion and
        remittance abroad, and reduction in tariff protection and other import
        restrictions.
 
 ***Because
        we are conducting significant operations in China, for an interim period
        the
        majority of our consolidated revenues may be in Chinese renminbi (RMB), with
        a
        comparatively lesser amount in U.S. dollars. Thus, our revenues and operating
        results may be impacted by exchange rate fluctuations in the RMB against
        the
        U.S. dollar.***
 
 Until
        July 2005, the RMB was tied to the dollar. At that time, the People’s Bank of
        China, the central bank, adopted a new exchange-rate regime for the RMB,
        allowing a managed float.
 
 In
        September 2006, the rate of appreciation of the RMB accelerated significantly
        from its previous pace. The People’s Bank of China is reported to be in favor of
        a faster rate of appreciation, and therefore the rate of appreciation may
        continue to be relatively rapid. Exchange rate volatility may rise and the
        current trading bands against the U.S. dollar may be widened, also leading
        to a
        faster rate of appreciation. A higher-value RMB may mean that we would report
        lower U.S. dollars for the revenue anticipated.
 
 We
        have
        not tried to reduce our exposure to exchange rate fluctuations by using hedging
        transactions. However, we may choose to do so in the future. The availability
        and effectiveness of any hedging transactions may be limited and we may not
        be
        able to successfully hedge our exchange rate risks. Accordingly, we may
        experience economic losses and negative impacts on future earnings and equity
        as
        a result of these foreign exchange rate fluctuations.
  ***One
                  or more competitors may develop products and/or gain market acceptance
                  before we do.***
 
 The
        global wireless telecommunications market is intensely competitive and is
        subject to rapid technological change, evolving industry standards and
        regulatory developments. Our potential competitors include many large domestic
        and international companies that have substantially greater financial,
        manufacturing, technological, marketing, distribution and other resources,
        installed customer bases, and long-standing relationships with customers.
        If we
        fail to execute our strategy in a timely or effective manner, our competitors
        may be able to seize the marketing opportunities we have identified. Our
        business strategy is complex and requires that we successfully and
        simultaneously complete many tasks, including but not limited to the successful
        completion of our technology commercialization effort, continuing to establish
        strategic alliances with wireless telecommunications providers, the introduction
        of our new True Software RadioTM technology and products to the market,
        establishment of quality fabricators to support sales of the products, delivery
        of our products and services on-time and within required specifications,
        and
        continued maintenance, upgrade and improvement of our technology. There can
        be
        no assurance that we will be able to successfully execute all elements of
        our
        strategy.
  7
 
 ***The
                  wireless telecommunications infrastructure market may grow more
                  slowly
                  than we expect or may experience a downturn, and it is possible
                  that our
                  True Software RadioTM and IPTV Set Top Box products may never achieve
                  market acceptance.***
  Growth
        in
        demand for and acceptance of our new products is highly uncertain. We believe
        that many of our potential customers may not be fully aware of the benefits
        of
        True Software RadioTM or our IPTV Set Top Box technology or may choose to acquire
        other products or services. It is possible that our True Software RadioTM and our
        IPTV Set Top Box products and services may never achieve market acceptance.
        If
        the market for our products does not develop or grows more slowly than we
        currently anticipate, our business, financial condition, and operating results
        would be materially adversely affected.
  ***We
        rely substantially on our intellectual property in developing our True Software
        Radio*** ***TM*** ***products. Third parties have filed a lawsuit challenging our acquisition
        of and
        rights to the intellectual property. An unfavorable outcome could prevent
        us
        from fully utilizing our technology.***
  On
        December 30, 2005, a lawsuit, which named the Company as an additional
        defendant, was filed in the Superior Court, State of California, for the
        County
        of Los Angeles (Case No. BC345311). The plaintiffs were investors in Fiber
        Optic
        Techno Inc, a company which sold certain assets to TCI Nevada in May 2003,
        including a pending patent application and two expired provisional patent
        applications relating to True Software RadioTM technology. The plaintiffs
        allege
        that the sale was for less than fair consideration and constitutes a fraudulent
        conveyance by Fiber Optic Techno. They seek to set aside the transaction
        and
        assert claims for compensatory and punitive damages. At the time we purchased
        the assets, the pending patent application was in contention at the U.S.
        Patent
        and Trademark Office and also was the subject of state court litigation brought
        by different plaintiffs. We litigated these intellectual property issues
        and
        eventually obtained a dismissal. The U.S. Patent and Trademark Office
        subsequently issued U.S. Patent No. 6,748,025 to the Company in June 2004.
        The
        parties to the lawsuit have engaged in substantial written discovery and
        limited
        deposition discovery. Mediation was unsuccessful, and we are contesting the
        case
        vigorously. Our demurrer attacking the sufficiency of the plaintiffs' First
        Amended Complaint is expected to be heard in February 2007, The litigation
        has
        been expensive and time-consuming and may divert resources from our core
        business. If the litigation results in an unfavorable outcome and we are
        unable
        to license the technology or to
 develop
        an alternative technology, we may be unable to fully utilize our technology,
        and
        the results of our operations could therefore be negatively
        impacted.
  ***We
                  may be unable to protect our intellectual property adequately,
                  which could
                  cause us to lose any competitive advantage afforded by our intellectual
                  property.***
 
 Our
        ability to compete effectively against competing technologies will depend,
        in
        part, on our ability to protect our current and future proprietary technology,
        product designs and manufacturing processes through a combination of patent,
        copyright, trademark, trade secret and unfair competition laws. We may not
        be
        able to adequately protect our intellectual property and may need to defend
        our
        intellectual property against infringement claims, either of which could
        result
        in the loss of our competitive advantage and materially harm our business
        and
        profitability.
 
 Third
        parties may claim that we are infringing their intellectual property rights.
        Any
        claims made against us regarding patents or other intellectual property rights
        could be expensive and time consuming to resolve or defend, would divert
        our
        management and key personnel from our business operations and may require
        us to
        modify or cease marketing our products or services, develop new technologies
        or
        products/services, acquire licenses to proprietary rights that are the subject
        of an infringement claim or refund to our customers all or a portion of the
        amounts they paid for infringing products. If such claims are asserted, we
        cannot assure you that we would prevail or be able to acquire any necessary
        licenses on acceptable terms, if at all. In addition, we may be requested
        to
        defend and indemnify certain of our customers and resellers against claims
        that
        our products infringe the proprietary rights of others. We may also be subject
        to potentially significant damages or injunctions against the sale of certain
        products/services or use of certain technologies.
 
 Although
        we believe that our intellectual property rights are sufficient to allow
        us to
        develop our technology and to sell our planned products/services without
        violating the valid proprietary rights of others, we cannot assure you that
        our
        technologies or products/services do not infringe the proprietary rights
        of
        third parties or that third parties will not initiate infringement actions
        against us.
  ***We
                  plan to expand rapidly and managing our growth may be
                  difficult.*****
 
 Our
        business may grow rapidly both geographically and in terms of the number
        of
        products and services we offer. We cannot be sure that we will successfully
        manage such growth, if it occurs. If sufficient working capital cannot is
        not
        available, or if we are not successful in raising additional capital to execute
        our business strategy and grow the depth and breadth of our wireless products
        and services, we may be forced to discontinue our operations.
 
 ***Future
                  expansion of our operations internationally will require significant
                  management attention and financial resources, and our efforts to
                  expand
                  internationally may not
                  succeed.***
 
 We
        plan
        to attempt to sell our products in China and in other countries across the
        globe, but we have limited direct experience marketing and distributing our
        products internationally. To successfully expand our business internationally,
        we must expand our international operations, recruit international sales
        and
        support personnel and develop international distribution channels. This
        expansion will require significant management attention and financial resources
        and may not be successful. Our success in growing our business internationally
        may also depend on our ability to comply with foreign government rules and
        regulations and U.S. export and import laws with which we have limited
        familiarity and experience.
  8
 
 ***The
                  failure to attract and retain key personnel could adversely affect
                  our
                  business.***
 
 Our
        ability to implement our business strategy and our future success depends
        largely on the continued services of our current employees, including Antonio
        E.
        Turgeon, our Chief Executive Officer, who have critical industry or customer
        experience and relations. Some of our key personnel are not bound by an
        employment agreement. The loss of the technical knowledge and management
        and
        industry expertise of any of these key personnel could have a material adverse
        impact on our future prospects. In addition, members of our current management
        team believe that once we are sufficiently capitalized we will need to recruit
        new executive managers to help us execute our business strategy and new
        employees to help manage our planned growth. Competition for executive and
        other
        skilled personnel in the wireless communications industry is intense, and
        we may
        not be successful in attracting and retaining such personnel. Our business
        could
        suffer if we were unable to attract and retain additional highly skilled
        personnel or if we were to lose any key personnel and not be able to find
        appropriate replacements in a timely manner.
  9
 
 ***Our
                  management team may not be able to successfully implement our business
                  strategies.***
 
 If
        we are
        able to successfully execute our business strategies, we will likely experience
        rapid growth in the scope of our operations and the number of our employees,
        which is likely to place a significant strain on our senior management team
        and
        other resources. In addition, we may encounter difficulties in effectively
        managing the budgeting , forecasting and other process control issues presented
        by this rapid growth. We may seek to augment or replace members of our
        management team or we may lose key members of our management team, and we
        may
        not be able to attract new management talent with sufficient skill and
        experience.
 
 ***We
                  are in default under the terms of our outstanding 7% secured convertible
                  debentures.***
  On
        November 17, 2004, we issued 7% secured convertible debentures in the aggregate
        principal amount of $3,775,000. On November 17, 2006, the principal amounts,
        together with accrued and unpaid interest, on the then outstanding debentures
        became due and payable. As of this date, debentures in the aggregate principal
        of $250,000 were outstanding. The holders of debentures in the aggregate
        principal amount of $3,525,000 had previously either converted their debentures
        into shares of our common stock or exchanged their debentures for subordinated
        promissory notes that are scheduled to mature beginning in May 2007 and
        continuing through December 2007. We have been unable to pay the amounts
        owing
        with respect to the outstanding debentures as of the maturity date. As such,
        we
        are in default under the terms of our outstanding debentures and the holders
        of
        such debentures have the right to exercise their rights and remedies provided
        under the debentures, the related securities purchase agreement, the related
        security agreement or any document or instrument delivered in connection
        with or
        pursuant to the debentures. In that regard, the holders of the outstanding
        debentures (acting in concert) have the right to take possession of all of
        our
        assets and operate our business, and to seek to enforce the payment of the
        amounts due and payable. If the debenture holders exercise any of their rights
        and remedies, we may be required, among other things, to repay the amounts
        due,
        which would leave us with little or no working capital in our business. This
        would have a material adverse effect on our continuing operations.
 
 ***We
                  have other outstanding debt obligations secured by our assets and
                  a
                  default of those obligations could adversely affect our financial
                  and
                  operating results.***
 
 Effective
        May 30, 2006, we entered into a series of secured promissory notes in an
        aggregate amount of $8,359,520, subordinated to our existing 7% secured
        convertible debentures and certain accounts receivable facilities. These
        notes
        will mature on the date that is the earlier of (i) one year from the date
        of
        issuance of each secured subordinated promissory note, (ii) the date on which
        we
        consummate the closing of our next equity financing or series of equity
        financings which in the aggregate total is no less than $7,000,000 or (iii)
        the
        sale of the Company or sale of substantially all of the Company's assets
        any
        time prior to the maturity date. The holders may declare the notes immediately
        due and payable upon the occurrence of any of the following events of default:
        (i) our failure to pay the principal when due, (ii) our material breach of
        any
        of the covenants or conditions made in the note purchase agreement or the
        other
        transaction documents, (iii) the Company's filing of a voluntary bankruptcy
        proceeding, or (iv) the filing of an involuntary bankruptcy petition against
        the
        Company that is not dismissed or discharged within 180 days. If any of these
        events of default were to occur and the note holders exercise any of their
        rights and remedies, we could be required, among other things, to repay the
        amounts due, which would leave us with little or no working capital in our
        business. This would have a material adverse effect on our continuing
        operations.
 
 ***The
                  large number of our shares eligible for public sale could cause
                  our stock
                  price to decline.***
 
 The
        market price of our common stock could decline as a result of the resale
        of the
        shares of common stock issuable upon conversion of the debentures and the
        exercise of the warrants issued in our November 2004 private placement or
        the
        perception that these sales could occur. These sales also might make it more
        difficult for us to sell equity securities in the future at a time and price
        that we deem appropriate.
 
 ***The
                  issuance of (i) the shares to be issued upon conversion of
                  our******7%
                  secured convertible debentures and upon the conversion of convertible
                  preferred stock and (ii) the shares to be issued upon the exercise
                  of the
                  warrants issued in connection with the debentures, the secured
                  subordinated promissory notes, and the unsecured promissory notes
                  now
                  payable on demand will all cause the current holders of our common
                  stock
                  to suffer substantial dilution of their interests in
                  us.***
  As
        of
        September 30, 2006, the number of shares of our common stock issuable upon
        conversion of our 7% secured convertible debentures and our convertible
        preferred stock amounted to an aggregate of 35,503,000, of which the conversion
        of preferred stock into 34,703,000 shares common stock is subject to substantial
        restrictions as set forth in the applicable certificates of designation of
        the
        various series of preferred stock. The number of shares of our common stock
        issuable upon the exercise of warrants issued in connection with our debentures,
        our secured subordinated promissory notes and our unsecured promissory notes
        amounted to an aggregate of 16,635,723, of which 15,862,603 shares are subject
        to Rule 144 restrictions and 773,120 shares would be unrestricted. The weighted
        average exercise price of these warrants is $1.15, and the average remaining
        contractual life of these warrants is 3.8 years. We are obligated to file
        and
        have declared effective by the SEC a registration statement registering the
        resale of 3,560,000 of these shares. The resale of these shares will increase
        the number of our publicly traded shares, which could depress the market
        price
        of our common stock, and thereby affect the ability of our stockholders to
        realize the current trading price of our common stock. Moreover, the mere
        prospect of the resale of these shares could depress the market price for
        our
        common stock.
 
 10
  ***Our
        stock price can be extremely volatile, and there is no assurance there will
        be
        an active market for our stock.***  **
 
 Our
        common stock is traded on the OTC Bulletin Board. There can be no assurance
        of
        an active public market for the common stock, or that the market price for
        the
        common stock will not decline below its current price. Such price may be
        influenced by many factors, including, but not limited to, investor perception
        of us and our industry and general economic and market conditions. The trading
        price of the common stock could be subject to wide fluctuations in response
        to
        announcements of our business developments or our competitors, quarterly
        variations in operating results, and other events or factors. In addition,
        stock
        markets have experienced extreme price volatility in recent years. This
        volatility has had a substantial effect on the market prices of companies,
        at
        times for reasons unrelated to their operating performance. Such broad market
        fluctuations may adversely affect the price of our common stock. In addition,
        companies that have experienced volatility in the market price of their stock
        have been the subject of securities class action litigation. We may be involved
        in securities class action litigation in the future. This litigation often
        results in substantial costs and a diversion of management’s attention and
        resources.
  ***Trading
                  on the OTC Bulletin Board may be sporadic because it is not a stock
                  exchange, and stockholders may have difficulty selling our
                  shares.***
 
 Our
        common stock is quoted on the OTC Bulletin Board. Trading in stock quoted
        on the
        OTC Bulletin Board is often thin and characterized by wide fluctuations in
        trading prices, due to many factors that may have little to do with an OTC
        Bulletin Board company’s operations or business prospects. Moreover, the OTC
        Bulletin Board is not a stock exchange, and trading of securities on the
        OTC
        Bulletin Board is often more sporadic than the trading of securities listed
        on
        the Nasdaq. Accordingly, you may have difficulty reselling any of the shares
        you
        purchase from the selling security holders.
 
 ***If
                  we fail to remain current in the filing with the SEC of our periodic
                  reports under the Securities Exchange Act of 1934, our common stock
                  could
                  cease to be eligible to trade on OTC Bulletin Board, which would
                  limit the
                  ability of broker-dealers to sell shares of our common stock and
                  the
                  ability of stockholders to sell our shares in the secondary
                  market.***
 
 Companies
        trading on the OTC Bulletin Board, such as us, must be reporting issuers
        under
        Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange
        Act”) , and must be current in their reports under Section 13 of the Exchange
        Act, in order to maintain price quotation privileges on the OTC Bulletin
        Board.
        If we fail to remain current on our reporting requirements, shares of our
        common
        stock could be removed from the OTC Bulletin Board. As a result, the market
        liquidity for our securities could be severely adversely affected by limiting
        the ability of broker-dealers to sell our securities and the ability of
        stockholders to sell their securities in the secondary market.
 
 ***Our
                  common stock is subject to the “penny stock” rules of the SEC and the
                  trading market in shares of our common stock is limited, which
                  makes
                  transactions in our common stock cumbersome and may reduce the
                  value of an
                  investment in our common
                  stock.***
 
 Rule
        15g-9 under the Exchange Act defines “penny stock,” for the purposes relevant to
        us, as any equity security that has a market price of less than $5.00 per
        share
        or with an exercise price of less than $5.00 per share, subject to certain
        exceptions. For any transaction involving a penny stock, unless exempt, the
        rules require that a broker or dealer approve a person’s account for
        transactions in penny stocks and the broker or dealer receive from the investor
        a written agreement to the transaction, setting forth the identity and quantity
        of the penny stock to be purchased. In order to approve a person’s account for
        transactions in penny stocks, the broker or dealer must obtain financial
        information and investment experience objectives of the person and make a
        reasonable determination that the transactions in penny stocks are suitable
        for
        that person and the person has sufficient knowledge and experience in financial
        matters to be capable of evaluating the risks of transactions in penny stocks.
        The broker or dealer must also deliver, prior to any transaction in a penny
        stock, a disclosure schedule prescribed by the Commission relating to the
        penny
        stock market, which, in highlight form sets forth the basis on which the
        broker
        or dealer made the suitability determination and that the broker or dealer
        received a signed, written agreement from the investor prior to the transaction.
        Generally, brokers may be less willing to execute transactions in securities
        subject to the “penny stock” rules. This may make it more difficult for
        investors to dispose of our common stock and cause a decline in the market
        value
        of our stock. Disclosure also has to be made about the risks of investing
        in
        penny stocks in both public offerings and in secondary trading and about
        the
        commissions payable to both the broker-dealer and the registered representative,
        current quotations for the securities and the rights and remedies available
        to
        an investor in cases of fraud in penny stock transactions. Finally, monthly
        statements have to be sent disclosing recent price information for the penny
        stock held in the account and information on the limited market in penny
        stocks.
 
 ***We
                  do not expect to pay dividends on our common
                  stock.***
 
 We
        have
        not declared dividends on our common stock since our incorporation and we
        have
        no present intention of paying dividends on our common stock. We are also
        restricted by the terms of certain debt and other agreements as to the
        declaration of dividends.
  **ITEM
        2. DESCRIPTION OF PROPERTY**
 
 Our
        executive offices are located in 3,200 square feet of office space located
        at
        14945 Ventura Blvd, Suite 300, Sherman Oaks, California. This space is held
        under a one year and four and one half (4.5) months lease that commenced
        on
        August 1, 2006, and provides for monthly rental payments of $8,750.00. These
        facilities house our executive offices as well as certain administrative
        operations. Management believes that our present offices are adequate to
        meet
        our immediate current needs.
  11
 
 One
        of
        our engineering offices is located in 7,410 square feet of office space located
        at 6060 Sepulveda Blvd, Suite 202, Van Nuys, California. This space is held
        under a three-year lease that commenced on March 1, 2005, and provides for
        monthly rental payments of $13,543. These facilities house our engineering
        offices as well as certain product development operations. Additional
        engineering offices are located in 1,202 square feet of office space located
        at
        2182 DuPont Dr., Suites #13 & 15, Irvine, California. This space is held
        under a month-to-month term that commenced on August 1, 2006, and ends upon
        thirty days (30) days written notice to terminate said lease. This lease
        provides for monthly rental payments of $2,283.80. These facilities house
        additional engineering offices as well as certain product development
        operations. Management believes that our present engineering offices are
        adequate to meet our immediate current needs.
  Asanté
        Networks Inc., our subsidiary, leases approximately 7,000 square feet of
        office
        space in San Jose, Ca. This space is held pursuant to a twenty five (25)
        month
        lease that commenced on November 1, 2006 and provides for monthly rental
        payments of $7,591.23. Asanté uses this facility as executive offices as well as
        sales and administrative offices.
 
 Techno
        (Hong Kong) Limited, our subsidiary, leases approximately 846 square feet
        of
        office space in Hong Kong at a monthly rent of US $1,604 pursuant to a three
        year lease that commenced in August 2005. We use this facility for product
        development operations as well as administrative offices.
 
 Jinshilin
        Techno Ltd., another subsidiary, leases approximately 4,309 square feet of
        office space in Shanghai, China at a monthly rent of US $3,729 pursuant to
        a two
        year lease that commenced in July 2006. These facilities house our executive
        offices as well as certain administrative operations. Management believes
        that
        our present offices are adequate to meet our immediate current needs.
  **ITEM
        3. LEGAL PROCEEDINGS**
 
 We
        are
        subject to legal proceedings from time to time in the ordinary course of
        our
        business. As of September 30, 2006, we were not aware of any pending or
        threatened legal proceedings that could, in management’s opinion, have a
        material adverse impact on operations, assets or financial
        condition.
 
 On
        December 30, 2005, a lawsuit, which named the Company as an additional
        defendant, was filed in the Superior Court, State of California, for the
        County
        of Los Angeles (Case No. BC345311) for nonpayment of promissory notes issued
        to
        the plaintiffs by the primary defendant, Fiber Optic Techno, Inc. (formerly
        TechnoConcepts Inc.), a California corporation, which sold some of its
        assets to the Company in May 2003 for a fair consideration. The plaintiffs
        seek
        to set aside the transaction, as a fraudulent transfer, and assert claims
        for
        compensatory and punitive damages. The assets purchased by the Company included
        all rights to the TechnoConcepts trademark and to the then-pending patent
        application for the Direct Conversion Delta Sigma Receiver. At the time the
        assets were purchased by the Company, the patent application was in contention
        at the U.S. Patent and Trademark Office and also was the subject of State
        Court
        litigation brought by different plaintiffs, which litigation has since been
        dismissed. The U.S. Patent and Trademark Office issued U.S. Patent No. 6,748,025
        to the Company for the Direct Conversion Delta Sigma Receiver in June 2004.
        On
        or about April 13, 2006, the State Court action (Case No. BC345311) was removed
        to the United States Bankruptcy Court, Central District of California (BK
        No. SV
        06-10520-MT), by petition of the plaintiffs. On June 14, 2006, on motion
        made by
        the Company, the Bankruptcy Court remanded the case back to the State Court.
        The
        parties have engaged in substantial written discovery and limited deposition
        discovery. A mediation was unsuccessful, and the Company has instructed its
        attorneys to contest the case vigorously. The Company’s demurrer attacking the
        sufficiency of plaintiffs’ First Amended Complaint is expected to be heard in
        February 2007.
 
 On
        December 19, 2006, a lawsuit was filed in the Superior Court, State of
        California, for the County of Sacramento (Case No. AS05420) against Asanté
Technologies, Inc., Asanté Acquisition Corporation, and the Company for
        nonpayment of legal fees incurred by Asanté Technologies prior to and in
        connection with the acquisition of that company’s assets and business by
        TechnoConcepts. Judgment is sought in the amount of $98,069 plus attorneys’ fees
        and costs. The Company intends to defend against this lawsuit and to dispute
        the
        amount of fees owed.
 
 There
        can
        be no assurance that the ultimate resolution of these matters will not have
        a
        material adverse effect on our business or results of operations.
 
 **ITEM
        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS**
 
 On
        May
        18, 2006, by written consent of a majority of the holders of the outstanding
        shares of common stock and equivalents entitled to vote, the Company’s articles
        of incorporation were amended to increase the number of authorized shares
        to
        100,000,000 and the number of preferred shares to 10,000,000.
  12
 
 **PART
        II**
 
 **ITEM
        5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS**
 
 **Market
        Information**
 
 Our
        common stock commenced trading in the over-the-counter market on December
        23,
        2003, and prices for the common stock were quoted on the OTC Electronic Bulletin
        Board (“OTCBB”) under the symbol “TCPT.” No trading took place during the fiscal
        year ended September 30, 2003.
 
 Prior
        to
        the merger of Technology Consulting Partners Inc. and TechnoConcepts Inc.,
        a
        Nevada corporation, in February 2004, there was no established trading market
        in
        our common stock and trading therein was sporadic.
 
 In
        February 2004, we changed our name to “TechnoConcepts, Inc.” and the trading
        symbol of our common stock was changed to “TCPS.”
 
 The
        following table sets forth the high and low bid prices of our common stock
        in
        the over-the-counter market for the periods indicated. The bid prices represent
        prices between dealers, and do not include retail markups, markdowns or
        commissions, and may not represent actual transactions.
 
 **QUARTER
                  ENDED**
              
              **HIGH
                  BID**
              
              **LOW
                  BID**December
                  31, 2004
              
              $
              4.90
              
              $
              3.25March
                  31, 2005
              
              $
              5.55
              
              $
              3.50June
                  30, 2005
              
              $
              5.00
              
              $
              3.56September
                  30, 2005
              
              $
              4.59
              
              $
              3.05December
                  31, 2005
              
              $
              3.65
              
              $
              1.70March
                  31, 2006
              
              $
              2.93
              
              $
              1.70June
                  30, 2006
              
              $
              2.50
              
              $
              1.70September
                  30, 2006
              
              $
              2.01
              
              $
              1.23
 
 As
        of
        January 13, 2007, there were approximately 975 holders of record of our common
        stock.
 
 **Dividends**
 
 We
        have
        not paid any cash dividends on our common stock since inception and presently
        anticipate that all earnings, if any, will be retained for development of
        our
        business and that no dividends on our common stock will be declared in the
        foreseeable future. Any future dividends will be subject to the discretion
        of
        our Board of Directors and will depend upon, among other things, future
        earnings, operating and financial condition, capital requirements, general
        business conditions and other pertinent facts. Therefore, there can be no
        assurance that any dividends on our common stock will be paid in the
        future.
 
 **Recent
        Sales of Unregistered Securities**
 
 *Convertible
        Notes/Debentures*
 
 Initial
        and Subsequent Notes
 
 In
        November and December 2003, we entered into various unsecured convertible
        note
        agreements with private investors for the receipt of an aggregate of $333,675,
        in consideration for our issuance of promissory notes (the “Initial Notes”).
        These notes carried an interest rate of between 8% and 11% per annum, with
        all
        interest and principal due in April 2004. At the time of maturity, the notes
        were converted into 765,715 shares of our common stock.
 
 In
        January and February 2004, we entered into various unsecured convertible
        note
        agreements with private investors for the receipt of an aggregate of $905,000,
        in consideration for our issuance of promissory notes (the “Subsequent Notes”
and together with the Initial Notes, the “Notes”). In November 2004, we issued
        additional Subsequent Notes in an aggregate amount of $200,000. The Subsequent
        Notes carried an interest rate of 10% per annum payable quarterly in cash
        or
        stock, with all interest and principal due on January 31, 2005. The notes
        were
        convertible into shares of our common stock at any time after June 30, 2004.
        All
        of the Subsequent Notes have been converted into 694,571 shares of our common
        stock.
  13
 
 7%
        Secured Convertible Debentures and Warrants
 
 On
        November 17, 2004, we entered into a securities purchase agreement, a
        registration rights agreement, and a security agreement with certain
        institutional investors. Under the purchase agreement, we sold 7% secured
        convertible debentures in the aggregate principal amount of $3,775,000, warrants
        exercisable for a total of 608,000 shares of our common stock and shares
        of our
        Series B preferred stock (described below). One half of such warrants were
        exercisable at $3.50 per share and one half of such warrants were exercisable
        at
        $4.00 per share. Due to a subsequent financing which triggered an anti-dilution
        adjustment, the number of shares of our common stock for which the warrants
        can
        be exercised increased to 3,060,000 and the exercise price was adjusted to
        $1.00. The gross proceeds from the offering of the 7% secured convertible
        debentures, the warrants and the shares of Series B preferred stock were
        approximately $7,013,675 in cash and other consideration. Net proceeds to
        the
        Company from this transaction were approximately $3,442,000, after the payment
        of commissions and expenses. In connection with this transaction, we paid
        commissions to Duncan Capital, LLC, as placement agent, in the approximate
        amount of $332,550 and also issued warrants exercisable for 120,800 shares
        of
        our common stock at $2.50 per share, 24,160 shares at $3.50 per share and
        24,160
        shares at $4.00 per share to Duncan Capital.
  Under
        the
        terms of the agreements relating to the issuance and sale of our 7% secured
        convertible debentures, the debentures were convertible into shares of our
        common stock at $2.50 per share. Interest was due quarterly on the last day
        of
        each calendar quarter and, at our discretion, could be paid in cash or shares
        of
        our common stock assuming certain conditions were satisfied (including, that
        the
        shares of our common stock issuable upon conversion of the debentures were
        registered for resale to the public with the Securities and Exchange
        Commission). On the first day of each month commencing on December 1, 2005,
        the
        Company was required to redeem one-twelfth of the original principal amount
        of
        the 7% secured convertible debentures.
 
 The
        7%
        secured convertible debentures were due and payable on November 17, 2006.
        During
        fiscal 2006, certain debenture holders notified us that they were exercising
        their conversion right, and as a result, debentures in the aggregate principal
        amount of $1,275,000 were converted into 510,000 shares of our common stock.
        Also during fiscal 2006, certain debenture holders notified us that they
        were
        willing to exchange their debentures for secured subordinated promissory
        notes
        (described below) and, as a result, debentures in the aggregate principal
        amount
        of $1,250,000 were exchanged for our secured subordinated promissory notes.
        Subsequent to September 30, 2006, additional debenture holders notified us
        that
        they were willing to exchange their debentures for our secured subordinated
        promissory notes and, as a result, debentures in the aggregate principal
        amount
        of $1,000,000 were also exchanged. Debentures in the aggregate principal
        amount
        of $250,000 remained outstanding as of November 17, 2006. As of the date
        of this
        report, we have not paid the principal and interest due with respect to those
        debentures and are, accordingly, in default. We are also in default because
        (i)
        our registration statement, required under the registration rights agreement
        associated with the debentures, has not been declared effective, and (ii)
        the
        Company did not redeem the debentures as required commencing on December
        1,
        2005. Therefore, the holders of the outstanding debentures can elect to require
        us to pay a mandatory repayment amount equal to at least 130% of the outstanding
        principal amount, plus all other accrued and unpaid amounts under such
        debentures. The terms of a separate security agreement provide that, upon
        the
        occurrence of an event of default which is not cured, the debenture holders
        (acting in concert) have the right to take possession of all of our assets,
        to
        operate our business and to exercise certain other rights provided in the
        security agreement associated with the debentures.
 
 8%
        Promissory Notes and Warrants
 
 During
        October, 2005 and April, 2006, we issued 8% promissory notes in the aggregate
        principal amount of $665,000 and $285,000, respectively. As part of the
        consideration, we issued 5-year warrants to purchase an aggregate of 469,000
        shares of our common stock at an exercise price of $3.00 per share, with
        each
        purchaser of the promissory notes receiving a pro rata share of the warrant
        pool
        consistent with the principal amount of the notes purchased. The promissory
        notes matured two months after the date of issuance, and now are due upon
        demand. We paid a finder’s fee of 10% of the gross proceeds upon maturity of
        these notes.
 
 8%
        Secured Subordinated Promissory Notes
 
 Effective
        as of May 30, 2006, we entered into a series of note purchase agreements
        with a
        number of investors, including certain investors in our 7% secured convertible
        debentures who agreed to exchange such debentures for secured subordinated
        promissory notes issued and sold under such note purchase agreements. To
        secure
        the Company's obligations under the note purchase agreements, we granted
        a
        security interest in all of our assets (including, without limitation, our
        intellectual property) in favor of the investors, subordinated to the security
        interest of the holders of our 7% secured convertible debentures and certain
        accounts receivable facilities. The security interest terminates upon payment
        or
        satisfaction of all of our obligations under the agreements.
 
 Under
        the
        note purchase agreements, we issued to the investors our secured subordinated
        promissory notes in the aggregate principal amount of $8,359,520. The secured
        subordinated promissory notes carry an interest rate of 8% per annum. These
        notes will mature on the date that is the earliest of (i) one year from the
        date
        of issuance of the applicable secured subordinated promissory note, (ii)
        the
        date on which we consummate the closing of our next equity financing or series
        of equity financings which in the aggregate total no less than $7,000,000,
        or
        (iii) the sale of the Company or sale of substantially all of the Company's
        assets any time prior to the maturity date. We may, at our option, prepay
        any of
        the secured subordinated promissory notes in whole or in part without
        penalty.
  14
 
 Under
        the
        terms of the secured subordinated promissory notes, the holders may declare
        the
        notes immediately due and payable upon the occurrence of any of the following
        events of default: (i) our failure to pay the principal when due, (ii) our
        material breach of any of the covenants or conditions made in the note purchase
        agreements, the secured subordinated promissory notes or the other transaction
        documents, (iii) the Company's filing of a voluntary bankruptcy proceeding,
        or
        (iv) the filing of an involuntary bankruptcy petition against the Company
        that
        is not dismissed or discharged within 180 days.
 
 As
        part
        of the consideration for the sale of these notes, we issued 5-year warrants
        to
        purchase shares of our common stock at an exercise price of $1.00, with each
        note purchaser to receive a pro rata share of the warrant pool of warrants.
        The
        warrants issued are exercisable for an aggregate of 8,359,520 shares of our
        common stock.
 
 Subsequent
        to September 30, 2006, we and an investor in the secured subordinated promissory
        notes agreed to the exchange of $2,250,000 in principal amount of the secured
        subordinated promissory notes held by such investor into 1,500,000 shares
        of our
        common stock.
 
 *Series
        A Preferred Stock*
 
 On
        February 17, 2004, we completed our acquisition of TechnoConcepts, Inc.,
        a
        Nevada corporation, and issued 1,970,000 shares of our common stock and 16,000
        shares of our Series A preferred stock pursuant to the Agreement and Plan
        of
        Merger by and between Technology Consulting Partners Inc. and TechnoConcepts
        Inc., dated December 15, 2003.
 
 *Designation
        and Amount; Rank* .
        16,000
        shares of our preferred stock have been designated as “Series A” preferred
        stock. The shares of Series A preferred stock are divided into Series A-1
        and
        Series A-2. Shares of Series A preferred stock have no par value per share,
        have
        a face amount of $1,000 per share, and rank senior to our Series B preferred
        stock and our common stock.
 
 *Dividends.* Shares
        of Series A-1 preferred stock do not bear dividends. Shares of Series A-2
        preferred stock bear dividends, payable quarterly at the rate of five per
        cent
        per annum or $50.00 per share. Such dividends are payable in cash or common
        stock, as our Board of Directors shall determine.
 
 *Conversion* . Each
        share of Series A preferred stock is convertible, at the option of the holder
        thereof, at any time after January 31, 2006, into a number of shares of common
        stock determined by dividing the aggregate face amount of the shares to be
        converted by the conversion price, which shall be an amount equal to the
        lesser
        of (i) 100% of the average of the closing bid prices for our common stock
        occurring during the five trading days immediately prior to the date of
        conversion, and (ii) $.50 per conversion share. The number of shares of our
        common stock to be issued upon conversion is subject to anti-dilution protection
        in the event of certain dilutive issuances by the Company. Notwithstanding
        the
        foregoing, shares of Series A-1 preferred stock can only be converted upon
        the
        satisfaction of a number of conditions precedent, including the filing and
        issuance of certain patents and that we have gross revenues in any fiscal
        year
        of at least $75,000,000 as disclosed in a periodic report filed with the
        Securities and Exchange Commission under the Securities Exchange Act of 1934,
        as
        amended. The shares of Series A preferred stock are also subject to mandatory
        conversion upon the occurrence of certain events.
  *Conversion
        at Maturity* .
        On the
        date three (3) years following the issue date of the shares of Series A
        preferred stock (i.e., February 17, 2007), such shares are to be automatically
        converted into the number of shares of our common stock equal to the face
        amount
        per shares divided by the conversion price then in effect; provided that,
        with
        respect to the shares of Series A-l preferred stock, the conditions precedent
        (other than the minimum revenue condition) shall have been satisfied. If,
        on the
        maturity date, (i) we do not have a sufficient number of authorized and unissued
        shares of our common stock to issue shares of common stock upon conversion
        of
        the Series A preferred shares, (ii) our common stock is not actively traded
        on
        the Nasdaq market, or (iii) a mandatory redemption event (as described below)
        has occurred and is continuing, each holder of shares of Series A preferred
        stock has the option, upon written notice, to retain its rights as a holder
        of
        such Series A preferred shares. If the patent conditions have not been satisfied
        on the maturity date, then the holders of Series A-1 preferred stock will
        not be
        entitled to convert their preferred shares until the earlier of: (a) the
        satisfaction of the patent conditions or (b) five years from the issue date
        of
        the shares of Series A-1preferred stock. Currently the only patent condition
        that remains unsatisfied is that a patent must issue for the benefit of the
        Company based on the patent application filed on the Direct Conversion
        Delta-Sigma Receiver (application number PCT/US00/02665).
  15
 
 *Liquidation
        Rights.* In the
        event of any liquidation, dissolution or winding up of the Company, either
        voluntary or involuntary, the holders of the Series A preferred stock shall
        be
        entitled to receive, prior and in preference to any distribution of any of
        the
        assets of the Company to the holders of any subsequently issued series of
        preferred stock or holders of our common stock, an amount per share equal
        to the
        sum of $1,000 for each outstanding share of Series A preferred stock plus
        accrued and unpaid dividends (as adjusted for stock dividends, stock
        distributions, splits, combinations or recapitalizations).
 
 *Voting
        Rights.* The
        holders of the Series A preferred stock have the right to vote with the common
        stock on all matters submitted to a vote of stockholders, as if the Series
        A
        preferred shares were converted to shares of common stock on the record
        date.
 
 *Mandatory
        Redemption.* The
        shares of Series A preferred stock are redeemable, at the option of the holders,
        for the greater of (x) 125% of the face value of such shares, plus all accrued
        and unpaid dividends and (y) an amount determined by dividing (A) the sum
        of the
        face value of such shares, plus all accrued and unpaid dividends by (B) the
        conversion price in effect on the date upon which a mandatory redemption
        is
        triggered and multiplying the resulting amount by the average closing bid
        price
        for shares of our common stock for the five trading days immediately preceding
        the mandatory redemption date, if: (i) we fail to issue shares of common
        stock
        to a holder upon conversion of any preferred shares, and such failure continues
        for ten (10) business days; (ii) we breach, in a material respect, any material
        term or condition of our articles of incorporation or any other agreement
        with
        the holders and such breach continues for a period of five (5) business days
        after written notice to us; or (iii) any material representation or warranty
        made by us in any agreement, document, certificate or other instrument delivered
        to the holders of Series A preferred stock prior to the date of issuance
        is
        inaccurate or misleading in any material respect as of the date such
        representation or warranty was made due to voluntary action undertaken by
        us or
        a failure by us to take action.
 
 *Series
        B Preferred Stock*
 
 On
        November 17, 2004, we entered into a securities purchase agreement with an
        institutional investor, under which we agreed to sell, and the institutional
        investor agreed to purchase, 800 shares of our Series B preferred stock and
        warrants exercisable for a total of 320,000 shares of our common stock for
        consideration valued at $2,000,000. The warrants are identical to the warrants
        issued to the purchasers of our 7% secured convertible debentures.
 
 *Designation
        and Amount; Rank.* 800
        shares of our preferred stock have been designated as “Series B” preferred
        stock. Shares of Series B preferred stock have no par value per share, have
        a
        face amount of $2,500 per share, and rank senior to shares of common stock
        and
        to any subsequently issued series of preferred stock, but junior to shares
        of
        Series A preferred stock.
 
 *Dividends.* Shares
        of Series B preferred stock bear dividends, payable quarterly at the rate
        of ten
        (10%) per cent per annum or $250.00 per share. Such dividends are payable
        in
        cash or common stock, as our board of directors may determine.
 
 *Conversion.* Each
        share of Series B preferred stock is convertible, at the option of the holder
        thereof, at any time into 1,000 shares of our common stock, subject to certain
        anti-dilution adjustments. The shares of Series B preferred stock are
        automatically converted into shares of our common stock on the third anniversary
        of the issuance date unless the shares of our common stock are not then quoted
        on the Nasdaq market.
 
 *Liquidation
        Rights.* In the
        event of any liquidation, dissolution or winding up of the Company, either
        voluntary or involuntary, the holders of the Series B preferred stock shall
        be
        entitled to receive, prior and in preference to any distribution of any of
        the
        assets of the Company to the holders of common stock by reason of their
        ownership thereof, but after payment in full of any liquidation preference
        amounts payable to the holders of Series A preferred stock, an amount per
        share
        equal to the sum of $2,500 for each outstanding share of Series B preferred
        stock plus accrued and unpaid dividends (as adjusted for stock dividends,
        stock
        distributions, splits, combinations or recapitalizations).
 
 *Voting
        Rights.* The
        holders of the Series B preferred stock have the right to vote with the holders
        of our common stock on all matters submitted to a vote of stockholders, as
        if
        the Series B preferred shares were converted to shares of common stock on
        the
        record date.
 
 *Mandatory
        Redemption.* The
        shares of Series B preferred stock are redeemable, at the option of the holders,
        for 125% of the face value, plus all accrued and unpaid dividends, if: (i)
        we
        fail to issue shares of our common stock to a holder upon conversion of any
        preferred shares, and such failure continues for ten (10) business days;
        (ii) we
        breach, in a material respect, any material term or condition of our articles
        of
        incorporation or any other agreement, document, certificate or other instrument
        delivered in connection with the preferred stock securities purchase agreement
        under which the shares of Series B preferred stock were originally issued
        and if
        such breach continues for a period of five (5) business days after written
        notice thereof to us; or (iii) any material representation or warranty made
        by
        us in any agreement, document, certificate or other instrument delivered
        to the
        institutional investor purchasing the Series B preferred stock prior to the
        date
        of issuance is inaccurate or misleading in any material respect as of the
        date
        such representation or warranty was made due to voluntary action undertaken
        by
        us or a failure by us to take action.
  16
  *Series
        B-1 Preferred Stock*
 
 In
        November 2005, we negotiated a private placement of convertible preferred
        stock.
        Under the negotiated terms, we sold 2,203 shares of Series B-1 preferred
        stock,
        convertible into 2,203,000 shares of our common stock, at a purchase price
        of
        $2,500 per share for total gross proceeds of $5,505,506.  The Series B-1
        preferred has a dividend rate of 8% per annum, payable quarterly either in
        cash
        or through the issuance of common stock at the option of our board of directors.
        As part of this transaction, we also issued five-year warrants to purchase
        880,000 shares of the Company's common stock, one-half of the warrants at
        an
        exercise price of $3.00 per share and the remaining half at an exercise price
        of
        $4.00 per share.
 
 *Designation
        and Amount; Rank.* Shares
        of Series B-1 preferred stock have no par value per share, have a face amount
        of
        $2,500 per share, and rank senior to shares of common stock and to any
        subsequently issued series of preferred stock, but junior to shares of Series
        A
        and Series B preferred stock.
 
 *Dividends* .
        Shares
        of Series B-1 preferred stock bear dividends at the rate of eight percent
        (8%)
        per annum, or $200.00 per share, payable on a quarterly basis. Such dividends
        are payable in cash or in shares of our common stock (at the then current
        market
        price), as our board of directors may determine.
 
 *Conversion* .
        Each
        share of Series B-1 preferred stock is convertible, at the option of the
        holder
        thereof, at any time into 1,000 shares of our common stock, subject to certain
        anti-dilution adjustments. Provided there is an effective registration statement
        covering the resale of the shares of common stock into which the shares of
        Series B-1 preferred stock is convertible, the shares of Series B-1 preferred
        stock are automatically converted into shares of our common stock on the
        date
        when the market price of our common stock exceeds $5.00 for twenty (20)
        consecutive trading days.
 
 *Liquidation
        Rights* .
        In the
        event of any liquidation, dissolution or winding up of the Company, either
        voluntary or involuntary, the holders of the Series B-1 preferred stock shall
        be
        entitled to receive, prior and in preference to any distribution of any of
        the
        assets of the Company to the holders of common stock, but after payment in
        full
        of any liquidation preference amounts payable to the holders of Series A
        and
        Series B preferred stock, an amount per share equal to the sum of $2,000
        for
        each outstanding share of Series B-1 preferred stock plus accrued and unpaid
        dividends (as adjusted for stock dividends, stock distributions, splits,
        combinations or recapitalizations).
 
 *Voting
        Rights* .
        The
        holders of the Series B-1 preferred stock have no voting rights.
 
 *Common
        Stock and Warrants Exercisable for Shares of Common Stock*
 
 In
        January 2004, we issued 50,000 shares of our common stock to Berthel Fisher
        & Company Financial Services, Inc. pursuant to the terms of a cooperation
        letter between the parties in consideration for investment banking and
        advisory services.
 
 In
        June
        2005, we issued to a financial advisor warrants to purchase 100,000 shares
        of
        our common stock at an exercise price of $3.75 per share. The warrants are
        exercisable for a three-year period.
 
 In
        September 2005, we issued to a financial advisor warrants to purchase 75,000
        shares of our common stock at an exercise price of $4.50 per share. The warrants
        are exercisable for a three-year period.
  In
        September 2005, we issued to consultants warrants to purchase 40,000 shares
        of
        our common stock at an exercise price of $3.375 per share. The warrants are
        exercisable for a three-year period.
 
 In
        September 2005, we issued to a financial advisor warrants to purchase 10,000
        shares of our common stock at an exercise price of $6.00 per share. The warrants
        are exercisable for a three-year period.
 
 In
        September 2005, in conjunction with the establishment of a credit facility,
        we
        issued warrants to purchase 150,000 shares of our common stock at an exercise
        price of $3.85 per share. The warrants are exercisable for a three-year
        period.
 
 During
        the year ended September 30, 2006, we issued 825,092 shares of common stock
        for
        consulting fees provided by third parties. The value of each share issuance
        was
        determined using the closing price of our common stock on the date of
        issuance.
  In
        issuing the securities discussed above, we relied upon the exemption from
        registration afforded by Section 4(2) of the Act, in that: (a) the securities
        (other than those issued pursuant to the acquisition of TechnoConcepts, Inc.,
        a
        Nevada corporation) were sold to a limited number of sophisticated accredited
        investors, (b) the securities were sold without any general solicitation
        or
        public advertising, and (c) the investors in such securities provided us
        with
        representations customary for a private placement of securities.
  17
 
 The
        preferences, limitations and relative rights with respect to Series A, Series
        B,
        and Series B-1 preferred stock are summarized above. The preferences,
        limitations and relative rights of the Series A, Series B, and Series B-1
        preferred stock are contained in their entirety in our articles of
        incorporation, which is an exhibit to this annual statement.
 
 **ITEM
        6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
        OPERATION**
 
 *The
        following discussion and analysis should be read in conjunction
        with*  *the
        financial statements and notes thereto included elsewhere in this annual
        report
        on Form*  *10-KSB
        for the fiscal year ended September 30, 2006. Except for the historical
        information contained herein, the discussion*  *in
        this Form 10-KSB contains certain forward looking statements that
        involve*  *risks
        and uncertainties, such as statements of our plans, objectives,*  *expectations
        and intentions. The cautionary statements made in this Form
        10-KSB*  *should
        be read as being applicable to all related forward statements
        wherever*  *they
        appear in this Form 10-KSB. Our actual results could differ
        materially*  *from
        those discussed here.*
 
 **General**
 
 We
        are
        engaged in the business of designing, developing, manufacturing and marketing
        wireless communications semiconductors.
 
 We
        are in
        the process of attempting to commercialize proprietary technology that we
        refer
        to as True Software RadioTM. True Software RadioTM is an advanced delta-sigma
        semiconductor architecture that converts radio frequency, or RF, signals
        directly into digital data. The technology is designed to dramatically improve
        the way that wireless signals are received and transmitted by making possible
        device-to-device communication across otherwise incompatible networks and
        competing wireless standards (e.g., CDMA, TDMA, GSM, GPRS, G3, Bluetooth,
        WiFi,
        WiMAX, WiBro, etc.), creating true convergence for the wireless industry.
        “Software radio" is an industry term, referring to wireless receivers and
        transmitters that can be controlled and reconfigured by software commands
        and
        that can process radio signals digitally for better performance. To date,
        we
        have not generated any revenues from the sale of such microchips or the
        licensing of rights to the underlying technology. We are currently in the
        process of seeking to arrange financing to further our efforts to commercialize
        this technology.
 
 Through
        our wholly-owned subsidiary, Jinshilin Techno Ltd., or Jinshilin Techno,
        formed
        in December 2005 and based in Shanghai, China, we are seeking to provide
        marketing, sales and technical support for our True Software RadioTM technology
        in China. On April 21, 2006, Jinshilin Techno acquired Internet Protocol
        television (IPTV) set-top box (STB) technology through license agreements
        with
        Jinshilin Technologies Development Company Ltd. Jinshilin Techno currently
        offers an IPTV set-top box that features Voice over Internal Protocol, or
        VOIP,
        capability and can receive IP data transmissions through the household
        electrical power grid. Jinshilin Techno expects that future generation set-top
        boxes will support multi-protocol wireless connectivity with television,
        DVD
        players and other multi-media devices, by integrating True Software RadioTM into
        IPTV set-top boxes.
 
 We
        also
        own a controlling interest in Asanté Networks Inc., based in San Jose,
        California. Asanté provides Ethernet networking solutions for Apple Computer and
        the small-to-medium business retail markets, offering the IntraCore® and
        FriendlyNET® product families, integrating voice, data, and video over wireless
        and wired networks with unified management and authentication. In fiscal
        2006,
        Asanté Networks’ net sales were lower by $2,272,953, or 44.26%, than in the
        comparable twelve-month period of fiscal 2005. This was primarily the result
        of
        decreases in orders and sales of products into the business retail
        markets.
 
 *Restatement
        of Previously Issued Financial Statements and Review by the Securities and
        Exchange Commission*
 
 On
        March
        24, 2005, the staff of the Securities and Exchange Commission’s Division of
        Corporate Finance (the “Staff”) notified us that they had reviewed our
        registration statement on Form SB-2 filed May 3, 2005, our annual report
        on Form
        10-KSB for the fiscal year ended September 30, 2004 (as amended), our quarterly
        report on Form 10-QSB for the quarterly period ended December 31, 2004 (as
        amended), and our reports on Form 8-K during our fiscal year 2004. They provided
        us with comments and requested our response to their questions and additional
        information. During the succeeding 18 months, we corresponded with the Staff,
        and they also reviewed our other filings, including: our Form 8-K filed May
        2,
        2005, our Amendment No. 1 to the registration statement on Form SB-2, our
        annual
        report on Form 10-QSB for the fiscal year ended September 30, 2005, and our
        quarterly reports on Forms 10-QSB for the quarterly periods ended March 31,
        2005, June 30, 2005 and December 31, 2005. As a result of our correspondence
        with the Staff and after consultation with our registered independent accounting
        firm, Seligson & Giannattasio LLP, and with the concurrence of the audit
        committee of our Board of Directors, management determined that the recognition
        and reporting of certain intellectual property and other intangible assets,
        including goodwill, should be restated in our previously issued consolidated
        financial statements to, among other things, record material impairment charges
        to certain intellectual property and other intangible assets, as well as
        to
        goodwill. Management also concluded that further evaluation of our policies
        concerning the recognition and reporting of those assets would be required.
        As
        part of that evaluation, the Company engaged a third-party accounting firm,
        Squar, Milner, Miranda & Williamson LLP, to assist us in our determination
        of the appropriate interpretation and application of U.S. generally accepted
        accounting principles (“US GAAP”) related to accounting for assets acquired in a
        business combination to be used in research and development activities, goodwill
        and other intangible assets. In January 2007, based in part on our discussions
        with the Staff and with the concurrence of our independent registered accounting
        firm, we concluded our review of our policies regarding the recognition and
        reporting of intellectual property and other intangible assets, including
        goodwill, under US GAAP. With the concurrence of the audit committee of our
        Board of Directors and as authorized by resolution of our Board of Directors,
        management determined to make adjustments to:
 
 ·
              the
                  Company’s audited consolidated financial statements as of September 30,
                  2005 and 2004, and for each of the fiscal years in the two-year
                  period
                  ended September 30, 2005; and
 
 18
 ·
              the
                  Company’s unaudited interim consolidated financial statements for each
                  of
                  the quarterly periods in the fiscal years ended September 30, 2005
                  and
                  2004, and for each of the first three quarters of the fiscal year
                  ended
                  September 30, 2006.
 
 The
        accompanying financial statements have been corrected and adjusted as
        follows:
 
 1)
              a
                  consultancy expense of $1,169,429 has been recorded in the quarterly
                  period ended December 31, 2003, that was originally recorded in
                  the
                  quarterly period ended March 31,
                  2004;
 
 (2)
              an
                  adjustment of approximately $1.0 million has been made to the initial
                  valuation of the assets acquired in connection with the acquisition
                  of TCI
                  Nevada. The Company originally recorded this amount as Other Assets
                  under
                  Intellectual Property and Patents in the interim financial statements
                  included in its quarterly report on Form 10-QSB for the period
                  ended March
                  31, 2004, and subsequently carried it as such on its
                  books;
 
 (3)
              all
                  other intellectual property and other intangible assets acquired
                  in
                  connection with the acquisition of TCI Nevada, with an aggregate
                  book
                  value of approximately $7.0 million, have been entirely written
                  off as of
                  September 30, 2005; the Company first recorded this amount as Other
                  Assets
                  under Intellectual Property and Patents in the interim financial
                  statements included in its quarterly report on Form 10-QSB for
                  the period
                  ended March 31, 2004, and subsequently carried it as such on its
                  books;
                  and
 
 (4)
              goodwill
                  in an incremental amount of $5,663,629 has been written off as
                  of
                  September 30, 2005; such goodwill had been recorded in connection
                  with
                  Company’s acquisition of all of the assets of Asanté Technologies, Inc. in
                  June 2005, and then carried on the Company’s books as Other Assets under
                  Goodwill.
  *Reasons
        for the Adjustment and Restatement of Previously Issued Financial
        Statements*
 
 With
        respect to item (1) above, the Company’s management determined that the
        consultancy expense should have been recorded in the quarterly period ended
        December 31, 2003, the period in which the Company agreed to issue shares
        of its
        common stock in consideration for the related consulting services, rather
        than
        the period in which the shares were issued.
 
 With
        respect to items (2) and (3), the Company acquired the intellectual property
        and
        other intangible assets in question in connection with the acquisition of
        TCI
        Nevada. That transaction was accounted for as a “reverse acquisition.” The
        Company determined that TCI Nevada’s initial capitalization of those assets (in
        connection with TCI Nevada’s acquisition of such assets in May 2003) was
        unaffected by the transaction. The assets consist principally of semiconductor
        circuit “architecture.” Semiconductor “architecture” refers to the structural
        design of semiconductor material, which determines the electrical conductivity
        of the semiconductor materials and how the electrical conductivity is
        controlled. Management has concluded that:
 
 ·
              The
                  Company should have adjusted the initial valuation, at the time
                  of the
                  completion of the acquisition in February 2004, of the two expired
                  provisional patents, with a book value of $0.9 million, because
                  such
                  provisional patents were part of an ongoing research and development
                  effort at the time of the reverse
                  acquisition.
  19
  ·
              The
                  Company should have adjusted the initial valuation, at the time
                  of the
                  completion of the acquisition in February 2004, of the acquired
                  trademarks, with a book value of approximately $0.1 million, as
                  such
                  trademarks had no significant “brand value” and were unlikely to make a
                  significant direct contribution to future cash
                  flows.
 
 ·
              The
                  Company should have recorded an impairment charge equal to the
                  full book
                  value of the other intellectual property and intangible assets,
                  approximately $7.0 million, as of September 30, 2005, as a result
                  of the
                  absence of revenue-generating contracts following the Company’s
                  demonstrations of the technology in July 2005 for potential industry
                  partners, from whom it was hoped that funding would be obtained
                  for
                  further research and development projects to produce commercial
                  products
                  utilizing the technology.
 
 With
        respect to item (4) above, the Company’s audited consolidated financial
        statements as of and for the fiscal year ended September 30, 2005, reflect
        the
        recording of an impairment charge of $529,162 with respect to the goodwill
        recorded in connection with the acquisition of all of the assets of Asanté
Technologies, Inc. in June 2005. The Company has determined that it should
        have
        recorded an impairment charge equal to the full book value of the goodwill
        at
        that time, in the amount of $6,192,791, based on the recognizable trend,
        as of
        September 30, 2005, of declining net sales of this business.
  **Plan
        of Operations**
 
 We
        plan
        to design, develop and, using foundry partners, manufacture application specific
        integrated circuits (ASICs), microchips, chipsets and other electronic
        components based on our proprietary technology and to license these products
        to
        major telecommunications equipment suppliers for integration into their wireless
        communications products. As a development stage company, we have not yet
        commercialized our proprietary technology, but we believe we are making good
        progress in doing so. We are in the process of developing relationships with
        a
        number of major wireless communications companies, in order to incorporate
        our
        proprietary technology across a broad spectrum of consumer, industrial,
        and government applications.
  We
        have
        not earned any revenues to date on our core True Software RadioTM technology. Our
        strategy is to become a leading provider of wireless communication technology
        by
        offering True Software RadioTM ASICs and chipsets to major telecommunications
        equipment and component suppliers for integration into their wireless
        communications products.
 
 We
        intend
        to continue to seek to establish strategic relationships with both component
        manufacturers and “total solution” providers. We believe that incorporation of
        our True Software RadioTM technology will enable prospective industry partners to
        provide less expensive service along with seamless roaming and global
        interoperability, thereby enabling new and enhanced services and applications
        such as mobile e-commerce, position location, mobile multimedia web browsing,
        including music and video downloads, public safety and homeland security.
        Elements of our strategy include:
 
 ***Selling
        to the Portable Device Market***
 
 We
        anticipate opportunities in the portable device market (defined here as the
        aggregation of handsets, PDAs, and other niche wireless access devices),
        which
        include:
 
 ·
              sales
                  of True Software RadioTM “engines” (essentially very small wireless
                  “motherboards”) to portable device
                  manufacturers;
 
 ·
              non-recurring
                  engineering fees for integration services to large manufacturers
                  that want
                  to adopt True Software RadioTM technology into their products and license
                  fees based upon units sold under their own brand names (embedded
                  products); and
 
 ·
              OEM
                  licensing agreements for physical/data link layer software to handset
                  manufacturers.
  We
        have
        not entered into definitive agreements of the type referred to above as of
        the
        date of this report.
 
 ***Selling
        to the Base Station Market***
 
 We
        believe that True Software RadioTM technology will contribute to the obsolescence
        of conventional wireless technology. The True Software RadioTM transceiver is
        capable of providing at least three times the capacity of a conventional
        unit,
        making the per-channel cost equal to roughly one-third. We anticipate revenue
        generation from the base station market primarily from four sources:
  ·
              base
                  station transceiver hardware sales;
  20
  ·
              licensing
                  of base station software for physical and data link layer processing
                  to
                  infrastructure makers;
 
 ·
              strategic
                  business relationships for international deployment of base station
                  systems; and
 
 ·
              non-recurring
                  engineering (NRE) fees for the development of custom interfaces
                  to our
                  physical/data link layer software to government agencies and to
                  their
                  contractors.
  We
        have
        not entered into definitive agreements of the type referred to above as of
        the
        date of this report.
  ***Public
        Safety***
 
 Our
        True
        Software RadioTM technology can provide seamless communications between various
        local public safety and other government agencies that otherwise may not be
        able to “talk” to one another during an emergency. We are actively seeking
        strategic business relationships with contractors that are involved in providing
        interoperability wireless communication for State and Federal public safety
        and
        emergency agencies and for the Department of Homeland Security. We have not
        entered into definitive agreements for any such strategic business relationships
        as of the date of this report.
 
 ***Accelerating
        Growth through Partnering and Acquisition***
 
 Because
        the highly competitive wireless communication technology marketplace is changing
        rapidly, the Company wishes to broaden and build depth in our planned
        product/service lines as quickly as possible. We also recognize the need
        to
        achieve critical mass with a global presence in order to establish a leadership
        position in the market. To that end, our initiatives include:
 
 ·
              strategic
                    business relationships;
 
 ·
              licensing
                    arrangements; and
 
 ·
              sales
                    through distributors and
                    OEMS.
  We
        also
        recognize that consummating strategic acquisitions can help expand our
        geographic presence, and obtain specialized management and technical talent.
        To
        this end, we will consider acquiring companies that will help enable us to
        accelerate growth, accelerate technical development and commercialization
        of
        True Software RadioTM, add complementary product and service lines, diversify us
        into new markets, expand our geographic presence, acquire capable management,
        gain new technical capabilities, and/or gain a larger share of the existing
        market.
 
 We
        have
        no agreement or understanding to acquire any company as of the date of this
        report.
 
 To
        date,
        we have expended substantial amounts to commercialize our products through
        research and development and have received patents and are in the process
        of
        applying for additional patents for our products. We expect these expenditures
        for research and development to continue for the indefinite future as we
        seek to
        commercialize, improve and adapt our products.
  21
  **Results
        of Operations**
 
 *Revenues*
 
 Net
        sales
        for the year ended September 30, 2006 were $2,908,924, an increase of $1,910,663
        as compared to $898,261 of net sales for the year ended September 30, 2005.
        Sales were generated by our subsidiary, Asanté Networks Inc. The increase is
        attributable to owning Asanté Networks the entire fiscal year. However, Asanté
Networks’ net sales for fiscal 2006 were lower by $2,272,953, or 44.26%, than in
        the previous twelve-month period. This was primarily the result of decreases
        in
        orders and sales of products into the business retail markets, caused in
        part by
        obsolescence of the subsidiary’s products. Overall sales revenues continue to be
        subject to heavy competitive pressures negatively impacting selling prices
        of
        networking products and causing the delay of product deliveries from
        vendors.
 
 *Cost
        of   Sales and Gross Profit*
 
 Cost
        of
        sales for the year ended September 30, 2005, was $1,976,537. Cost of sales
        for the year ended September 30, 2005 was $858,284. The increase of $1,118,253
        in fiscal 2006 was a direct result of owning Asanté Networks for the entire
        fiscal year.
 
 Gross
        profit for fiscal 2006 was $832,387 as compared to $39,977 for the fiscal
        year
        ended September 30, 2005, an increase of $792,410. Our gross profit as a
        percentage of net sales was 29.63% as compared to 4.5% for the year ended
        September 30, 2005.
 
 *General
        and Administrative Expenses*
 
 We
        incurred general and administrative expenses of $15,239,939 in fiscal 2006,
        an
        increase of $6,636,356 over the fiscal year ended September 30, 2005, in
        which
        we incurred $8,603,583 of such expenses. This increase is a direct result
        of
        increased overhead expenses including investor relations, investment banking
        fees, consulting costs, engineering costs, research and development costs
        and
        professional fees and expenses incurred by Asanté Networks for the entire fiscal
        year.
 
 *Off
        Balance Sheet Arrangements*
 
 During
        the year ended September 30, 2006, we did not engage in any off-balance sheet
        arrangements as defined in Item 303(c) of the SEC's Regulation S-B.
 
 **Liquidity
        and Capital Resources**
 
 To
        date,
        we have been a primarily a development stage company and have generated revenues
        during the fiscal year ending September 30, 2006, only from the operations
        of
        our subsidiary, Asanté Networks Inc. As of September 30, 2006, our assets
        totaled $3,093,083 consisting of $932,690 in cash, $197,863 in accounts
        receivable, $688,114 in inventory (including reserves of $444,000) and $180,883
        in prepaid expenses. Our liabilities totaled $9,884,976, consisting of
        $1,250,000 from our 7% convertible debentures that are in default, $8,359,520
        of
        secured subordinated notes payable that are scheduled to become due and payable
        beginning in May 2007 and continuing through December 2007, $950,000 of
        unsecured notes payable on demand, $13,667,000 of capital leases payable,
        $2,956,876 of accounts payable, $1,975,902 of expenses payable, and $715,825
        of
        notes due to related parties.
 
 Subsequent
        to September 30, 2006, some of the holders of our 7% secured convertible
        debentures notified us that they wanted to exchange their debentures for
        our
        secured subordinated promissory notes, and as a result, debentures with an
        aggregate principal amount of $1,000,000 were so exchanged, such that
        immediately following such exchange debentures in the aggregate principal
        amount
        of $250,000 remained outstanding. We are currently negotiating with the holders
        of the debentures that remain outstanding a settlement and satisfaction for
        the
        default condition.
 
 We
        have
        incurred a cumulative loss from operations of $48,830,529, have negative
        working
        capital of $8,329,426 and negative cash flow from operations of $11,453,733.
        We
        anticipate incurring capital expenditures of approximately $1,000,000
        during the fiscal year ending September 30, 2007. We expect our operating
        cash requirements will also be significant throughout fiscal year 2007, as
        we
        continue our research and development efforts, and attempt to execute on
        our
        business strategy. The amount and timing of cash requirements will depend
        on our
        completion of commercial products, market acceptance of our products and
        the
        resources we devote to researching and developing, marketing, selling and
        supporting our products. Moreover, the responsibilities of a public company
        will
        require the Company to meet certain legal and accounting requirements and
        to
        incur related expenses. In addition to the normal risks associated with an
        unproven business venture, there can be no assurance that our business plan
        will
        be successfully executed, even if adequate financing is secured.
 
 Since
        November 2003, we have financed our operations primarily through private
        sales
        of preferred convertible securities in the amount of $7,505,506 and the debt
        described above. Subsequent to September 30, 2006, we have sought additional
        debt and equity financing. As we raise additional funds through the issuance
        of
        equity securities and equity securities equivalents, the percentage ownership
        of
        our existing stockholders is reduced. If we are unable to raise sufficient
        funds
        on acceptable terms we may not succeed in executing our strategy and achieving
        our business objective. In particular, we could be forced to limit our product
        development and marketing activities, forego attractive business opportunities
        and we may lose the ability to respond to competitive pressures. There can
        be no
        assurance that sufficient funding will be obtained to keep the Company operating
        over the next twelve months. Nor can any assurance be made that the Company
        will
        generate substantial revenues or that the business operations will prove
        to be
        profitable. These conditions raise substantial doubt about the Company’s ability
        to continue as a going concern. The accompanying financial statements reflect
        ongoing losses, negative cash flows from operating activities, negative working
        capital and shareholders’ deficit. The financial statements do not include any
        adjustments that might result from the outcome of these
        uncertainties.
 
 22
  **Net
        Operating Loss**
 
 We
        have
        accumulated approximately $27,400,000 of net operating loss carry forwards
        as of
        September 30, 2006, which may be offset against taxable income and income
        taxes
        in future years through 2026. The use of these losses to reduce future income
        taxes will depend on the generation of sufficient taxable income prior to
        the
        expiration of the net operating loss carry forwards in 2026. No tax benefit
        has
        been reported in the financial statements for the year ended September 30,
        2006,
        because we believe there may be a chance that the carry forward will expire
        unused. Accordingly, the potential tax benefit of the loss carry forward
        is
        offset by a valuation allowance of the same amount.
 
 **ITEM
        7. FINANCIAL STATEMENTS**
  **REPORT
        OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 To
        the
        Stockholders and
 Board
        of
        Directors
 TechnoConcepts,
        Inc.
 Van
        Nuys,
        CA
 
 We
        have
        audited the accompanying balance sheet of TechnoConcepts, Inc. and subsidiaries
        as of September 30, 2006, the related statements of operations, changes in
        shareholders’ deficit and cash flows for the periods ended September 30, 2006
        and 2005. These financial statements are the responsibility of the Company’s
        management. Our responsibility is to express an opinion on these financial
        statements based on our audit.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements. An audit also includes assessing the accounting principles used
        and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe the audit provides a reasonable
        basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of TechnoConcepts, Inc. and
        subsidiaries as of September 30, 2006, and the result of its operations and
        its
        cash flows for the periods ended September 30, 2006 and 2005 in conformity
        with
        accounting principles generally accepted in the United States of
        America.
 
 The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern. As discussed in Note 4 to the financial statements,
        the Company has had significant recurring losses. The realization of a major
        portion of its assets is dependent upon its ability to meet its future financing
        requirements, and the success of future operations. These factors raise
        substantial doubt about the Company’s ability to continue as a going concern.
        The financial statements do not include any adjustments that might result
        from
        this uncertainty.
 
 /s/
        Seligson & Giannattasio, LLP
 Seligson
        & Giannattasio, LLP
 White
        Plains, NY
 January
        16, 2007
  F-1




TechnoConcepts,
      Inc.


And
      Subsidiaries


Consolidated
      Balance Sheet




September
                30,
              2006ASSETSCurrent
                assets:Cash
            
            $
            932,690Accounts
                receivable, net of allowance for doubtfulaccounts
                of $60,632
            
            
            197,863Inventory,
                net of reserves of $444,000
            
            
            244,114Prepaid
                expenses
            
            
            180,883Total
                current assets
            
            
            1,555,550Fixed
                assets, net
            
            
            979,868Other
                assets:Deposits
            
            
            104,439Debt
                issuance costs, net
            
            
            9,226Total
                assets
            
            $
            2,649,083




See
      accompanying notes to consolidated financial statements




F-2




TechnoConcepts,
      Inc.


And
      Subsidiaries


Consolidated
      Balance Sheet





September
                30,2006LIABILITIES
                AND SHAREHOLDERS' DEFICITCurrent
                liabilities:Convertible
                notes payable,net
                of unamortized debt issuance costs of $68,899
            
            $
            1,181,101Notes
                Payable,net
                of unamortized debt issuance costs of $5,791,763
            
            
            2,567,757Notes
                PayableNet
                of unamortized debt issuance costs of $476,152
            
            
            473,848Capital
                Leases payable
            
            
            13,667Accounts
                payable
            
            
            2,956,876Accrued
                expenses payable
            
            
            1,975,902Due
                to related parties
            
            
            715,825Total
                current liabilities
            
            
            9,884,976Minority
                interest
            
            
            614,122Shareholders'
                deficit:Series
                A Preferred stock, no par value, 10,000,000shares
                authorized, 16,000 sharesissued
                and outstanding
            
            
            16Series
                B Preferred, no par value, 3,100 authorized, 3,003issued
                and outstanding,
            
            
            7,505,506Common
                stock, no par value, 100,000,000shares
                authorized 28,376,734 sharesissued
                and outstanding
            
            
            28,377Additional
                paid-in capital
            
            
            33,446,615Accumulated
                deficit
            
            
            (48,830,529
            )Total
                shareholders' deficit
            
            
            (7,850,015
            )Total
                liabilities and shareholders' deficit
            
            $
            2,649,083




See
      accompanying notes to consolidated financial statements.





F-3




TechnoConcepts,
      Inc.


Consolidated
      Statements of Operations




Year
                Ended
            
            Year
                EndedSeptember
                30,
            
            September
                30,2006
            
            2005
                (Restated)Revenues:Net
                Sales
            
            $
            2,808,924
            
            $
            898,261Cost
                of goods sold
            
            
            1,976,537
            
            
            858,284Gross
                Profit
            
            
            832,387
            
            
            39,977Operating
                Expenses:General
                and administrative
            
            
            15,239,939
            
            
            8,603,583Loss
                before other income (expense) and income taxes
            
            
            (14,407,552
            )
            
            (8,563,606
            )Other
                income (expense):Interest
                expense, net
            
            
            (7,086,904
            )
            
            (2,164,142
            )Impairment
                of goodwill
            
            
            —
            
            
            (6,192,791
            )Impairment
                of intellectual property
            
            
            —
            
            
            (6,990,000
            )Minority
                interest
            
            
            135,878
            
            
            —Loss
                before income taxes
            
            
            (21,358,578
            )
            
            (23,910,539
            )Income
                taxes
            
            
            800
            
            
            1,600Net
                loss
            
            
            (21,359,378
            )
            
            (23,912,139
            )Dividends
                on preferred stock
            
            
            517,525
            
            
            100,000Net
                loss available to common shareholders
            
            $
            (21,876,903
            )
            $
            (24,012,139
            )Weighted
                shares outstanding:Basic
            
            
            27,527,784
            
            
            26,378,677Diluted
            
            
            27,527,784
            
            
            26,378,677Loss
                per share available to common shareholder:Basic
            
            $
            (.79
            )
            $
            (.91
            )Diluted
            
            $
            (.79
            )
            $
            (.91
            )




See
      accompanying notes to consolidated financial statements





F-4




TechnoConcepts
      Inc.


And
      Subsidiaries


Comprehensive
      Statement of Shareholders’ Deficit




preferred
                stock
            
            Common
                Stock
            
            Paid-In
            
            Subscriptions
            
            Accumulated
                DeficitShares
            
            Amount
            
            Shares
            
            Amount
            
            Capital
            
            Receivable
            
            (Restated)Balances,
                September 30, 2004
            
            
            32,000
            
            $
            32
            
            
            24,852,671
            
            $
            24,852
            
            $
            9,048,984
            
            $
            (4,008
            )
            $
            (2,240,931
            )Prior
                period adjustmentsAdjustment
                to purchase priceof
                assets of TechnoConcepts(CA)
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (1,010,000
            )
            
            —
            
            
            —Adjustment
                of valuation ofshares
                issued for consultingfees
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            700,556
            
            
            —
            
            
            (700,556
            )Adjusted
                balance September30,
                2004
            
            
            32,000
            
            
            32
            
            
            24,852,671
            
            
            24,852
            
            
            8,739,540
            
            
            (4,008
            )
            
            (2,941,487
            )Collection
                of subscriptionreceivable
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            4,008
            
            
            —Beneficial
                conversionfeature
                from the issuanceof
                convertible debentures
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            3,329,200
            
            
            —
            
            
            —Shares
                issued for:Preferred
                shares
            
            
            800
            
            
            2,000,000
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Conversion
                ofdebentures
            
            
            —
            
            
            —
            
            
            771,480
            
            
            771
            
            
            1,232,854
            
            
            —
            
            
            —Consulting
                services
            
            
            —
            
            
            —
            
            
            229,713
            
            
            230
            
            
            909,483
            
            
            —
            
            
            —Effect
                of merger
            
            
            —
            
            
            —
            
            
            1,161,170
            
            
            1,162
            
            
            4,998,838
            
            
            —
            
            
            —Issuance
                of warrants forservices
                rendered
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            971,005
            
            
            —
            
            
            —Retirement
                of preferredshares
            
            
            (16,000
            )
            
            (16
            )
            
            —
            
            
            —
            
            
            16
            
            
            —
            
            
            —Dividends
                on preferredStock
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (100,000
            )Net
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (23,912,139
            )Balances,
                September 30,2005
            
            
            16,800
            
            $
            2,000,016
            
            
            27,015,034
            
            $
            27,015
            
            $
            20,180,936
            
            $
            —
            
            $
            (26,953,626
            )Issuance
                of warrants forservices
                rendered
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            8,999,515
            
            
            —
            
            
            —Conversion
                of debentures
            
            
            —
            
            
            —
            
            
            518,108
            
            
            518
            
            
            1,293,572
            
            
            —
            
            
            —Preferred
                shares issued
            
            
            2,203
            
            
            5,505,506
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Shares
                issued forconsulting
                services
            
            
            —
            
            
            —
            
            
            825,092
            
            
            825
            
            
            1,519,050
            
            
            —
            
            
            —Shares
                issued for employeeBonuses
            
            
            —
            
            
            —
            
            
            15,500
            
            
            16
            
            
            38,269
            
            
            —
            
            
            —Shares
                issued for stockoption
                exercise
            
            
            —
            
            
            —
            
            
            3,000
            
            
            3
            
            
            1,497
            
            
            —
            
            
            —Cost
                of stock options
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            1,413,776
            
            
            —
            
            
            —Dividends
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (517,525
            )Net
                Loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (21,359,378
            )Balances,
                September 30,2006
            
            
            19,003
            
            $
            7,505,522
            
            
            28,376,734
            
            $
            28,377
            
            $
            33,446,615
            
            
            —
            
            $
            (48,830,529
            )




See
      accompanying notes to consolidated financial statements.





F-5





TechnoConcepts,
      Inc.


And
      Subsidiaries


Consolidated
      Statements of Cash Flows





September
                30,
              2006
            
            September
                30,
              2005
                (Restated)**Cash
                flows from operating activities:**Net
                loss
            
            $
            (21,359,378
            )
            $
            (23,912,139
            )Adjustments
                to reconcile net loss from operations tonet
                cash used in operating activities:Depreciation
            
            
            131,736
            
            
            50,097Amortization
                of debt costs
            
            
            4,776,910
            
            
            1,740,618Shares
                issued for services
            
            
            1,519,050
            
            
            1,880,718Stock
                option expense
            
            
            1,413,775
            
            
            —Impairment
                of goodwill
            
            
            —
            
            
            6,192,791Impairment
                of intellectual property
            
            
            —
            
            
            6,990,000Minority
                interest
            
            
            614,122
            
            
            —Shares
                issued for bonus
            
            
            38,268
            
            
            —Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            120,339
            
            
            419,773Inventory
            
            
            255,429
            
            
            403,009Other
                assets
            
            
            120,652
            
            
            (375,725
            )Accounts
                payable
            
            
            793,038
            
            
            97,456Accrued
                expenses
            
            
            122,326
            
            
            728,258Net
                cash flows from operating activities
            
            
            (11,453,733
            )
            
            (5,785,144
            )**Cash
                flows from investing activities:**Net
                Borrowings from related parties
            
            
            452,127
            
            
            (152,451
            )Acquisition
                of fixed assets
            
            
            (728,079
            )
            
            (348,663
            )Net
                cash flows from investing activities
            
            
            (275,952
            )
            
            (501,114
            )**Cash
                flows from financing activities:**Proceeds
                from notes payable
            
            
            7,310,365
            
            
            4,525,000Debt
                acquisition costs
            
            
            —
            
            
            (445,800
            )Proceeds
                from preferred shares
            
            
            5,505,503
            
            
            2,000,000Net
                borrowings from bank
            
            
            (331,639
            )
            
            331,639Repayment
                of long-term debt
            
            
            (14,023
            )
            
            (4,478
            )Stock
                subscription received
            
            
            —
            
            
            4,008Stock
                options exercised
            
            
            1,500
            
            
            —Net
                cash flows from financing activities
            
            
            12,471,706
            
            
            6,410,369**Net
                change in cash and cash equivalents**
            
            
            742,021
            
            
            124,111**Cash
                and cash equivalents, beginning of period**
            
            
            190,669
            
            
            66,558**Cash
                and cash equivalents, end of period**
            
            $
            932,690
            
            $
            190,669**Supplemental
                cash flow information:**Interest
                paid
            
            $
            —
            
            $
            —Income
                taxes paid
            
            $
            800
            
            $
            800**Non-cash
                investing and financing activities****Shares
                issued for conversion of debt**
            
            
            518,108
            
            
            1,233,625




See
      accompanying notes to consolidated financial statements.





F-6




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




NOTE
      1
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Organization
      and Nature of the business - TechnoConcepts, Inc. (the “Company”) is in the business of designing,
      developing, manufacturing, and marketing wireless communications semiconductors.
      The Company has begun manufacturing wireless transmitter and receiver
      microchips, based on its proprietary technology, and produced its first
      engineering run in August 2006. The proprietary technology, which the Company
      calls True Software RadioTM, is designed to dramatically improve the way that
      wireless signals are received and transmitted, by making possible
      device-to-device communication across otherwise incompatible networks and
      competing wireless standards (e.g., CDMA, TDMA, GSM, GPRS, G3, Bluetooth, WiFi,
      WiMAX, WiBro, etc.), creating true convergence for the wireless
      industry.





In
      April
      2005, Asanté Acquisition Corp. (“Acquisition Corp.”) was formed in the State of
      California as a wholly owned subsidiary of the Company. Acquisition Corp. was
      formed primarily to acquire the assets of Asanté Technology Corp. On October 17,
      2005, Asanté Acquisition Corp. completed a reorganization with RegalTech Inc.
      (“RegalTech”), a publicly traded Delaware corporation. The reorganization
      provided for the merger of Asanté Acquisition Corp. and RegalTech, pursuant to
      the companies’ Agreement and Plan of Reorganization dated August 31, 2005.
      RegalTech's name was subsequently changed to Asanté Networks Inc. Asanté
Networks maintains a 52-53 week fiscal year ending on the Saturday closest
      to
      September 30.





In
      May
      2005, Technoconcepts (Hong Kong) Ltd. (“Techno HK”) was formed in the Republic
      of China as a wholly owned subsidiary. The Company plans to perform production
      design and application-specific engineering and to provide product support
      in
      Asia for the Company’s semiconductor products at this subsidiary.





In
      December 2005, the Company formed Jinshilin Techno Ltd. ("Jinshilin Techno")
      as
      its wholly owned subsidiary based in Shanghai, China. The Company organized
      Jinshilin Techno to provide marketing, sales and technical support for True
      Software Radio(TM) technology in China. On April 21, 2006, Jinshilin Techno
      acquired IPTV Set Top Box (STB) technology through license agreements with
      Jinshilin Technologies Development Company Ltd. ("Jinshilin"). Jinshilin Techno
      develops new technology for Internet Protocol Television (IPTV), Stream Media
      Protocol Processing, and Broadcasting Software for IPTV-STB, IPTV-STB providing
      On-Line Family Real Time Payment Service. Jinshilin Techno expects future
      generation set-top boxes to support multi-protocol wireless connectivity with
      television, DVD players and other multi-media appliances, by integrating True
      Software Radio(TM) into Jinshilin's IPTV-STB. In July 2006, the Company received
      final approval from the People’s Republic of China for the
      subsidiary.





F-7




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      1-
      Summary of Significant Accounting Policies (continued)





Basis
      for Presentation- The
      consolidated financial statements include the accounts of the Company and its
      subsidiaries, Asanté Networks Inc., Jinshilin Techno and Techno HK. All material
      intercompany transactions have been eliminated in consolidation.




Pervasiveness
      of estimates - The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates.




Income
      taxes - Income
      taxes are provided for the tax effects of transactions reported in the financial
      statements and consist of taxes currently due plus deferred taxes related
      primarily to differences between the recorded book basis and tax basis of assets
      and liabilities for financial and income tax reporting. The deferred tax assets
      and liabilities represent the future tax return consequences of those
      differences, which will either be taxable or deductible when the assets and
      liabilities are recovered or settled. Deferred taxes are also recognized for
      operating losses that are available to offset future taxable income and tax
      credits that are available to offset future federal income taxes.





Cash
      and Equivalents - The
      Company considers investments with an initial maturity of three months or less
      to be cash equivalents.




Fixed
      Assets- The
      value of fixed assets is at historical cost as required by generally accepted
      accounting principles. Depreciation is calculated on a straight-line basis
      over
      the expected useful life of the asset as follows:





Leasehold
                improvements
            
            Remaining
                lease term or useful lifeSoftware
            
            3
                yearsEquipment
            
            5
                to 7 yearsFurniture
                and fixtures
            
            5
                to 7 years




Fixed
      assets at September 30, 2006 are comprised as follows:





Furniture
                and fixtures
            
            $
            271,469Computer
                and office equipment
            
            
            2,412,401Computer
                Software
            
            
            673,887Leasehold
                improvements
            
            
            248,2283,605,985Accumulated
                depreciation
            
            
            2,626,117$
            979,868




Computer
      and office equipment under capital leases totaled $41,532.




F-8





TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      1-
      Summary of Significant Accounting Policies (continued)




Prepaid
      expenses- The
      Company records as prepaid expenses amounts for which the Company has been
      required to pay for prior to when the related cost has been incurred.  The
      Company amortizes the related cost over the period the related product or
      service is incurred or the term of the related contract or
      agreement.




Prepaid
      expenses consist of the following at September 30, 2006





Licenses
            
            $
            66,007Consulting
                fees
            
            
            53,789Equipment
                rental
            
            
            35,822Inventory
            
            
            13,237Insurance
            
            
            6,096Other
            
            
            5,932$
            180,883




Inventory- Inventory is valued at the lower of cost (first-in first-out method) or market.
      Merchandise shipped from overseas is inventoried, and the corresponding
      liability recorded, upon the Company’s taking title to the inventory. **** Appropriate adjustments of the inventory values are provided for slow moving
      and
      discontinued products based upon future expected sales and committed inventory
      purchases. Components of inventories at September 30, 2006 are as
      follows:





Raw
                materials
            
            $
            94,755Finished
                goods
            
            
            593,359688,114Less:
                reserve for obsolescence
            
            
            (444,000
            )$
            244,114





Bad
      debts - The
      carrying amount of the Company’s trade accounts receivable approximates fair
      value due to the short-term nature of the asset. Although the Company’s
      outstanding accounts receivable are exposed to credit risk, the Company
      maintains valuation allowances for estimated losses resulting from the inability
      to collect outstanding amounts due from its customers. The valuation allowances
      include specific amounts for those accounts that are likely to be uncollectible,
      such as customer bankruptcies and disputed amounts, and general allowances
      for
      accounts that management currently believes to be collectible but later become
      uncollectible. Estimates used to determine the valuation allowances are
      generally based on historical collection experience, current economic trends,
      credit-worthiness of customers, and changes in customer payment
      terms.





F-9




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




NOTE
      1-
      Summary of Significant Accounting Policies (continued)





Accounting
      for convertible debt securities - The
      Company has issued convertible debt securities with non-detachable conversion
      features. The Company has recorded the fair value of the beneficial conversion
      features and is amortizing them as interest expense over the term of the related
      debt.




Debt
      Issuance Costs - Debt
      issuance costs are the costs incurred relating to the convertible notes and
      debentures. The costs are amortized over the term of the related
      indebtedness.




Revenue
      recognition - Revenue
      from product sales to customers is recognized, including freight charges billed
      to customers, when a definite arrangement exists, the product has been shipped
      to the customer, acceptance terms, if any, have been fulfilled, no significant
      contractual obligations remain outstanding, the price is fixed or determinable,
      and collection is considered probable. Reserves are provided for estimated
      returns at the time the related revenue is recorded. Sales to distributors
      are
      generally subject to agreements allowing certain rights of return and price
      protection with respect to unsold merchandise held by the distributor. Reserves
      for distributor returns are established based on historical returns experience
      at the time the related revenue is recorded. Reserves for price protection
      are
      established based on actual price reduction programs. Additionally, the Company
      provides reserves for incentive rebates to distributors, warranty obligations
      and cooperative advertising at the time the related revenue is
      recorded.




Accrued
      Expense





Accrued
      expenses consist of the following at September 30, 2006:




Loan
                Fees
            
            $
            285,000Director
                Fees
            
            
            50,000Interest
            
            
            801,557Dividends
            
            
            617,525Commissions
            
            
            94,108Vacation
                Pay
            
            
            10,314Warranty
            
            
            73,688Taxes
            
            
            18,966Other
            
            
            24,744Total
            
            $
            1,975,902




F-10




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      1-
      Summary of Significant Accounting Policies (continued)





Concentration
      of credit risk -
      Financial instruments that potentially subject the Company to concentrations
      of
      credit risk consist principally of cash equivalents and accounts receivable.
      Accounts receivable are typically unsecured and are derived from worldwide
      distributor and customer revenues. The Company performs ongoing credit
      evaluations of its customers and maintains reserves for potential credit losses;
      historically, such losses have been within management's expectations. The
      Company maintains substantially all its cash balances in a limited number of
      financial institutions. The balances are insured by the Federal Deposit
      Insurance Corporation up to $100,000. At September 30, 2006, the Company had
      balances in excess of insured limits totaling $400,878.




Research
      and development costs -
      Research and development costs are expensed as incurred. Research and
      development of new software products and enhancements to existing software
      products are expensed as incurred until technological feasibility has been
      established. The Company believes its current process for developing software
      is
      essentially completed concurrently with the establishment of technological
      feasibility.




Software
      costs incurred after the establishment of technological feasibility have not
      been material to date and therefore have been expensed.





Loss
      per share -
      Earnings (loss) per share for the years ended September 30, 2006 and 2005 was
      computed by dividing net income (loss) by the weighted average number of common
      and common equivalent shares outstanding and also was adjusted for the assumed
      conversion of shares issuable upon the exercise of options and warrants in
      accordance with SFAS No. 128, “Earnings Per Share”. The Company had a net loss
      for the years ended September 30, 2006 and 2005 and, accordingly, potential
      dilutive common shares are excluded from this computation for each such year
      as
      the effect would be anti-dilutive. The total potential dilutive common shares
      excluded from this computation totaled 20,798,223 and 4,045,620 in the fiscal
      years ended September 30, 2006 and 2005, respectively. The reconciliation
      between basic and diluted average shares outstanding is as follows:




Year
                Ended September 30,
            
            Year
                Ended
              September
                30,2006
            
            2005Basic
                weighted average shares outstanding
            
            
            27,527,784
            
            
            26,378,677Dilutive
                effect of stock options
            
            
            —
            
            
            —Dilutive
                effect of warrants
            
            
            —
            
            
            —Diluted
                weighted average shares outstanding
            
            
            27,527,784
            
            
            26,378,677





F-11




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      1-
      Summary of Significant Accounting Policies (continued)





Stock-Based
      Compensation - In
      October 1995, the Financial Accounting Standards Board (“FASB”) issued Statement
      of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based
      Compensation”. Until January 1, 2006, the Company accounted for its stock-based
      compensation plans using the accounting prescribed by Accounting Principles
      Board Opinion No. 25, “Accounting for Stock Issued to Employees”. As the Company
      was not required to adopt the fair value based recognition provisions prescribed
      under SFAS No. 123, as amended, it has elected only to comply with the
      disclosure requirements set forth in the statement which includes disclosing
      pro
      forma net income (loss) and earnings (loss) per share as if the fair value
      based
      method of accounting had been applied. For periods subsequent to January 1,
      2006, the Company is required to report the fair value of each option grant
      as a
      component of operating expense.





The
      fair
      value of each option grant was estimated on the date of the grant using the
      Black-Scholes option-pricing model with the following weighted average
      assumptions for the fiscal years ended September 30, 2006 and 2005: expected
      volatility of between 92% and 117%, risk free interest rate of between 4.63%
      and
      5.75%; and expected lives of 5 years.




The
      effects of applying SFAS No. 123, as amended, in the above pro forma disclosures
      are not indicative of future amounts as they do not include the effects of
      awards granted prior to fiscal 2006. Additionally, future amounts are likely
      to
      be affected by the number of grants awarded since additional awards are
      generally expected to be made at varying amounts.





F-12





TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




NOTE
      1-
      Summary of Significant Accounting Policies (continued)





Stock
      Based Compensation- The pro
      forma net loss and loss per share consists of the following:





Year
                ended
              September
                30,
            
            Year
                ended
              September
                30,2006
            
            2005
                (Restated)Net
                loss available to common shareholders, as restated
            
            $
            (21,876,903
            )
            $
            (24,012,139
            )Effect
                of stock options, net of tax (prior to adoption of FAS
                123R)
            
            
            (325,135
            )
            
            (1,166,173
            )Proforma
                net loss available to common shareholders
            
            $
            (22,202,038
            )
            $
            (25,178,312
            )Proforma
                diluted loss per share available to common shareholders
            
            $
            (.81
            )
            $
            (.95
            )





Recently
      Issued Accounting Pronouncements




In
      February 2006, the FASB issued FASB Statement No. 155, “Accounting for Certain
      Hybrid Financial Instruments—an amendment of FASB Statements No. 133 and 140”
(“FASB No. 155”). FASB No. 155 amends FASB Statements No. 133, *Accounting
      for Derivative Instruments and Hedging Activities,* and No.
      140, *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities.* FASB No.
      155 resolves issues addressed in Statement 133 Implementation Issue No. D1,
      “Application of Statement 133 to Beneficial Interests in Securitized Financial
      Assets.”




FASB
      No.
      155:




a.
            Permits
                fair value remeasurement for any hybrid financial instrument that
                contains
                an embedded derivative that otherwise would require
                bifurcation




b.
            Clarifies
                which interest-only strips and principal-only strips are not subject
                to
                the requirements of Statement 133




c.
            Establishes
                a requirement to evaluate interests in securitized financial assets
                to
                identify interests that are freestanding derivatives or that are
                hybrid
                financial instruments that contain an embedded derivative requiring
                bifurcation




d.
            Clarifies
                that concentrations of credit risk in the form of subordination are
                not
                embedded derivatives




e.
            Amends
                Statement 140 to eliminate the prohibition on a qualifying special-purpose
                entity from holding a derivative financial instrument that pertains
                to a
                beneficial interest other than another derivative financial
                instrument.




FASB
      No.
      155 is effective for all financial instruments acquired or issued after the
      beginning of an entity’s first fiscal year that begins after September 15, 2006.
      The fair value election provided for in paragraph 4(c) of FASB No. 155 may
      also
      be applied upon adoption of FASB No. 155 for hybrid financial instruments that
      had been bifurcated under paragraph 12 of Statement 133 prior to the adoption
      of
      FASB No. 155. Earlier adoption is permitted as of the beginning of an entity’s
      fiscal year, provided the entity has not yet issued financial statements,
      including financial statements for any interim period for that fiscal year.
      Provisions of FASB No. 155 may be applied to instruments that an entity holds
      at
      the date of adoption on an instrument-by-instrument basis.




F-13




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      1-
      Summary of Significant Accounting Policies (continued)




At
      adoption, any difference between the total carrying amount of the individual
      components of the existing bifurcated hybrid financial instrument and the fair
      value of the combined hybrid financial instrument should be recognized as a
      cumulative-effect adjustment to beginning retained earnings. The
      cumulative-effect adjustment should be disclosed gross (that is, aggregating
      gain positions separate from loss positions) determined on an
      instrument-by-instrument basis. Prior periods should not be restated. The
      Company does not believe there will be any effect on the financial statements
      upon adopting FASB No. 155.




Recently
      Issued Accounting Pronouncements (continued)




In
      March
      2006, the FASB issued FASB Statement No. 156, “Accounting for Servicing of
      Financial Assets—an amendment of FASB Statement No. 140” (FASB Statement No.
      156”). FASB No. 156 amends FASB Statement No. 140, *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities,* with
      respect to the accounting for separately recognized servicing assets and
      servicing liabilities. FASB No. 156 is effective for years beginning after
      September 15, 2006. The Company does not believe FASB No. 156 will have a
      material effect on the Company’s financial statements.




In
      September 2006, the FASB issued Statement No. 157, “Fair Value Measurements”
(“FASB No. 157”). FASB No. 157 defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles (GAAP), and
      expands disclosures about fair value measurements. FASB No. 157 applies under
      other accounting pronouncements that require or permit fair value measurements,
      the FASB having previously concluded in those accounting pronouncements that
      fair value is the relevant measurement attribute. Accordingly, this Statement
      does not require any new fair value measurements. However, for some entities,
      the application of this Statement will change current practice.




FASB
      No.
      157 is effective for financial statements issued for fiscal years beginning
      after November 15, 2007, and interim periods within those fiscal years. Earlier
      application is encouraged, provided that the reporting entity has not yet issued
      financial statements for that fiscal year, including financial statements for
      an
      interim period within that fiscal year. The Company is currently reviewing
      the
      potential effect of this statement on its financial statements.




In
      September 2006, the FASB issued Statement No. 158, “Employers’ Accounting for
      Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB
      Statements No. 87, 88, 106, and 132R” (“FASB No. 158”). This Statement improves
      financial reporting by requiring an employer to recognize the overfunded or
      underfunded status of a defined benefit postretirement plan (other than a
      multiemployer plan) as an asset or liability in its statement of financial
      position and to recognize changes in that funded status in the year in which
      the
      changes occur through comprehensive income of a business entity or changes
      in
      unrestricted net assets of a not-for-profit organization. This Statement also
      improves financial reporting by requiring an employer to measure the funded
      status of a plan as of the date of its year-end statement of financial position,
      with limited exceptions.





F-14




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      1-
      Summary of Significant Accounting Policies (continued)




An
      employer with publicly traded equity securities is required to initially
      recognize the funded status of a defined benefit postretirement plan and to
      provide the required disclosures as of the end of the fiscal year ending after
      December 15, 2006. The Company does not believe FASB No. 158 will have any
      material effect on its financial statements.




NOTE
      2
      RESTATEMENT AND RECLASSIFICATION OF PREVIOUSLY ISSUED FINANCIAL
      STATEMENTS




The
      Company’s previously issued consolidated balance sheets, statements of
      operations, statements of shareholders’ equity (deficit) and cash flows for the
      fiscal years ended September 30, 2005 and 2004 have been restated to correct
      for
      certain accounting errors in the following areas:





Intellectual
      Property -
      Intellectual property consists of patents, copyrights and trademarks purchased
      from TechnoConcepts (CA). The Company had previously capitalized these costs
      as
      intangible assets. Following the receipt of, and responses to, a series of
      comment letters from the staff of the SEC’s Division of Corporation Finance, the
      Company has determined that certain expired provisional patents and trademarks
      included in these assets totaling $1,010,000 should have been recorded as an
      adjustment to the purchase price at the time of acquisition. The remaining
      portion of the assets, comprised primarily of chipsets based on patented
      technology totaling $6,990,000, has been expensed as of September 30, 2005
      as a
      result of the inability to obtain definitive revenue-producing contracts based
      on the technology.





Goodwill- In June
      2001, the Financial Accounting Standards Board issued Statements of Financial
      Accounting Standards No. 141, “Business Combinations”, and No. 142, “Goodwill
      and Other Intangible Assets”, effective for fiscal years beginning after
      December 15, 2001. Under the rules, the pooling of interests method of
      accounting for acquisitions is no longer allowed and goodwill and intangible
      assets deemed to have indefinite lives will no longer be amortized but will
      be
      subject to annual impairment tests in accordance with the
      Statements.





The
      Company performed the annual tests at September 30, 2005, and determined there
      to be an impairment of the goodwill recorded in connection with the acquisition
      of all of the assets of Asanté Technologies, Inc in June 2005, totaling
      $529,162. Following the receipt of, and response to, a series of comment letters
      from the staff of the SEC’s Division of Corporation Finance, the Company has
      determined that it could have recognized the declining trend in revenues when
      performing its annual impairment test at September 30, 2005. The Company has
      therefore determined that the entire amount of the goodwill should have been
      impaired at that time.





F-15




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      2
      Restatement and reclassification of previously issued financial statements
      (continued)





Consulting
      expenses- The
      Company had previously reported consulting expense paid through the issuance
      of
      stock, totaling approximately $468,000, during the quarter ended March 31,
      2004.  In response to comment letters from the SEC, the Company determined
      that the services should have been valued at $1,169,429 and reported in the
      quarterly period ended December 31, 2003.




Restatement
      Impact on Consolidated Statement of Operations


For
      the
      years ended September 30, 2005 and the nine months ended September 30,
      2004





2005
            
            2004As
                Previously
            
            
            
            As
                PreviouslyReported
            
            As
                Restated
            
            Reported
            
            As
                RestatedRevenues
            
            $
            898,261
            
            $
            898,261
            
            $
            0
            
            $
            0Cost
                of Sales
            
            
            858,284
            
            
            858,284
            
            
            0
            
            
            0Gross
                Profit
            
            
            39,977
            
            
            39,977
            
            
            0
            
            
            0Operating
                expenses:General
                and administrative expenses
            
            
            8,603,583
            
            
            8,603,583
            
            
            880,812
            
            
            411,939Loss
                before other income(expense)and
                income taxes
            
            
            (8,563,606
            )
            
            (8,563,606
            )
            
            (880,812
            )
            
            (411,939
            )Other
                income (expense)Interest
                expense
            
            
            (2,164,142
            )
            
            (2,164,142
            )
            
            (252,162
            )
            
            (252,162
            )Impairment
                of Goodwill
            
            
            (529,162
            )
            
            (6,192,791
            )
            
            0
            
            
            0Impairment
                of intellectual property
            
            
            0
            
            
            (6,990,000
            )
            
            0
            
            
            0Loss
                before income taxes
            
            
            (11,256,910
            )
            
            (23,910,539
            )
            
            (1,132,974
            )
            
            (664,101
            )Income
                taxes
            
            
            1,600
            
            
            1,600
            
            
            0
            
            
            0Net
                loss
            
            
            (11,258,510
            )
            
            (23,912,139
            )
            
            (1,132,974
            )
            
            (664,101
            )Dividends
                on preferred stock
            
            
            100,000
            
            
            100,000
            
            
            0
            
            
            0Net
                loss available to commonshareholders
            
            
            ($11,358,510
            )
            
            ($24,012,139
            )
            
            ($1,132,974
            )
            
            ($664,101
            )Basic
                and diluted shares outstanding
            
            
            26,378,677
            
            
            26,378,677
            
            
            19,424,421
            
            
            19,424,421Basic
                and diluted loss per shareavailable
                to common shareholder
            
            
            (0.43
            )
            
            (0.91
            )
            
            (0.06
            )
            
            (0.03
            )





F-16





Restatement
      Impact on Consolidated Balance Sheet


As
      of
      September 30, 2005 and 2004




2005
            
            2004As
                Previously
            
            
            
            As
                PreviouslyReported
            
            As
                Restated
            
            Reported
            
            As
                RestatedAssetsCurrent
                AssetsCash
            
            $
            190,669
            
            $
            190,669
            
            $
            66,558
            
            $
            66,558Accounts
                receivable
            
            
            318,202
            
            
            318,202
            
            
            0
            
            
            0Inventory
            
            
            499,543
            
            
            499,543
            
            
            0
            
            
            0Prepaid
                expenses
            
            
            328,723
            
            
            328,723
            
            
            727
            
            
            727Total
                current assets
            
            
            1,337,137
            
            
            1,337,137
            
            
            67,285
            
            
            67,285Fixed
                Assets
            
            
            383,525
            
            
            383,525
            
            
            28,743
            
            
            28,743Other
                assets:Intellectual
                property
            
            
            8,000,000
            
            
            0
            
            
            8,000,000
            
            
            6,990,000Goodwill
            
            
            5,663,629
            
            
            0
            
            
            0
            
            
            0Deposits
            
            
            77,251
            
            
            77,251
            
            
            0
            
            
            0Debt
                issue costs
            
            
            250,762
            
            
            250,762
            
            
            82,875
            
            
            82,875Total
                assets
            
            $
            15,712,304
            
            $
            2,048,675
            
            $
            8,178,903
            
            $
            7,168,903Liabilities
                and Shareholders’ DeficitCurrent
                LiabilitiesLine
                of Credit
            
            $
            331,639
            
            $
            331,639
            
            $
            0
            
            $
            0Note
                Payable
            
            
            750,000
            
            
            750,000
            
            
            921,985
            
            
            921,985Current
                portion of capital leases
            
            
            10,567
            
            
            10,567
            
            
            0
            
            
            0Accounts
                payable
            
            
            2,163,838
            
            
            2,163,838
            
            
            9,000
            
            
            9,000Accrued
                expenses
            
            
            1,076,336
            
            
            1,076,336
            
            
            258,989
            
            
            258,989Customer
                deposits
            
            
            278,806
            
            
            278,806
            
            
            0
            
            
            0Due
                to related parties
            
            
            263,698
            
            
            263,698
            
            
            160,000
            
            
            160,000Total
                current liabilities
            
            
            4,874,884
            
            
            4,874,884
            
            
            1,349,974
            
            
            1,349,974Capital
                leases payable less current maturities
            
            
            17,123
            
            
            17,123
            
            
            0
            
            
            0Convertible
                note payable
            
            
            1,902,327
            
            
            1,902,327
            
            
            0
            
            
            0Total
                liabilities
            
            
            6,794,334
            
            
            6,794,334
            
            
            1,349,974
            
            
            1,349,974Shareholders’
                DeficitSeries
                A Preferred stock
            
            
            16
            
            
            16
            
            
            32
            
            
            32Series
                B Preferred stock
            
            
            2,000,000
            
            
            2,000,000
            
            
            0
            
            
            0Common
                stock
            
            
            27,015
            
            
            27,015
            
            
            24,852
            
            
            24,852Additional
                paid in capital
            
            
            20,490,380
            
            
            20,490,380
            
            
            9,048,984
            
            
            8,739,540Subscriptions
                receivable
            
            
            0
            
            
            0
            
            
            (4,008
            )
            
            (4,008
            )Accumulated
                deficit
            
            
            (13,599,441
            )
            
            (27,263,070
            )
            
            (2,240,931
            )
            
            (2,941,487
            )Total
                shareholders’ deficit
            
            
            8,917,970
            
            
            (4,745,659
            )
            
            6,828,929
            
            
            5,818,929Total
                liabilities and shareholders’ deficit
            
            $
            15,712,304
            
            $
            2,048,675
            
            $
            8,178,903
            
            $
            7,168,903




F-17




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




NOTE
      2
      Restatement and reclassification of previously issued financial statements
      (continued)





Restatement
      Impact on Cash Flows





As
      a
      result of the restatements, there would be no changes to the net cash flows
      from
      operating activities, investing activities or financing activities in the
      statements of cash flows for the year ended September 30, 2005 and the nine
      month period ended September 30, 2004.





Restatement
      Impact on Retained Deficit





As
      a
      result of the restatements, the retained deficit increased to $2,941,487 at
      September 30, 2004 and $26,953,626 at September 30, 2005.





Quarterly
      Financial Data (Unaudited)





The
      following financial data presents the effect of the restatements on the
      statement of operations for those periods affected by the
      restatements:





F-18





TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      2
      Restatement and reclassification of previously issued financial statements
      (continued)




Restatement
      Impact on Consolidated Statement of Operations


For
      the
      three months ended December 31, 2003 and March 31, 2004





December
                31, 2003
            
            March
                31, 2004As
                Previously
            
            
            
            As
                PreviouslyReported
            
            As
                Restated
            
            Reported
            
            As
                RestatedRevenues
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0Cost
                of Sales
            
            
            0
            
            
            0
            
            
            0
            
            
            0Gross
                Profit
            
            
            0
            
            
            0
            
            
            0
            
            
            0Operating
                expenses:General
                and administrative expenses
            
            
            941,354
            
            
            2,110,783
            
            
            1,423,368
            
            
            959,020Loss
                before other income(expense)and
                income taxes
            
            
            (941,354
            )
            
            (2,110,783
            )
            
            (1,423,368
            )
            
            (959,020
            )Other
                income (expense)Interest
                expense
            
            
            (743
            )
            
            (743
            )
            
            (1
            )
            
            (1
            )Impairment
                of Goodwill
            
            
            0
            
            
            0
            
            
            0
            
            
            0Impairment
                of intellectual property
            
            
            0
            
            
            0
            
            
            0
            
            
            0Loss
                before income taxes
            
            
            (942,097
            )
            
            (2,111,526
            )
            
            (1,423,369
            )
            
            (959,021
            )Income
                taxes
            
            
            0
            
            
            0
            
            
            0
            
            
            0Net
                loss
            
            
            (942,097
            )
            
            (2,111,526
            )
            
            (1,423,369
            )
            
            (959,021
            )Dividends
                on preferred stock
            
            
            0
            
            
            0
            
            
            0
            
            
            0Net
                loss available to commonshareholders
            
            
            ($942,097
            )
            
            ($2,111,526
            )
            
            ($1,423,369
            )
            
            ($959,021
            )Basic
                and diluted shares outstanding
            
            
            7,930,320
            
            
            7,930,320
            
            
            7,930,320
            
            
            7,930,320Basic
                and diluted loss per shareavailable
                to common shareholder
            
            
            (0.12
            )
            
            (0.27
            )
            
            (0.18
            )
            
            (0.12
            )





F-19




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




NOTE
      3
      PREFERRED STOCK





Series
      A preferred stock





The
      Company has designated 16,000 shares of the preferred stock as “Series A
      preferred stock”. The shares of Series A preferred stock are divided into Series
      A-1 and Series A-2. Shares of Series A preferred stock have no par value per
      share, a face value of $1,000 per share and rank senior to common stock and
      shares of Series B preferred stock.





Shares
      of
      Series A-1 preferred stock do not bear dividends. Shares of Series A-2 preferred
      stock bear dividends, payable quarterly at the rate of five percent per annum
      or
      $50.00 per share. Such dividends are payable in cash or common stock, as the
      Board of Directors shall determine.





Each
      share of Series A preferred stock is convertible, at the option of the holder
      thereof, at any time after January 31, 2006, into a number of shares of common
      stock determined by dividing the face value of the shares to be converted by
      the
      conversion price, which shall be an amount equal to the lesser of (i) 100%
      of
      the average of the closing bid prices for the Company’s common stock occurring
      during the five trading days immediately prior to the date of conversion, and
      (ii) $0.50 per conversion share. The number of shares of the Company’s common
      stock to be issued upon conversion is subject to anti-dilution protection in
      the
      event of certain dilutive issuances by the Company. Notwithstanding the
      foregoing, shares of Series A-1 preferred stock can only be converted upon
      the
      satisfaction of a number of conditions precedent, including that the Company
      have gross revenues in any fiscal year of at least $75,000,000 as disclosed
      in a
      periodic report filing with the Securities and Exchange Commission pursuant
      to
      the Securities Exchange Act of 1934. The shares of Series A preferred stock
      are
      also subject to mandatory conversion upon the occurrence of certain
      events.




** In the
      event of any liquidation, dissolution or winding up of the Company, either
      voluntary or involuntary, the holders of the Series A preferred stock shall
      be
      entitled to receive, prior and in preference to any distribution of any of
      the
      assets of the Company to the holders of common stock and of any subsequently
      issued series of preferred stock, an amount per share equal to the sum of $1,000
      for each outstanding share of Series A preferred stock plus accrued and unpaid
      dividends (as adjusted for stock dividends, stock distributions, splits,
      combinations or recapitalizations).





F-20




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





Note
      3-
      preferred stock (continued)





The
      holders of the Series A preferred stock have the right to vote on an
      as-converted basis with the common stock on all matters submitted to a vote
      of
      stockholders.





The
      shares of Series A preferred stock are redeemable, at the option of the holders,
      for the greater of (x) 125% of the face value of such shares, plus all accrued
      and unpaid dividends and (y) an amount determined by dividing (A) the sum of
      the
      face value of such shares, plus all accrued and unpaid dividends by (B) the
      conversion price in effect on the date upon which a mandatory redemption is
      triggered and multiplying the resulting amount by the average closing bid price
      for shares of our common stock for the five trading days immediately preceding
      the mandatory redemption date, if: (i) the Company fails to issue shares of
      common stock to a holder upon conversion of any preferred shares, and such
      failure continues for ten (10) business days; (ii) the Company breaches, in
      a
      material respect, any material term or condition of its articles of
      incorporation or any other agreement, document, certificate or other instrument
      delivered in connection with the transactions contemplated thereby and such
      breach continues for a period of five (5) business days after written notice
      thereof to the Company; or (iii) any material representation or warranty made
      by
      the Company in any agreement, document, certificate or other instrument
      delivered to the holder of Series A preferred stock prior to the date of
      issuance is inaccurate or misleading in any material respect as of the date
      such
      representation or warranty was made due to voluntary action undertaken by us
      or
      a failure by the Company to take action.





Series
      B preferred stock





The
      Company has designated 800 shares of the preferred stock as "Series B
      preferred stock". Shares of Series B preferred stock have no par value per
      share, have a face value of $2,500 per share and rank senior to common stock
      and
      B-1 preferred stock but junior to shares of Series A preferred
      stock.




Shares
      of
      Series B preferred stock will bear dividends, payable quarterly at the rate
      of
      ten per cent per annum or $250.00 per preferred share. Such dividends shall
      be
      payable in cash or common stock, as the Board of Directors shall determine.
      At
      September 30, 2006, $300,000 has been accrued for dividends which have not
      been
      declared and paid.





Each
      share of Series B preferred stock is convertible, at the option of the holder
      thereof, at any time into 1,000 shares of common stock, subject to certain
      anti-dilution adjustments. The shares of Series B preferred stock are
      automatically converted into shares of common stock on the third anniversary
      of
      the issuance date unless the shares of the Company’s common stock are not quoted
      on the Nasdaq market.




In
      the
      event of any liquidation, dissolution or winding up of the Company, either
      voluntary or involuntary, the holders of the Series B preferred stock shall
      be
      entitled to receive, prior and in preference to any distribution of any of
      the
      assets of the Company to the holders of the Company’s common stock by reason of
      their ownership thereof, an amount per share equal to the sum of  $2,500
      for each outstanding share of Series B preferred stock plus accrued and unpaid
      dividends (as adjusted for stock dividends, stock distributions, splits,
      combinations or recapitalizations).




F-21




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





Note
      3-
      preferred stock (continued)





The
      holders of the Series B preferred stock have the right to vote on an
      as-converted basis, with the holders of common stock on all matters submitted
      to
      a vote of stockholders.





The
      shares of Series B preferred stock are redeemable, at the option of the holders,
      for 125% of the face value, plus all accrued and unpaid dividends, if: (i)
      the
      Company fails to issue shares of common stock to a holder upon conversion of
      any
      preferred shares, and such failure continues for ten (10) Business Days;
 (ii) the Company breaches, in a material respect, any material term or
      condition of the Company’s articles of incorporation or any other agreement,
      document, certificate or other  instrument delivered in connection with the
      transactions contemplated by the preferred stock securities purchase agreement
      under which the Series B preferred stock was issued and such breach continues
      for a period of five (5) business days after written notice thereof to the
      Company; or (iii) any material representation or warranty made by the Company
      in
      any agreement, document, certificate or other instrument delivered to the
      investors in such shares prior to the date of issuance is inaccurate or
      misleading in any material respect as of the date such representation or
      warranty was made due to voluntary action undertaken by the Company  or a
      failure by the Company to take action.




Series
      B-1 preferred stock





2,300
      shares have been designated as “Series B-1 preferred stock”. Shares of Series
      B-1 preferred stock have no par value per share, have a face amount of $2,500
      per share, and rank senior to shares of common stock but junior to shares of
      Series A and Series B preferred stock.





Shares
      of
      Series B-1 preferred stock bear dividends, payable quarterly at the rate of
      eight (8%) per cent per annum or $200.00 per share. Such dividends are payable
      in cash or in shares of the Company’s common stock (at the then current market
      price), as the Board of Directors shall determine. Each share of Series B-1
      preferred stock is convertible, at the option of the holder thereof, at any
      time
      into 1,000 shares of our common stock, subject to certain anti-dilution
      adjustments. Provided there is an effective registration statement covering
      the
      resale of the shares of common stock underlying the shares of Series B-1
      preferred stock, the shares of Series B-1 preferred stock are automatically
      converted into shares of our common stock on the date when the market price
      of
      our common stock exceeds $5.00 for twenty (20) consecutive trading
      days.





In
      the
      event of any liquidation, dissolution or winding up of the Company, either
      voluntary or involuntary, the holders of the Series B-1 preferred stock shall
      be
      entitled to receive, prior and in preference to any distribution of any of
      the
      assets of the Company to the holders of common stock by reason of their
      ownership thereof, but after payment in full of any liquidation preference
      amounts payable to the holders of Series A and Series B preferred stock, an
      amount per share equal to the sum of $2,000 for each outstanding share of Series
      B-1 preferred stock plus accrued and unpaid dividends (as adjusted for stock
      dividends, stock distributions, splits, combinations or recapitalizations).





The
      holders of the Series B-1 preferred stock have no voting rights.




F-22




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




Note
      3-
      preferred stock (continued)





As
      of
      September 30, 2006, the Company sold 2,203 shares of Series B-1 Preferred
      (convertible to 2,203,000 shares of Common) at an aggregate purchase price
      of
      $5,505,506.





As
      of
      September 30, 2006, $617,525 has been accrued for dividends which have not
      been
      declared and paid.





NOTE
      4
      GOING CONCERN





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. The Company has a cumulative loss from
      operations of $48,830,529, negative working capital of $8,329,426 and a negative
      cash flow from operations of $11,453,733, which raises doubt about its ability
      to continue as a going concern. These financial statements do not include any
      adjustments that might result from the outcome of this uncertainty. The Company
      expects our cash requirements will be significant throughout its fiscal year
      2007, as the Company continues its research and development efforts, and
      attempts to execute on its business strategy through working capital growth
      and
      capital expenditures. The amount and timing of cash requirements will depend
      on
      market acceptance of the Company’s products and the resources the Company
      devotes to researching and developing, marketing, selling and supporting its
      products





The
      Company believes that its current cash and cash equivalents on hand should
      be
      sufficient to fund our operations for at least the next two months. Thereafter,
      if current sources are not sufficient to meet the Company’s needs, the Company
      may seek additional equity or debt financing. In addition, any material
      acquisition of complementary businesses, products or technologies or material
      joint venture could require the Company to obtain additional equity or debt
      financing. There can be no assurance that such additional financing would be
      available on acceptable terms, if at all. If the Company raises additional
      funds
      through the issuance of equity securities the percentage ownership of the
      Company’s shareholders prior to such transaction(s) would be reduced. If the
      Company is unable to raise sufficient funds on acceptable terms, the Company
      may
      not succeed in executing its strategy and achieving its business objectives.
      In
      particular, the Company could be forced to limit its product development and
      marketing activities and forego attractive business opportunities, and the
      Company may lose the ability to respond to competitive pressures.





NOTE
      5
      CONVERTIBLE DEBENTURES





On
      November 17, 2004 the Company entered into a securities purchase agreement
      (the
      "Purchase Agreement"), a registration rights agreement, and a security agreement
      with certain institutional investors. Pursuant to the Purchase Agreement, the
      Company sold its 7% secured convertible debentures in the aggregate principal
      amount of $3,775,000 and warrants exercisable for a total of 608,000 shares
      of
      the Company’s common stock, one half of which are exercisable at $3.50 per share
      and one half of which are exercisable at $4.00 per share. The gross proceeds
      from the offering of the 7% secured convertible debentures, the warrants, and
      the shares of Series B preferred stock (see Note 3) were approximately
      $7,013,675 in cash and other consideration. Net proceeds to the Company from
      this transaction were approximately $3,442,000, after the payment of commissions
      and expenses. In connection with this transaction, the Company paid commissions
      to Duncan Capital, LLC, as placement agent, in the approximate amount of
      $332,550 and also issued warrants exercisable for 120,800 shares of the
      Company’s common stock at $2.50 per share, 24,160 shares at $3.50 per share and
      24,160 shares at $4.00 per share to Duncan Capital.





In
      issuing the securities under the terms of the Purchase Agreement, the Company
      relied upon the exemption from registration afforded by Section 4(2) of the
      Act,
      in that: (a) the securities were sold to a limited number of sophisticated
      accredited investors, (b) the securities were sold without any general
      solicitation or public advertising, and (c) the purchasers provided the Company
      with representations customary for a private placement of
      securities.





The
      Company reflected the amortization of the discounts on these debentures as
      interest expense totaling $1,803,774 and $1,651,562 for the fiscal years ended
      September 30, 2006 and 2005 respectively.





Under
      the
      terms of the Purchase Agreement, the debentures were convertible into shares
      of
      the Company’s common stock at $2.50 per share. Interest was due quarterly on the
      last day of each calendar quarter and, at the Company’s discretion, could be
      paid in cash or shares of the Company’s common stock assuming certain conditions
      were satisfied (including, that the shares of the Company’s common stock
      issuable upon conversion of the debentures were registered for resale to the
      public with the Securities and Exchange Commission). On the first day of each
      month commencing on December 1, 2005, the Company was required to redeem
      one-twelfth of the original principal amount of the 7% secured convertible
      debentures.





The
      7%
      secured convertible debentures were due and payable on November 17, 2006. During
      fiscal 2006, certain debenture holders notified the Company that they were
      exercising their conversion right, and as a result, debentures in the aggregate
      principal amount of $1,275,000 were converted into 510,000 shares of the
      Company’s common stock. Also during fiscal 2006, certain debenture holders
      notified the Company that they were willing to exchange their debentures for
      secured subordinated promissory notes (more fully described in Note 6) and,
      as a
      result, debentures in the aggregate principal amount of $1,250,000 were
      exchanged for the Company’s secured subordinated promissory notes.





As
      of
      September 30, 2006, the outstanding debentures consisted of the
      following:





Principal
                amount of 7% secured convertible debentures outstanding as of September
                30, 2006
            
            $
            1,250,000Less:
                unamortized conversion costs
            
            
            (68,899
            )$
            1,181,101





Subsequent
      to September 30, 2006, additional debenture holders notified the Company that
      they were willing to exchange their debentures for the Company’s secured
      subordinated promissory notes and, as a result, debentures in the aggregate
      principal amount of $1,000,000 were also exchanged. Debentures in the aggregate
      principal amount of $250,000 remained outstanding as of November 17,
      2006.





As
      of the
      date of this report, the Company has not paid the principal and interest due
      with respect to the outstanding debentures and is, accordingly, in default.
      The
      Company is also in default because (i) the Company’s registration statement,
      required under the registration rights agreement associated with the debentures,
      has not been declared effective, and (ii) the Company did not redeem the
      debentures as required commencing on December 1, 2005. Therefore, the holders
      of
      the outstanding debentures can elect to require the Company to pay a mandatory
      repayment amount equal to at least 130% of the outstanding principal amount,
      plus all other accrued and unpaid amounts under such debentures. The terms
      of a
      separate security agreement provide that, upon the occurrence of an event of
      default which is not cured, the debenture holders (acting in concert) have
      the
      right to take possession of all of the Company’s assets, to operate the
      Company’s business and to exercise certain other rights provided in the security
      agreement associated with the debentures.





F-23




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





Note
      5-
      Convertible Debentures (continued)





Under
      the
      Registration Rights Agreement, the Company agreed to file a registration
      statement covering the resale of the shares of the Company’s common stock
      issuable upon conversion of the debentures and upon exercise of the warrants
      by
      no later than January 20, 2005. On May 4, 2005, the Company filed with the
      SEC a
      registration statement on Form SB-2 for that purpose. By virtue of the
      delinquency, the Company became obligated to pay a penalty equal to 1% of the
      aggregate purchase price paid by each purchaser for the debentures, effective
      as
      of January 20, 2005, and an additional 1% on the 20th of each month thereafter
      until (and including) April 20, 2005. Any unpaid amount was to bear interest
      at
      a rate of 18% per annum. Under the Registration Rights Agreement, the Company
      also agreed to use its best efforts to cause the registration statement to
      be
      declared effective by the SEC as promptly as possible, but not later than 135
      days following the closing date of the financing transaction. On July 15, 2005,
      the Registration Rights Agreement was amended to extend the period for the
      registration statement to be declared effective from 135 days to 300 days.
      However, the registration statement was not declared effective by the SEC within
      this extended 300-day period. Failure to have the registration statement
      declared effective resulted in the occurrence of an event of default under
      the
      debentures, effective September 13, 2005, which has not been cured as of the
      date hereof. Certain liabilities have therefore been incurred by the Company
      for
      failing to have the registration statement declared effective, in a timely
      manner. The Registration Rights Agreement also provides indemnification and
      contribution remedies to the purchasers of the debentures and warrants in
      connection with the resale of the shares of common stock underlying such
      securities pursuant to such registration statement.




F-24




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





Note
      5-
      Convertible Debentures (continued)




NOTE
      6
      NOTES PAYABLE




Effective
      as of May 30, 2006 the Company entered into a series of Note Purchase Agreements
      with a number of investors, some of whom had previously invested in the Company.
      To secure the Company's obligations under the Note Purchase Agreements, the
      Company granted a security interest in all of its assets (including, without
      limitation, its intellectual property) in favor of the investors, subordinated
      to the Company's existing Convertible Debentures and certain accounts receivable
      facilities. The security interest terminates upon payment or satisfaction of
      all
      of the Company's obligations under the Note Purchase Agreements.





Effective
      as of May 30, 2006, the Company entered into a series of note purchase
      agreements with a number of investors, including certain investors in the
      Company’s 7% secured convertible debentures who agreed to exchange such
      debentures for secured subordinated promissory notes issued and sold under
      such
      note purchase agreements. To secure the Company's obligations under the note
      purchase agreements, the Company granted a security interest in all of its
      assets (including, without limitation, its intellectual property) in favor
      of
      the investors, subordinated to the security interest of the holders of the
      Company’s 7% secured convertible debentures and certain accounts receivable
      facilities. The security interest terminates upon payment or satisfaction of
      all
      of the Company’s obligations under the note purchase agreements.





Under
      the
      note purchase agreements, the Company issued to the investors its secured
      subordinated promissory notes in the aggregate principal amount of $8,359,520.
      The secured subordinated promissory notes carry an interest rate of 8% per
      annum.. These notes will mature on the date that is the earliest of (i) one
      year
      from the date of issuance of the applicable secured subordinated promissory
      note, (ii) the date on which the Company consummates the closing of its next
      equity financing or series of equity financings which in the aggregate total
      no
      less than $7,000,000, or (iii) the sale of the Company or sale of substantially
      all of the Company's assets any time prior to the maturity date. The Company
      may, at its option, prepay any of the secured subordinated promissory notes
      in
      whole or in part without penalty.





Under
      the
      terms of the secured subordinated promissory notes, the holders may declare
      the
      notes immediately due and payable upon the occurrence of any of the following
      events of default: (i) the Company’s failure to pay the principal when due, (ii)
      the Company’s material breach of any of the covenants or conditions made in the
      note purchase agreements , the secured subordinated promissory notes or the
      other transaction documents, (iii) the Company's filing of a voluntary
      bankruptcy proceeding, or (iv) the filing of an involuntary bankruptcy petition
      against the Company that is not dismissed or discharged within 180
      days.





As
      part
      of the consideration for the sale of these notes, the Company issued 5-year
      warrants to purchase shares of its common stock at an exercise price of $1.00,
      with each note purchaser to receive a pro rata share of the warrant pool of
      warrants. The warrants issued are exercisable for an aggregate of 8,359,520
      shares of the Company’s common stock. At issuance, the warrants had an estimated
      fair value of $8,359,520. The fair value of each warrant was estimated on the
      date of the grant using the Black-Scholes option-pricing model with the
      following weighted average assumptions: expected volatility of 112.93%; risk
      free interest rate of 7.0%; and expected lives of 5 years.





F-25





TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




NOTE
      6
      Notes Payable (continued)




As
      of
      September 30, 2006 the Notes payable consisted of the following:





Notes
                payable
            
            $
            8,359,520Less:
                unamortized issuance costs
            
            
            (5,791,763
            )$
            2,567,757




Subsequent
      to September 30, 2006, the Company and an investor in the secured subordinated
      promissory notes agreed to the exchange if $2,250,000 in principal amount of
      the
      secured subordinated promissory notes held by such investor into 1,500,000
      shares of the Company’s common stock.





NOTE
      7
      NOTES PAYABLE





During
      October, 2005 and April, 2006, the Company issued 8% promissory notes in the
      aggregate principal amount of $665,000 and $285,000, respectively. As part
      of
      the consideration, the Company issued 5-year warrants to purchase an aggregate
      of 469,000 shares of the Company’s common stock at an exercise price of $3.00
      per share, with each purchaser of the promissory notes receiving a pro rata
      share of the warrant pool consistent with the principal amount of the notes
      purchased. At issuance, the warrants had an estimated fair value of $864,270.
      The fair value of each warrant was estimated on the date of the grant using
      the
      Black-Scholes option-pricing model with the following weighted average
      assumptions: expected volatility of 91.19 to112.93%; risk free interest rate
      of
      7.0%; and expected lives of 5 years.





The
      promissory notes matured two months after the date of issuance, and now are
      due
      upon demand. The Company paid a finder’s fee of 10% of the gross proceeds upon
      maturity of these notes.





As
      of
      September 30, 2006 the notes payable consisted of the following:




Notes
                payable
            
            $
            950,000Less:
                unamortized issuance costs
            
            
            (476,152
            )$
            473,848




F-26




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




NOTE
      8
      INCOME TAXES





At
      September 30, 2006, the Company has a net loss carry forward totaling
      approximately $27,400,000 that may be offset against future taxable income
      through 2026. No tax benefit has been reported in the financial statements,
      however, because the Company believes there is a chance that the carry forward
      will expire unused. Accordingly, the tax benefit of the loss carry forward
      has
      been offset by a valuation allowance of the same amount.




Deferred
      income taxes are comprised of the following:




September
                30,2006Deferred
                tax assetsNet
                operating loss
            
            $
            10,963,511Inventory
                reserve
            
            
            177,600Interest
                payable
            
            
            320,622Bad
                debt allowance
            
            
            24,333Other
            
            
            784Intellectual
                property
            
            
            2,986,667Goodwill
            
            
            2,146,834Total
                deferred tax assets
            
            
            16,620,351Less:
                valuation allowance
            
            
            16,620,351$
            —





The
      valuation allowance will be evaluated at the end of each year, considering
      positive and negative evidence about whether the asset will be realized. At
      such
      time, the allowance will either be increased or reduced. Reduction could result
      in the partial or complete elimination of the allowance if positive evidence
      indicates that the value of the deferred tax asset will not be realized. It
      is
      management’s position that the deferred tax asset be recorded when there is
      positive evidence it will be realized.




F-27





TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





Note
      8 -
      Income Taxes (continued)





Income
      tax expense is comprised of the following:




September
                30,
            
            September
                30,2006
            
            2005Current:Federal
            
            $
            —
            
            $
            —State
            
            
            800
            
            
            1,600800
            
            
            1,600Deferred:Federal
            
            
            —
            
            
            —State
            
            
            —
            
            
            —Total
                income tax expense
            
            $
            800
            
            $
            1,600




A
      reconciliation of the difference between the expected income tax rate using
      the
      statutory federal tax rate and the Company’s effective rate is as follows:





Year
                ended
              September
                30,
              2005
            
            Nine
                months ended
              September
                30,
              2005U.S.
                Federal income tax statutory rate
            
            
            (34
            )%
            
            (34
            )%State
                income tax, net of federal income tax benefit
            
            
            (6
            )%
            
            (6
            )%Other-
                primarily net operating losses
            
            
            40
            %
            
            40
            %—
            %
            
            —
            %




NOTE
      9
      RELATED PARTY TRANSACTIONS




Certain
      officers have made interest-free advances to the Company. At September 30,
      2006,
      the advances totaled $715,825.





NOTE
      10
      LEASE





The
      Company leases its various office facilities under operating leases that expire
      through 2009. Future minimum rentals on the leases are as follows:





Year
                ended September 30,2007
            
            $
            460,6362008
            
            
            248,9842009
            
            
            16,866$
            726,486




F-28




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      11
      ACQUISITION





On
      June
      2, 2005, TechnoConcepts, Inc. (the "Company"), through its wholly-owned
      subsidiary, Asanté Acquisition Corp. acquired substantially all of the assets
      (collectively, the “Asanté Assets”) of Asanté Technologies, Inc. (“Asanté”). The
      acquisition of these assets was consummated pursuant to an Agreement and Plan
      of
      Acquisition among Asanté, the Company, and Asanté Acquisition Corp. dated as of
      February 25, 2005. In connection with the acquisition, Asanté Acquisition Corp.
      purchased the Asanté assets, which included certain patents, trademarks and
      other intellectual property right, along with cash and cash equivalents,
      accounts receivable, inventory, property, plant, equipment and other capital
      assets, in exchange for 1,161,170 restricted shares of the Company’s common
      stock.





An
      allocation of the purchase price at the date of acquisition is as
      follows:





Accounts
                receivable
            
            $
            737,975Inventory
            
            
            902,552Other
                current assets
            
            
            8,502Fixed
                assets
            
            
            56,216Other
                assets
            
            
            21,016Goodwill
            
            
            6,192,791Total
                assets acquired
            
            
            7,919,052Cash
                overdraft
            
            
            155,428Accounts
                payable
            
            
            2,180,760Accrued
                expenses
            
            
            273,297Note
                payable
            
            
            256,149Other
                liabilities
            
            
            21,250Capital
                leases payable
            
            
            32,168Total
                liabilities assumed
            
            
            2,919,052Value
                of stock issued
            
            $
            5,000,000




On
      October 17, 2005, TechnoConcepts, Inc., through its wholly-owned subsidiary,
      Asanté Acquisition Corp. completed a reorganization with RegalTech Inc.(
“RegalTech”), a publicly traded Delaware corporation. The reorganization
      provided for the merger of Asanté Acquisition Corp. and RegalTech, pursuant to
      the companies’ Agreement and Plan of Reorganization dated August 31, 2005.
      RegalTech’s name was changed to Asanté Networks, Inc. (“Asanté Networks”) and is
      trading on the Pink Sheets under the ticker symbol “ASTN”.





F-29




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      11
      Acquisition (continued)





In
      connection with the merger, the Company received 15,000 shares of Series A
      nondilutable convertible preferred stock (the “preferred stock”) of Asanté
Networks, which when converted will represent approximately eighty-five percent
      (85%) of the outstanding shares of Asanté Networks. Each share of preferred
      stock may be converted at any time after October 1, 2006 for 10,000 shares
      of
      common stock. The Company, as the holder of the preferred stock, shall have
      the
      same voting rights with respect to the business, management and affairs of
      Asanté Networks as if the preferred stock were converted to shares of common
      stock on the record date. The preferred stock bears dividends at an annual
      rate
      of $10.00 per share. In addition, Asanté Networks has effected a 10-for-1
      forward split of its common shares. Since the Company has retained 85% of the
      voting shares, the Company continues to report Asanté as a subsidiary and
      reflects the remaining 15% as a minority interest.




NOTE
      12
      COMMON STOCK ISSUED FOR CONSULTING SERVICES




During
      the year ended September 30, 2006, the Company issued 825,092 shares of common
      stock for consulting fees provided by third parties. The value of each share
      issuance was determined using the closing price of the common stock of the
      Company on the date of issuance.





NOTE
      13
      WARRANTS





On
      November 17, 2004 the Company entered into a securities purchase agreement
      (the
      "Purchase Agreement"), a registration rights agreement, and a security agreement
      with certain institutional investors. Pursuant to the Purchase Agreement, the
      Company sold its 7% secured convertible debentures in the aggregate principal
      amount of $3,775,000 and warrants exercisable for a total of 608,000 shares
      of
      the Company’s common stock, one half of which are exercisable at $3.50 per share
      and one half of which are exercisable at $4.00 per share. The warrants are
      exercisable at any time until November 17, 2009. In connection with this
      transaction, the Company issued warrants to Duncan Capital, LLC, as placement
      agent, exercisable for 169,120 shares of the Company’s common stock, with
      warrants exercisable for 120,000 shares at $2.50 per share, warrants exercisable
      for 24,160 shares at $3.50 per share and warrants exercisable for 24,160 shares
      at $4.00 per share. Pursuant to certain anti-dilution terms of the warrants,
      adjustments to the exercise price and to the number of warrant shares were
      required upon the issuance of our 8% secured subordinated promissory notes
      in
      May 2006. Therefore, the number of warrant shares increased from 608,000 to
      3,060,000 and the exercise price of these warrants was re-set to $1.00 per
      share.





During
      March 2005, the Company completed a private placement of 800 shares of Series
      B
      preferred stock at a price of $2,500 per share for $2 million. The Company
      also
      issued to the investors warrants to purchase an aggregate of 320,000 shares
      of
      common stock, one half of which were exercisable at $3.50 per share and one
      half
      of which were exercisable at $4.00 per share. The warrants are exercisable
      at
      any time until March 31, 2010. Pursuant to the anti-dilution terms of the
      warrants, adjustments to the exercise price and to the number of warrant shares
      were required upon the issuance of the Company’s 8% secured subordinated
      promissory notes. Therefore, the number of warrant shares increased from 320,000
      to 1,120,000 and the exercise price of these warrants was re-set to $1.00 per
      share.


F-30




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




NOTE
      13
      Warrants (continued)





In
      June
      2005, the Company issued to a financial advisor warrants to purchase 100,000
      shares of the Company’s common stock at an exercise price of $3.75 per share.
      The warrants are exercisable for the three- year period.





In
      September 2005, the Company issued to a financial advisor warrants to purchase
      75,000 shares of the Company’s common stock at an exercise price of $4.50 per
      share. The warrants are exercisable for a three-year period.




In
      September 2005, the Company issued to consultants warrants to purchase 40,000
      shares of the Company’s common stock at an exercise price of $3.75 per share.
      The warrants are exercisable for a three-year period.





In
      September 2005, the Company issued to a financial advisor warrants to purchase
      10,000 shares of the Company’s common stock at an exercise price of $6.00 per
      share. The warrants are exercisable for a three-year period.





In
      September 2005, in conjunction with the establishment of a credit facility,
      the
      Company issued warrants to purchase 150,000 shares of the Company’s common stock
      at an exercise price of $3.85 per share. The warrants are exercisable for a
      three-year period.





During
      fiscal 2006, the Company completed a private placement of 2,203 shares of Series
      B-1 preferred stock at a price of $2500 per share for gross proceeds of
      $5,505,506. The Company also issued to the investors warrants to purchase an
      aggregate of 880,880 shares of common stock, with warrants exercisable for
      440,000 shares at an exercise price of $3.00 per share and warrants exercisable
      for 400,000 shares at an exercise price of $4.00 per share. Pursuant to certain
      anti-dilution terms of these warrants, adjustments to the exercise price and
      to
      the number of warrant shares were required upon the issuance of our 8% secured
      subordinated promissory notes in May 2006. Therefore, the number of warrant
      shares increased from 880,880 to 3,083,083 and the exercise price of these
      warrants was re-set to $1.00 per share.




In
      October 2005 and April 2006, the Company entered into a series of note purchase
      agreements with a number of investors in the Company’s 8% promissory notes, In
      connection with this financing transaction, the Company issued to the investors
      warrants exercisable for an aggregate of 469,000 shares of the Company’s common
      stock at an exercise price per share of $3.00. The warrants are exercisable
      for
      a five-year period..




On
      May
      30, 2006, the Company entered into a series of note purchase agreements with
      a
      number of investors in the Company 8% secured subordinated promissory notes.
      In
      connection with this financing transaction, the Company issued to the investors
      in the 8% secured subordinated promissory notes warrants exercisable for an
      aggregate of 8,359,520 shares of the Company’s common stock at an exercise price
      of $1.00 per share. The warrants are exercisable for a five-year
      period.




At
      September 30, 2006, warrants exercisable for a total 16,635,723 shares of the
      Company’s common stock were outstanding. Of this amount, warrants exercisable
      for 15,622,603 shares of the Company’s common stock have an exercise price of
      $1.00, warrants exercisable for 220,800 shares have an exercise price of $2.50,
      warrants exercisable for 469,000 shares have an exercise price of $3.00,
      warrants exercisable for 24,160 shares have an exercise price of $3.50, warrants
      exercisable for 40,000 shares have an exercise price of $3.75, warrants
      exercisable for 150,000 shares have an exercise price of $3.85, warrants
      exercisable for 24,160 shares have an exercise price of $4.00, warrants
      exercisable for 75,000 shares have an exercise price of $4.50 and warrants
      exercisable for 10,000 shares have an exercise price of
      $6.00.


F-31





TechnoConcepts,
        Inc.
 And
        Subsidiaries
 Notes
        to
        Financial Statements
 September
        30, 2006
  NOTE
        13
        Warrants (continued)
  The
        fair
        value weighted average of the exercise price of the warrants is $1.15. The
        weighted average exercise price for all outstanding warrants as of September
        30,
        2006 is $1.15 and the weighted average remaining contractual life of warrants
        outstanding is 3.8 years. The table below summarizes warrants outstanding
        as of
        September 30, 2006:
  WARRANTS
              
              WEIGHTED
                  AVERAGE EXERCISE PRICEGranted
              
              
              1,193,120
              
              $
              1.15Exercised
              
              
              —
              
              
              —Canceled
              
              
              —
              
              
              —Warrants
                  outstanding andexercisable
                  atSeptember
                  30, 2005
              
              
              1,193,120
              
              $
              1.15Granted
              
              
              15,442,603
              
              $
              1.15Exercised
              
              
              —
              
              
              —Canceled
              
              
              —
              
              
              —Warrants
                  outstanding andExercisable
                  atSeptember
                  30, 2006
              
              
              16,635,723
              
              $
              1.15
  NOTE
        14
        OPTIONS
 
 In
        September 2005, the Company’s Board of Directors adopted the 2005 Equity
        Incentive Plan (the “2005 Plan”), pursuant to which up to 12,000,000 shares of
        common stock may be issued to officers, employees, non-employee directors,
        and
        consultants either through the award of restricted stock or through the exercise
        of grants of incentive stock options or nonqualified stock options. The exercise
        price of an option granted under the 2005 Plan generally may not be less
        than
        the fair market value of the Company’s common stock on the date of grant.
        Subject to the terms of the 2005 Plan, the Board of Directors is authorized
        to
        select optionees and to determine the number of shares covered by each option,
        its exercise price, a vesting schedule, and certain other
        terms.
  F-32
 
 TechnoConcepts,
        Inc.
 And
        Subsidiaries
 Notes
        to
        Financial Statements
 September
        30, 2006
  Note
        14
        Options (continued)
  The
        fair
        value weighted average of the exercise price of the options outstanding as
        of
        September 30, 2006, is $2.67. The weighted average exercise price for all
        outstanding options as of September 30, 2006 is $2.67 and the weighted average
        remaining contractual life of warrants outstanding is 2.6 years. The table
        below
        summarizes options outstanding as of September 30, 2006:
  Shares
              
              Option
                  Price Per ShareOptions
                  outstanding - September 30, 2004
              
              
              600,000
              
              $
              0.50-$3.50Granted
              
              
              2,252,500
              
              $
              2.91-$3.50Canceled
              
              
              —
              
              
              —Exercised
              
              
              —
              
              
              —Options
                  outstanding - September 30, 2005
              
              
              2,852,500
              
              $
              0.50-$3.50Granted
              
              
              1,365,000
              
              $
              1.62-$2.62Canceled
              
              
              (50,000
              )
              
              2.91Exercised
              
              
              (5,000
              )
              
              2.91Options
                  outstanding - September 30, 2006
              
              
              4,162,500
              
              $
              0.50-$2.91Options
                  exercisable- September 30, 2006
              
              
              1,693,425
              
              $
              0.50-$2.91
  NOTE
        15
        FOREIGN SALES
 
 During
        the year ended September 30, 2006, sales by region were broken down as
        follows:
 
 US
              
              
              91
              %Europe
              
              
              6
              %Others
              
              
              3
              %
  F-33
  TechnoConcepts,
        Inc.
 And
        Subsidiaries
 Notes
        to
        Financial Statements
 September
        30, 2006
  NOTE
        16
        EMPLOYMENT AGREEMENTS
 
 The
        Company has employment agreements with several of its key employees. The
        agreements are for terms of three years and are automatically extended unless
        the Company notifies the employee in writing 30 days prior to the anniversary
        date that the agreement will not be extended.
  Each
        agreement calls for a base salary, which may be adjusted annually at the
        discretion of the Company's Compensation Committee of the Company’s Board of
        Directors, and also provides for the employee’s eligibility to participate in
        the Company’s benefit plans and incentive bonuses which are payable based upon
        the attainment of certain profitability goals. Among other provisions, the
        agreements include a non-compete clause for varying periods not exceeding
        three
        years following termination of employment.
 
 The
        aggregate commitment for future salaries as of September 30, 2006 excluding
        bonuses and benefits is as follows:
 
 Fiscal
        year ending September 30,
 
 2007
              
              $
              829,6672008
              
              $
              260,0002009
              
              $
              66,667
 
 NOTE
        17
        CAPITAL LEASE OBLIGATIONS
 
 The
        Company leases a phone system under a capital lease. The lease calls for
        monthly
        payments of $1,463, has a length of 3 years with an interest rate of
        10.58%
 
 Future
        minimum lease payments are as follows:
  Year
                  EndedSeptember
                  302007$
              14,109less
                  interest portion
              
              
              442Present
                  value of net minimum lease payments
              
              
              13,667Less
                  current portion
              
              
              13,667$
              0
  F-34
  TechnoConcepts,
        Inc.
 And
        Subsidiaries
 Notes
        to
        Financial Statements
 September
        30, 2006
 
 NOTE
        18
        SUBSEQUENT EVENTS
 
 Separation
        and Release Agreement
 
 In
        December 2006, the Company entered into a separation and release agreement
        with
        Richard T. Hines Consulting (“RTH Consulting”) and its principal, who was then
        serving as a member of the Company’s board of directors. Among other provisions,
        the agreement provides for the release of the Company’s obligations under a
        consulting agreement, entered into August 2004, under which RTH Consulting
        was
        to perform consulting services and strategic marketing to government and
        international agencies with general assistance in support of marketing the
        products of the Company for 18 months in exchange for $10,000 per month,
        plus
        options to purchase up to 75,000 shares of the Company’s common stock at an
        exercise price of $5.75 per share. In addition, Mr. Hines resigned as a
        director, received a one-time payment of $108,691 and retained the ability
        to
        exercise previously granted options for the purchase of 90,000 shares of
        the
        Company’s common stock.
  F-35
 
 **ITEM
        8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND**  **FINANCIAL
        DISCLOSURE**
 
 Not
        applicable
  **ITEM
        8A. CONTROLS AND PROCEDURES**
 
 We
        maintain disclosure controls and procedures (as defined in Exchange Act Rule
        13a-15(e) and 15d-15(e)) that are designed to ensure that material information
        relating to the Company, and its consolidated subsidiaries, is recorded,
        processed, summarized and reported within the time periods specified in the
        Securities and Exchange Commission’s rules and forms, and that such information
        is accumulated and communicated to our management, including our chief executive
        officer and chief financial officer, as appropriate, to allow timely decisions
        regarding the required disclosure.
 
 In
        designing and evaluating our disclosure controls and procedures, management
        recognizes that any controls and procedures, no matter how well designed
        and
        operated, can provide only reasonable assurance of achieving the desired
        control
        objectives, and management necessarily is required to apply its judgment
        in
        evaluating the cost-benefit relationship of possible controls and
        procedures.
 
 *Evaluation
        of disclosure controls and procedures*
 
 As
        required by SEC Rule 13a-15(b), we carried out an evaluation, under the
        supervision and with the participation of our chief executive officer and
        chief
        financial officer, of the effectiveness of the design and operation of our
        disclosure controls and procedures as of the end of the fiscal year covered
        by
        this report.
 
 Based
        on
        the foregoing, our chief executive officer and chief financial officer have
        concluded that, for the reasons set forth below, our disclosure controls
        and
        procedures were not adequate to ensure that the information required to be
        disclosed by us in reports we file or submit under the Exchange Act is recorded,
        processed, summarized and reported within the time periods specified in the
        rules and forms of the Securities and Exchange Commission.
  *Management’s
        annual report on internal control over financial reporting*
  Our
        management is responsible for establishing and maintaining adequate internal
        control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
        under the Exchange Act. Our internal control over financial reporting is
        designed to provide reasonable assurance regarding the reliability of financial
        reporting and the preparation of financial statements for external purposes
        in
        accordance with U.S. generally accepted accounting principles (“US GAAP”). Our
        internal control over financial reporting includes those policies and procedures
        that:
  (i)  pertain
        to the maintenance of records that, in reasonable detail, accurately and
        fairly
        reflect the transactions and dispositions of our assets;
  (ii)  provide
        reasonable assurance that transactions are recorded as necessary to permit
        preparation of financial statements in accordance with US GAAP, and that
        our
        receipts and expenditures are being made only in accordance with authorizations
        of our management and directors; and
  (iii)  provide
        reasonable assurance regarding prevention or timely detection of unauthorized
        acquisition, use or disposition of assets that could have a material effect
        on
        the financial statements.
  Because
        of its inherent limitations, internal control over financial reporting may
        not
        prevent or detect misstatements. Also, projections of any evaluation of
        effectiveness to future periods are subject to the risk that controls may
        become
        inadequate because of changes in conditions or that the degree of compliance
        with the policies or procedures may deteriorate.
  A
        material weakness is (i) a significant deficiency or (ii) a combination of
        significant deficiencies, which result(s) in there being more than a remote
        likelihood that a material misstatement of the annual or interim financial
        statements will not be prevented or detected on a timely basis by employees
        in
        the normal course of their assigned functions. The terms “material weakness” and
“significant deficiency” are used here as defined in the Public Company
        Accounting Oversight Board’s (PCAOB) Auditing Standard No. 2.
  Our
        chief
        executive officer and chief financial officer conducted an evaluation of
        the
        effectiveness of our internal control over financial reporting as of September
        30, 2006, as required by Exchange Act Rule 13a-15(c). Our management’s
        evaluation and assessment of our internal control over financial reporting
        identified the following three material weaknesses.
  (1)
              As
                  of March 31, 2004, our management did not have an accurate and
                  complete
                  understanding of US GAAP to properly record consultancy expenses
                  associated with the issuance of the Company’s common stock. Consultancy
                  expenses should have been recorded in the quarterly period in which
                  the
                  Company agreed to issue shares of its common stock in consideration
                  for
                  the related consulting services. As a result of this deficiency
                  in our
                  internal control over financial reporting, we have corrected the
                  accounting as described in the notes to the consolidated financial
                  statements appearing elsewhere in this Annual
                  Report.
  (2)
              As
                  of September 30, 2005, our management did not have an accurate
                  and
                  complete understanding of US GAAP to properly adjust the initial
                  valuation
                  of trademarks and expired provisional patents acquired in connection
                  with
                  the Company’s acquisition of TechnoConcepts, Inc., a Nevada corporation
                  (“TCI Nevada”) in February 2004. At the time of the initial valuation of
                  these assets, management should have recognized that the subject
                  of the
                  trademarks had no “brand” value and that the technology underlying the
                  provisional patents were effectively part of an ongoing research
                  and
                  development effort at the time of their acquisition. As a result
                  of this
                  deficiency in our internal control over financial reporting, we
                  were
                  required to restate our consolidated financial statements as described
                  in
                  the notes to the consolidated financial statements appearing elsewhere
                  in
                  this annual report on Form 10-KSB.
  23
 
 (3)
              As
                  of September 30, 2005, our management did not have an adequate
                  system for
                  the operating unit’s management to recognize the declining trend of sales
                  as of September 30, 2005, and to enable us to determine that the
                  carrying
                  amount of the operating unit’s goodwill exceeded the implied fair value of
                  that goodwill by a greater amount. As a result of this deficiency
                  in our
                  internal control over financial reporting, we did not recognize
                  the proper
                  impairment loss for the period ending September 30, 2005. As a
                  result of
                  this deficiency in our internal control over financial reporting,
                  we were
                  required to restate our consolidated financial statements as described
                  in
                  the notes to the consolidated financial statements appearing elsewhere
                  in
                  this Annual Report.
 
 *Changes
        in internal control over financial reporting*
  We
        engaged a third-party accounting firm, Squar, Milner, Miranda & Williamson
        LLP, to assist the Company in its determination of the appropriate
        interpretation and application of US GAAP related to accounting for assets
        acquired in a business combination to be used in research and development
        activities, goodwill and other intangible assets. We are in the process of
        restructuring and reorganizing the operating unit’s management to ensure, among
        other things, early recognition and reporting of sales trends to
        management.
  Other
        than as set forth above, there were no changes in our internal control over
        financial reporting during the year ended September 30, 2006, or subsequently,
        that has materially affected or is reasonably likely to materially affect,
        our
        internal control over financial reporting.
  **ITEM
        8B. OTHER INFORMATION**
 
 None
  **PART
        III**
 
 **ITEM
        9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH
        SECTION 16(a) OF THE EXCHANGE ACT**
  The
        following table sets forth the names, ages and offices of our current executive
        officers and directors.
 
 **Name**
              
              **Age**
              
              **Position**Antonio
                  E. Turgeon
              
              57
              
              Chairman/CEO
                  and DirectorDr.
                  Feng Yuh Juang
              
              53
              
              Vice
                  Chairman and DirectorRonald
                  M. Hickling
              
              47
              
              Chief
                  Technology Officer and DirectorMichael
                  Handelman
              
              47
              
              Chief
                  Financial OfficerEric
                  Pommer
              
              55
              
              Vice
                  President and General CounselRichard
                  Hines
              
              56
              
              Director
                  (1)Michael
                  Ussery
              
              54
              
              DirectorGeorge
                  Lange
              
              66
              
              DirectorJohn
                  Mansfield
              
              59
              
              Director
 
 24
 
 (1)
              In
                  December 2006, the Company entered into a separation and release
                  agreement
                  with Richard T. Hines Consulting (“RTH Consulting”) and its principal, who
                  was serving as a member of the Company’s board of directors. Among other
                  conditions, the agreement provides for a consulting agreement between
                  the
                  Company and RTH Consulting whereby RTH Consulting would provide
                  consulting
                  services to the Company for 18 months in exchange for $10,000 per
                  month
                  plus option to purchase up to 75,000 shares of the Company’s common stock
                  at an exercise price of $5.75 per share. In addition, Mr. Hines
                  resigned
                  as a director, received a one-time payment of $108,691 and retained
                  the
                  ability to exercise previously granted options for the purchase
                  of 90,000
                  shares of the Company’s common
                  stock.
  (2)
              The
                  following is a biographical summary of the business experience
                  of our
                  present directors and executive
                  officers:
 
 **Antonio
        E. Turgeon** ,
        Chairman and CEO, age 57, has served the Company since February 18, 2004
        and
        prior to such date served in a similar position with TCI Nevada from April
        2003
        until TCI Nevada’s acquisition by the Company on February 18, 2004. Mr. Turgeon
        has 30 years of international and domestic experience in computer and
        communications systems, software technology and applications services. Prior
        to
        joining TechnoConcepts, he was a principal in The Sunrise Group, a consulting
        firm that provided business development services to early stage high-tech
        companies. From 1994 to 1999 he served as an advisor to a Scandinavian-based
        venture capital firm, as well as executive vice president for Dolphin
        Interconnect Solutions, Inc., a portfolio company designing Gigabyte hardware
        interconnect and software technology for the high-availability, scalable,
        server
        clustering market. He was a founder and served as president and CEO of SOTA
        Electronics Inc. from 1988 to 1994, a company that designed communications
        security products and the world’s first PC managed universal applications
        Smartcard. From 1978 to 1988 he was president of Digital Applications
        Corporation, a company he founded to develop software and hardware applications
        for the aerospace industry. Mr. Turgeon holds a B.A. in Mathematics form
        the
        University of California, Los Angeles, an M.S. in Computer Science from West
        Coast University and completed coursework requirements for an M.S. in Applied
        Mathematics.
 
 **Dr.
        Feng Yuh (Richard) Juang,** Vice
        Chairman, age 53, has served the Company since February 18, 2004. Dr. Juang
        received his Ph.D. in electrical engineering from the University of Michigan
        in
        Ann Arbor, his M.S. in Institute of Applied Physics at Chung-Yuan University
        in
        Taiwan and a B.S. in electronic engineering from Tamkang University, also
        in
        Taiwan. He has significant expertise in engineering, specifically in the
        areas
        of ultra high speed device design and development; high performance optical
        modulation and switching devices; 100GHz Modulation Doped FET design and
        development; low noise microwave amplifier; and wireless communications devices
        to the board. He has published more than 50 scientific articles in electronics,
        engineering and communications industry publications. Dr Jaung is the director
        of Ahoku Electronic Company in Taipei, Taiwan, ROC, an advisor for AceNet
        Technology, Inc. in Shenzhen, China, president of Rich Capital Group, of
        Fremont, California and the Vice President of Business Development at NeoAxiom
        Corporation, San Jose, California. He previously served as Vice President
        of
        Business Development at Acute Communications Corp. both in the U.S. and Taiwan.
        Prior to that he was Vice President of marketing and sales at Acer NeWeb
        Corp.,
        Satellite Communications Department Manager at Microelectronic Technology
        Inc.,
        head of the solid state electronic device department at Chung-Shan Institute
        of
        Science and Technology and Associate Professor at the Institute of Applied
        Physics, Chung-Yuan University.
  25
 
 **Ronald
        M. Hickling,** age 47,
        has served as the Company’s chief technology officer and as a director since
        November 2004. Mr. Hickling is the inventor of True Software RadioTM and founded
        the entity in 1991 that initially developed the Company’s True Software RadioTM
technology. He was responsible for securing more than $1.1 million in Federal
        SBIR funds to develop the key technology elements of the Company’s True Software
        RadioTM products. He holds a master of science in electrical engineering from
        UCLA. He has more than 20 years of experience in communications systems and
        integrated circuits related to communications for U.S. defense and commercial
        contractors. Beginning in 1980, Mr. Hickling began his career with Hughes
        Space
        and Communications, a Hughes Aircraft company, developing circuits for satellite
        communications. In this capacity he developed customer integrated circuits
        using
        silicon CMOS (Complementary Metal-Oxide Semiconductor) and Bipolar technology,
        and actively participated in the early research and development efforts of
        using
        Gallium Arsenide (GaAs) digital circuits in spacecraft. During his tenure
        at
        Hughes, Mr. Hickling was appointed Group Head, in leading research projects,
        for
        GaAs digital circuits. Additional projects included Intelsat VI, Magellan,
        and
        Navstar/GPS and he also contributed to the Very High Speed Integrated Circuit
        Program (VHSIC). In 1984 he left Hughes to pursue commercial ventures. He
        joined
        start up Gigabit Logic in 1984 and headed development teams on numerous
        mixed-signal communications projects. He was involved in collaboration
        development efforts with contract clients such as DEC, Rockwell-Collins,
        Bell
        Communications Research and others. He has been awarded three patents and
        currently has two patents pending. He has published in numerous industry
        journals and is a member of the IEEE and Tau Beta Pi.
 
 **Michael
        Handelman,** age 47,
        has served as the Company’s chief financial officer since November 2004. He has
        over 23 years of financial management experience. Prior to joining the Company,
        he held various senior executive positions for several publicly traded
        companies. He was chief financial officer and chief operating officer of
        Global
        Business Services, Inc., a publicly traded retail postal and business services
        company. Earlier, he was chief financial officer of Interglobal Waste Management
        Inc., a publicly traded manufacturing company in Camarillo, CA; vice president
        and chief financial officer of Janex International, a $32 million publicly
        traded children’s toy manufacturer; and vice president and chief financial
        officer of the Los Angeles Kings, a $45 million National Hockey League
        franchise. Mr. Handelman is a Certified Public Accountant and holds a B.S.
        in
        Accounting from the City University of New York.
  **Eric
        Pommer,** age 55,
        has served as the General Counsel and Secretary of the Company since April
        2005.
        He has over 25 years engaged in the management of various high-tech companies.
        Mr. Pommer received an MS in Systems Management from USC in 1989, a JD from
        Thomas Jefferson School of Law in 1977, and a BA from Pomona College in 1973.
        He
        is a member of the faculty of the Southern California Institute of Law. He
        has
        had directorships in several companies, including Geo InSight International,
        Broadband Telecom, and Pacific Investment Bank. He directly managed both
        RDT&E hardware projects and software development programs for such companies
        as Geo InSight International, Abex Aerospace, and Martin Marietta Aerospace.
        Mr.
        Pommer has been directly involved in management, operations, process design,
        strategic planning, regulatory compliance, employment relations, commercial
        transactions, and government contracts. In 1993, as outside counsel, Mr.
        Pommer
        negotiated the initial protection for the TechnoConcepts intellectual
        property.
 
 **Richard
        Hines,**age 56,
        served as a director of the Company since December 2004 until December 2006.
        Prior to this, he served as an elected official in the South Carolina House
        of
        Representatives. He held various executive positions in the Reagan
        Administration in executive branch agencies such as the U.S. Department of
        Transportation and Interstate Commerce Commission. In the U.S. General Services
        Administration, he was the principal interface for the agency in charge of
        business and industry relations, as well as a catalyst for reform for
        acquisition policies within the government. After leaving the public sector,
        he
        became Vice-President of Electronic Data Systems, a billion dollar corporation
        with over 60,000 employees, where he was responsible for U.S. Government
        sales.
        He combined his talent and experience in the private and public sectors to
        form
        RTH Consulting in 1997. His history of political activism was, most recently,
        extended to aid the campaign of President Bush in the South Carolina Primary
        of
        the 2000 Presidential election. He continues to be involved in local, regional,
        and federal politics and has an active voice in the current Bush Administration.
        In April of this year, he participated in the Government Roundtable in Athens,
        Greece, where he spoke alongside former President Bush, Mikhail Gorbachev,
        and
        other European leaders, as well as prominent businessmen.
  26
 
 **Michael
        Ussery** ,
        age 54,
        has served as a director of the Company since August 2004. Prior to this
        he
        worked as an international public affairs advisor and business developer
        with
        extensive investments and financing experience in Eastern Europe. He is a
        former
        U.S. Ambassador to Morocco who has international private sector experience
        in
        marketing, negotiations, strategic planning, and project development; he
        held
        his title from 1988 thru 1992. In government he has held senior positions
        during
        the Libya conflict, Gulf War, Afghan War, and Mid-East peace process. Mr.
        Ussery
        has worked for more than 35 countries, and in the past decade he has worked
        with
        more than (60) companies and organizations including numerous Fortune 500
        and
        top international corporations, and has advised foreign governments. Mr.
        Ussery
        has been a founder of five companies and two non-profit organizations, and
        is a
        veteran of seven presidential and congressional campaigns. He was a national
        fund raising Vice Chairman, policy contributor and Arkansas field manager
        of the
        2000 Bush - Chaney Campaign. Mr. Ussery serves as a Co-Founder and chairs
        the
        Advisory Board of the Romania Moldova Direct Fund, and in Bulgaria he is
        a
        recent Co-Founder of InfoMed and Netcare Bulgaria. Appointed by the Virginia
        Governor, Mr. Ussery is one of seven Commissioners of Vint Hill Economic
        Development Authority, responsible for converting a U.S. military base into
        a
        commercial and residential development. In the field of education, Mr. Ussery
        is
        President and CEO of the Coordinating Council for The International University,
        a non- profit organization creating American higher education in developing
        countries. He has served on the Advisory Board and spoken at numerous
        prestigious colleges and universities across the U.S. including Yale, the
        University of South Carolina, VMI, the George Mason University and Newberry
        College.
 
 **George
        Lange,** age 66,
        has served as a director of the Company since February 17, 2004. He also
        has
        been a Co-Founder of various companies, a business consultant and electronic
        engineer within aerospace, defense, and the consumer product industry. His
        multi-discipline experience covers product and business development, circuit
        and
        systems design engineer and operations and organizational staffing. He has
        assisted with company start-up activities, mergers and acquisitions,
        restructurings and fundings and has performed in an executive capacity. Clients
        have been diverse in size and types; Fortune 500 companies, individual
        inventors, and foreign businesses, including the Ford Motor Company Corporate
        offices, Control Data Corporation, Hughes Aircraft Company, Lockheed
        Corporation, Litton Industries, Plantronics Corporation, Teledyne Corporation,
        Coopers and Lybrand, JJ Barnicke, Bendix Electrodynamics and Ramo Corporation.
        He attended both Northrop Institute of Technology and the University of
        California at Los Angeles. He is involved in civic and community service
        activities applying his business skills to his elected government position
        appointments to City, County and State Agency Boards and various non-profit
        Organization Boards of Directors.
 
 **John
        Mansfield,** age 59,
        has served as a director of the Company since February 17, 2004. He has earned
        valuable experience in several industries, including heavy equipment, property
        development and building, medical information technology and management,
        insurance, and financial advisory services. He operates Axis Capital LLC,
        a
        Georgia-based company that specializes in advisory services for companies
        in
        transition, including start-ups, turnarounds, new growth initiatives and
        mergers
        and acquisitions. He has assisted with strategic planning, business plan
        development, financial structuring and re-structuring for such conglomerates
        as
        JMJ Technologies, Admiralty Corporation, Accent Mortgage Corporation, and
        AlumniWorldwide.com, and many others. His history includes seven years in
        sales
        and marketing, including Director of Sales and Marketing for an international
        heavy equipment manufacturer, followed by 18 years operating businesses in
        land
        development and property management, including involvement in numerous
        syndicated investment transactions. He served for seven years as a Director
        of
        the Ontario (Canada) New Home Warranty Corporation and was a member of its
        executive committee and chairman of its audit committee. Following his board
        term, he was retained by the Corporation to perform advisory services. He
        currently serves as a Director of a publicly traded healthcare management
        company, American HealthChoice, and is chairman of its audit committee. Mr.
        Mansfield is a graduate of Wilfred Laurier University, Waterloo, Ontario,
        Canada.
 
 **Significant
        Employees**
 
 **John
        Hwang,** Member
        of the Office of the Chairman and Vice President of Business Development,
        began
        his career in the high tech industry as Vice President of Sales and Corporate
        Manager at Samsung America, Inc., where he helped Samsung to become number
        one
        in market share in monitors worldwide. He then was president of a number
        of
        other entrepreneurial high-tech companies, with successful sales increases
        achieved at each. Mr. Hwang earned his BS degree in economics from Rutgers
        University in 1985.
  27
 
 **Dr.
        Oleg Panfilov** ,
        Chief
        Scientific Officer, received his Ph.D. degree from the Moscow Institute of
        Long
        Radio Communication in 1971 (Russia). Working in the fields of signal and
        data
        processing Dr. Panfilov held different positions from engineer to the director
        of laboratory. Since his immigration to the United States in 1979 he has
        worked
        as a senior math analyst in Bedford Research Associates, as a research scientist
        and staff engineer in Unisys Corporation, a senior consulting analyst in
        NCR, a
        distinguished member of technical staff in Motorola and as an independent
        consultant in the system design of Doppler radars, computer systems and networks
        as well as in wireless communication systems. Dr. Panfilov has devoted a
        considerable portion of his professional career to identifying prospective
        technologies providing the highest return on investments. The results of
        his
        research and findings have been published in over forty domestic and
        international publications and he is a frequent lecturer at international
        conferences on high performance computer systems, networks and communication
        systems.
 
 **Section
        16(a) Beneficial Ownership Reporting Compliance**
 
 Based
        solely upon our review of Forms 3, 4 and 5 and amendments thereto furnished
        to
        us under Rule 16a-3(e) of the Securities Exchange Act of 1934, as amended
        (the
“Securities Exchange Act”) during the fiscal year ended September 30, 2006 and
        written representations received by us pursuant to Securities and Exchange
        Commission rules, none of our directors, officers, or any beneficial owner
        of
        more than 10 percent of any class of our equity securities failed to file,
        on a
        timely basis, any reports required by Section 16(a) of the Securities Exchange
        Act.
  **Director
        Independence**
 
 The
        Board
        believes that the interests of its shareholders are best served by having
        at
        least a majority of objective independent representatives on the
        Board.
 
 In
        determining independence, the Board applies the standards established by
        the
        Nasdaq Stock Market. In conjunction with this report, the Board has evaluated
        all relationships between each director, and the Company and has made the
        following determinations with respect to the “independence” of each
        director:
  **Director**
              
              
              
              **Status**Antonio
                  Turgeon
              
              
              
              Not
                  independentDr.
                  Feng Yuh Juang
              
              
              
              Not
                  independentRichard
                  Hines
              
              
              
              Not
                  IndependentRonald
                  Hickling
              
              
              
              Not
                  IndependentMichael
                  Ussery
              
              
              
              IndependentGeorge
                  Lange
              
              
              
              IndependentJohn
                  Mansfield
              
              
              
              Independent
  28
  Based
        on
        the foregoing analysis, it was determined that a majority of our directors
        are
        not “independent” directors under the standards established by Nasdaq. The
        Company intends to take steps to appoint additional independent directors
        to our
        Board of Directors as soon as it is able to do so.
 
 The
        Board
        will continually monitor the standards established for director independence
        under applicable law or listing requirements and will take all reasonable
        steps
        to assure compliance with those standards.
  **Committees
        of the Board**
 
 In
        order
        to facilitate the various functions of our Board of Directors, in February
        2004,
        the Board created a standing Audit Committee and a standing Corporate
        Governance/Nominating Committee.
 
 *Audit
        Committee.* The
        Audit Committee operates pursuant to a written charter that was adopted in
        February 2004. Under its charter, the Audit Committee is given the sole
        authority and responsibility for the appointment, retention, compensation
        and
        oversight of our independent auditors, including pre-approval of all audit
        and
        non-audit services to be performed by our independent auditors. The Board
        has
        determined that John Mansfield, the chairman of the Company’s Audit Committee,
        meets the Securities and Exchange Commission criteria of an audit committee
        financial expert.
 
 *Corporate
        Governance/Nominating Committee.* The
        Corporate Governance/Nominating Committee is responsible for implementing
        and
        carrying out appropriate processes by which nominees for election as directors
        are selected.
 
 Committee
        assignments are re-evaluated annually and approved by our Board of Directors
        at
        its annual meeting that follows the annual meeting of stockholders.
 
 **Board
        Meetings and Executive Sessions**
 
 During
        the year ended September 30, 2006, our Board of Directors held four formal
        meetings.
 
 By
        resolution adopted by our Board of Directors, commencing in 2004, the
        non-management members of the Board will meet on a regular basis, not less
        than
        twice annually, in executive session without management present. Executive
        sessions are to be led by a “Lead Director” designated by the non-management
        directors. An executive session is held in conjunction with each regularly
        scheduled Board meeting and other sessions may be called by the Lead Director
        in
        his or her own discretion or at the request of the Board.
 
 **Nomination
        of Directors**
 
 In
        assessing potential director nominees, the Corporate Governance/Nominating
        Committee is expected to look for candidates who possess a wide range of
        experience, skills, areas of expertise, knowledge and business judgment,
        high
        integrity and demonstrated superior performance or accomplishments in his
        or her
        professional undertakings. The Corporate Governance/Nominating Committee
        may
        utilize the services of a search firm to help identify candidates for director
        who meet the qualifications outlined above.
 
 The
        Board
        will also consider for nomination as a director qualified candidates suggested
        by our shareholders. Shareholders can suggest qualified candidates for
        nomination as a director by writing to our corporate secretary at 6060 Sepulveda
        Blvd., Suite 202, Van Nuys, CA 91411. Submissions that are received that
        meet
        the criteria outlined above are forwarded to the Corporate Governance/Nominating
        Committee for further review and consideration.
 
 **Codes
        of Ethics**
 
 In
        February 2004, our Board of Directors adopted a Code of Business Ethics covering
        all officers, directors and employees. We require all employees to adhere
        to the
        Code of Business Ethics in addressing legal and ethical issues encountered
        in
        conducting their work. The Code of Business Ethics requires that our employees
        avoid conflicts of interest, comply with all laws and other legal requirements,
        conduct business in an honest and ethical manner and otherwise act with
        integrity and in the Company’s best interest. All of our employees are required
        to certify that they have reviewed and understand the Code of Business
        Ethics.
  29
  In
        April
        2004, our Board of Directors also adopted a separate Code of Business Ethics
        for
        our CEO and senior financial officers. This Code of Ethics supplements our
        general Code of Business Ethics and is intended to promote honest and ethical
        conduct, full and accurate reporting, and compliance with laws as well as
        other
        matters. Any person wishing to receive, without charge, a copy of such code
        of
        ethics, should request the same by writing to our corporate secretary at
        6060
        Sepulveda Blvd., Suite 202, Van Nuys, CA 91411.
 
 **Contacting
        the Board**
 
 Any
        shareholder who desires to contact our Lead Director or the other members
        of our
        Board of Directors may do so by writing to: Board of Directors, TechnoConcepts,
        Inc. 6060 Sepulveda Blvd., Suite 202, Van Nuys, CA 91411. Communications
        received electronically or in writing are distributed to the Lead Director
        or
        the other members of the Board as appropriate depending on the facts and
        circumstances outlined in the communication received. For example, if any
        complaints regarding accounting, internal accounting controls and auditing
        matters are received, then they will be forwarded to the Chairman of the
        Audit
        Committee for review.
 
 **Compensation
        Committee Interlocks and Insider Participation**
 
 None
        of
        our executive officers served during 2006 as a member of our Board of Directors
        or compensation committee of any entity that has had one or more executive
        officers who served as a member of our Board of Directors or Compensation
        Committee.
  **ITEM
        10. EXECUTIVE COMPENSATION**
 
 **Compensation
        of Executive Officers**
 
 During
        the period beginning February 17, 2004, the date upon which the Exchange
        was
        consummated and ending September 30, 2004, no salary or any other compensation
        was paid to the Company’s Chief Executive Officer or any officer or employee of
        the Company for the services provided to us. During the Company’s fiscal year
        ending September 30, 2007, Antonio E. Turgeon, our President and Chief Executive
        Officer, will be paid a base salary of $240,000, Ronald M. Hickling, our
        Chief
        Technology Officer, will be paid a base salary of $168,000, Michael Handelman,
        our Chief Financial Officer, will be paid a base salary of $200,000, Eric
        Pommer, our Vice President and General counsel, will be paid a base salary
        of
        $125,000 and Dr. Feng Yuh Juang, our Vice Chairman, will be paid a base salary
        of $120,000.
 
 **Summary
        Compensation Table**
  **Name
                    and**
                
                
                
                
                
                **Annual
                    Compensation**
                
                
                **Other**
                  **Annual**
                
                
                **All
                    Other****Principal
                    Position**
                
                
                **Year**
                
                
                **Salary**
                
                
                **Bonus**
                
                
                **Compensation**
                
                
                **Compensation****Antonio
                    Turgeon ,**
                  Chairman
                    and
                
                
                2006
                
                $
                240,000
                
                $
                0
                
                $
                0
                
                $
                0Chief
                    Executive Officer
                
                
                2005
                
                $
                180,000
                
                $
                0
                
                $
                0
                
                $
                0**Ron
                    Hickling ,**
                
                
                2006
                
                $
                154,000
                
                $
                0
                
                $
                0
                
                $
                0Chief
                    Technology Officer
                
                
                2005
                
                $
                105,000
                
                $
                0
                
                $
                0
                
                $
                0**Michael
                    Handelman**,
                  Chief
                    Financial
                
                
                2006
                
                $
                127,500
                
                $
                0
                
                $
                0
                
                $
                0Officer
                
                
                2005
                
                $
                93,750
                
                $
                0
                
                $
                0
                
                $
                0**Dr
                    Feng Yuh Juang ,**
                
                
                2006
                
                $
                120,000
                
                $
                0
                
                $
                0
                
                $
                0Vice
                    Chairman
                
                
                2005
                
                $
                90,000
                
                $
                0
                
                $
                0
                
                $
                0**Eric
                    Pommer**,
                
                
                2006
                
                $
                125,000
                
                $
                0
                
                $
                0
                
                $
                0Vice
                    President and General Counsel
                
                
                2005
                
                $
                81,667
                
                $
                0
                
                $
                0
                
                $
                0
  30
 
 **Employment
        Contracts**
 
 As
        of
        September 30, 2006, we had a three year employment contract with Antonio
        Turgeon
        commencing on January 1, 2005 at an annual salary of $240,000. The Company
        also
        has a three year employment contract with Richard Juang commencing on January
        1,
        2005 at an annual salary of $120,000, and Ron Hickling commencing on January
        1,
        2005 at an annual salary of $140,000 that has been increased to $168,000
        annually.
 
 **Compensation
        of Directors**
 
 Commencing
        in April 2004, each director who is not an employee is paid (1) an annual
        fee of
        $20,000, payable in quarterly installments, (2) $1,000 per day per meeting,
        including one travel day for each meeting for out-of-state directors, and
        (3)
        out-of-pocket expenses. The Company has also agreed to grant each non-employee
        director options to purchase 50,000 shares of our common stock upon the
        Company’s establishment of an option plan and 20,000 options following each
        subsequent shareholders meeting after which the director continues to serve.
        In
        addition, each non-employee director is paid $500 per meeting for each committee
        meeting attended. The Chair of the Audit Committee is paid an annual fee
        of
        $7,500. Other committee chairs are paid an annual fee of $1,000.
 
 **Equity
        Compensation Plan Information**
 
 In
        September 2005, the Company’s Board of Directors adopted the 2005 Equity
        Incentive Plan (the “2005 Plan”), pursuant to which up to 12,000,000 shares of
        common stock may be issued to officers, employees, non-employee directors,
        and
        consultants either through the award of restricted stock or through the exercise
        of incentive stock options or nonqualified stock options granted under the
        2005
        Plan. The exercise price of an option granted under the 2005 Plan generally
        may
        not be less than the fair market value of the Company’s common stock on the date
        of grant. Subject to the terms of the 2005 Plan, our Board of Directors is
        authorized to select optionees and to determine the number of shares covered
        by
        each option, its exercise price, a vesting schedule, and certain other
        terms.
  **ITEM
        11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
        AND**  **RELATED
        STOCKHOLDER MATTERS**
 
 The
        following tables sets forth information as of January 14, 2007, based on
        information obtained from the persons named below, with respect to the
        beneficial ownership of shares of our common stock, Series A preferred stock,
        Series B preferred stock and Series B-1 preferred stock, respectively, held
        by
        (i) each person known by us to be the owner of more than 5% of our outstanding
        shares of common stock, Series A preferred stock, Series B preferred stock
        and
        Series B-1 preferred stock, as applicable (ii) each director, (iii) each
        named
        executive officer, and (iv) all executive officers and directors as a
        group:
  31
  **Common
        Stock**
  **Name
                    and Address of Beneficial Owner (1)**
                
                **Number
                    of Shares Beneficially Held**
                
                **Percent
                    of Class Beneficially Held (2)****Directors
                    and Officers**Antonio
                    E. Turgeon (3)
                
                
                3,482,976
                
                
                10.07
                %Dr.
                    Feng Yuh Juang (3)
                
                
                876,103
                
                
                2.53
                %Ronald
                    M Hickling (3)
                
                
                0
                
                
                0.00
                %Michael
                    Handelman (3)
                
                
                273,500
                
                
                0.79
                %Richard
                    Hines (3)
                
                
                90,000
                
                
                0.26
                %Michael
                    Ussery (3)
                
                
                90,000
                
                
                0.26
                %George
                    Lange (3)
                
                
                95,000
                
                
                0.26
                %John
                    Mansfield (3)
                
                
                90,000
                
                
                0.26
                %Eric
                    Pommer (3)
                
                
                95,500
                
                
                0.28
                %All
                    directors and executive officers as a group (9 persons)
                
                
                4,508,317
                
                
                14.71
                %**5%
                    Shareholders**Fiber
                    Optic Techno Inc.
                
                
                1,970,000
                
                
                6.94
                %1220-1/2
                    State Street 93101Santa
                    Barbara, CA
  
 *
 
        Less than 1%
 
 (1)
              Unless
                  otherwise indicated, each beneficial owner has both sole voting
                  and sole
                  investment power with respect to the shares beneficially owned
                  by such
                  person, entity or group. The number of shares shown as beneficially
                  owned
                  include all options, warrants and convertible securities held by
                  such
                  person, entity or group that are exercisable or convertible within
                  60 days
                  of January 14, 2007.
 
 (2)
              The
                  percentages of beneficial ownership as to each person, entity or
                  group
                  assume the exercise or conversion of all options, warrants and
                  convertible
                  securities held by such person, entity or group which are exercisable
                  or
                  convertible within 60 days, but not the exercise or conversion
                  of options,
                  warrants and convertible securities held by others shown in the
                  table.
 
 (3)
              Address
                  is c/o TechnoConcepts, Inc., 6060 Sepulveda Blvd., Suite 202, Van
                  Nuys, CA
                  91411.
 
 **Series
        A preferred stock**
  **Name
                    and Address of Beneficial Owner (1)**
                
                **Number
                    of Shares Beneficially Held**
                
                **Percent
                    of Class Beneficially Held (2)****Directors
                    and Officers**Antonio
                    E. Turgeon (3)
                
                
                2,700
                
                
                16.88
                %All
                    directors and executive officers as a group (8 persons)
                
                
                2,700
                
                
                16.88
                %**5%
                    Shareholders**Fiber
                    Optic Techno Inc.
                
                
                4,000
                
                
                25
                %1220-1/2
                    State StreetSanta
                    Barbara, CA 93101Developmental
                    Technology Corp.
                
                
                1,500
                
                
                9.38
                %64
                    Sunset DriveNorth
                    Bennington, Vermont 05257Lee
                    Holdings, Inc.
                
                
                2,050
                
                
                12.81
                %3650
                    Jewel Cave Dr.Las
                    Vegas, Nevada 89122
  32
  (1)
              Unless
                  otherwise indicated, each beneficial owner has both sole voting
                  and sole
                  investment power with respect to the shares beneficially owned
                  by such
                  person, entity or group. The number of shares shown as beneficially
                  owned
                  include all options, warrants and convertible securities held by
                  such
                  person, entity or group that are exercisable or convertible within
                  60 days
                  of January 14, 2007
 
 (2)
              The
                  percentages of beneficial ownership as to each person, entity or
                  group
                  assume the exercise or conversion of all options, warrants and
                  convertible
                  securities held by such person, entity or group which are exercisable
                  or
                  convertible within 60 days, but not the exercise or conversion
                  of options,
                  warrants and convertible securities held by others shown in the
                  table.
 
 (3)
              Address
                  is c/o TechnoConcepts, Inc., 6060 Sepulveda Blvd., Suite 202, Van
                  Nuys, CA
                  91411.
 
 **Series
        B preferred stock**
  Name
                    and Address of Beneficial Owner (1)
                
                Number
                    of Shares Beneficially Held
                
                Percent
                    of Class Beneficially
                  Held
                    (2)**Directors
                    and Officers**All
                    directors and executive officers as a group (8 persons)
                
                
                0
                
                
                0
                %**5%
                    Shareholders**Triumph
                    Research Partners, LLC
                
                
                800
                
                
                100
                %48
                    South Service RoadMelville,
                    NY 11747
 
 (1)
              Unless
                  otherwise indicated, each beneficial owner has both sole voting
                  and sole
                  investment power with respect to the shares beneficially owned
                  by such
                  person, entity or group. The number of shares shown as beneficially
                  owned
                  include all options, warrants and convertible securities held by
                  such
                  person, entity or group that are exercisable or convertible within
                  60 days
                  of January 14, 2007
 
 (2)
              The
                  percentages of beneficial ownership as to each person, entity or
                  group
                  assume the exercise or conversion of all options, warrants and
                  convertible
                  securities held by such person, entity or group which are exercisable
                  or
                  convertible within 60 days, but not the exercise or conversion
                  of options,
                  warrants and convertible securities held by others shown in the
                  table.
  **Series
        B-1 preferred stock**
  Name
                    and Address of Beneficial Owner (1)
                
                Number
                    of Shares Beneficially Held
                
                Percent
                    of Class Beneficially
                  Held
                    (2)**Directors
                    and Officers**All
                    directors and executive officers as a group (8 persons)
                
                
                0
                
                
                0
                %**5%
                    Shareholders**Triumph
                    Research Partners, LLC
                
                
                1,768
                
                
                80
                %48
                    South Service RoadMelville,
                    NY 11747Mirus
                    Capital Management Ltd.
                
                
                220
                
                
                10
                %CH-6422
                    SteinenSwitzerlandSDS
                    Capital
                
                
                195
                
                
                9
                %53
                    Forest Ave Second FloorOld
                    Greenwich, CT. 06870
 
 (1)
              Unless
                  otherwise indicated, each beneficial owner has both sole voting
                  and sole
                  investment power with respect to the shares beneficially owned
                  by such
                  person, entity or group. The number of shares shown as beneficially
                  owned
                  include all options, warrants and convertible securities held by
                  such
                  person, entity or group that are exercisable or convertible within
                  60 days
                  of January 14, 2007
 
 (2)
              The
                  percentages of beneficial ownership as to each person, entity or
                  group
                  assume the exercise or conversion of all options, warrants and
                  convertible
                  securities held by such person, entity or group which are exercisable
                  or
                  convertible within 60 days, but not the exercise or conversion
                  of options,
                  warrants and convertible securities held by others shown in the
                  table.
  33
  **ITEM
        12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**
 
 In
        December 2006, the Company entered into a separation and release agreement
        with
        Richard T. Hines Consulting (“RTH Consulting”) and its principal, who was then
        serving as a member of the Company’s board of directors. Among other provisions,
        the agreement provides for the release of the Company’s obligations under a
        consulting agreement entered into August 2004, under which RTH Consulting
        was to
        perform consulting services and strategic marketing to government and
        international agencies with general assistance in support of marketing the
        products of the Company for 18 months in exchange for $10,000 per month,
        plus
        options to purchase up to 75,000 shares of the Company’s common stock at an
        exercise price of $5.75 per share. In addition, Mr. Hines resigned as a
        director, received a one-time payment of $108,691 and retained the ability
        to
        exercise previously granted options for the purchase of 90,000 shares of
        the
        Company’s common stock.
  34
  **ITEM
        13. EXHIBITS**
 
 **Incorporated
                  by reference****Exhibit**
                **Number**
              
              **Description
                  of Exhibit**
              
              **Filed
                  herewith**
              
              **Form**
              
              **Period
                  Ending**
              
              **Exhibit**
              
              **Filing
                  Date**2.1
              
              Agreement
                  and Plan of Merger, dated December 15, 2003, between Technology
                  Consulting
                  Partners Inc. and TechnoConcepts Inc., a Nevada
                  corporation
              
              
              
              8-K
              
              
              
              2.1
              
              2/18/042.2
              
              Agreement
                  and Plan of Acquisition Among Asante Technologies, Inc., and
                  TechnoConcepts, Inc. and Asante Acquisition Corp., dated January
                  29,
                  2005
              
              X2.3
              
              Earn-Out
                  Agreement, dated February 25, 2005, among Asante Technologies Inc.,
                  the
                  Company and Asante Acquisition Corp.
              
              
              
              8-K
              
              
              
              2.02
              
              6/9/052.4
              
              Agreement
                  and Plan of Reorganization, dated August 31, 2005, between RegalTech,
                  Inc.
                  and Asante Acquisition Corp.
              
              
              
              8-K
              
              
              
              2.1
              
              10/21/053.1
              
              Restated
                  Articles of Incorporation of the Company
              
              
              
              10-KSB/A
              
              9/30/04
              
              3.1
              
              5/2/053.1.1
              
              Articles
                  of Amendment to Articles of Incorporation of Technology Consulting
                  Partners, Inc., filed with the Colorado Secretary of State on April
                  8,
                  2004
              
              X3.1.2
              
              Certificate
                  of Designations to the Restated Articles of Incorporation, as amended,
                  setting forth the terms of the Company’s Series A preferred
                  stock
              
              
              
              10-KSB/A
              
              9/30/04
              
              3.1
              
              5/2/053.1.3
              
              Certificate
                  of Designations to the Restated Articles of Incorporation, as amended,
                  setting forth the terms of the Company’s Series B preferred
                  stock
              
              
              
              10-KSB
              
              9/30/04
              
              3.1
              
              1/14/053.1.4
              
              Amendment
                  to the Restated Articles of Incorporation, as amended, Certificate
                  of
                  Designations setting forth the terms of the Company’s Series B-1 preferred
                  stock and authorizing additional shares
              
              X3.1.5
              
              Certificate
                  of Designations to the Restated Articles of Incorporation, as amended,
                  setting forth the terms of the Company’s Series C preferred
                  stock
              
              X3.2
              
              Bylaws
                  of the Company
              
              
              
              10-KSB/A
              
              9/30/04
              
              3.2
              
              5/2/054.1
              
              Specimen
                  stock certificate for common stock of the Company
              
              X4.2
              
              Form
                  of 7% Secured Convertible Debentures
              
              
              
              10-KSB
              
              9/30/04
              
              4.1
              
              1/14/054.3
              
              Form
                  of Warrant to purchase shares of the Company’s common stock issued and
                  sold in conjunction with the 7% Secured Convertible
                  Debentures
              
              
              
              10-KSB
              
              9/30/04
              
              4.1
              
              1/14/054.4
              
              Form
                  of Warrant to purchase shares of the Company’s common stock issued and
                  sold in conjunction with the Company’s sale of 8% Promissory Notes from
                  October 2005 through April 2006
              
              X4.5
              
              Form
                  of Warrant to purchase shares of the Company’s common stock issued and
                  sold in conjunction with the Company’s sale of 8% Secured Subordinated
                  Promissory Notes from May 2006 through December 2006
              
              X
  35
  4.6
              
              Warrant
                  to purchase 100,000 shares of the Company’s common stock issued to
                  Richstar Venture, Inc., a financial advisor, in June 2005
              
              X4.7
              
              Warrant
                  to purchase 75,000 shares of the Company’s common stock issued to Cyndel
                  & Co. Inc., a financial advisor, in September 2005
              
              X4.8
              
              Warrant
                  to purchase 75,000 shares of the Company’s common stock issued to SDS
                  Capital Group SPC, Ltd., in September 2005, in conjunction with
                  the
                  Company’s establishment of a credit facility
              
              X4.9
              
              Warrant
                  to purchase 75,000 shares of the Company’s common stock issued to Triumph
                  Research Partners, in September 2005, in conjunction with the Company’s
                  establishment of a credit facility
              
              X10.1
              
              Subscription
                  Escrow Agreement, among the Company and various investors
              
              
              
              SB-2/A
              
              
              
              10.1.1
              
              8/28/0210.2
              
              Securities
                  Purchase Agreement, dated November 17, 2004, among the Company
                  and the
                  investors in the Company’s 7% Secured Convertible Debentures and warrants
                  exercisable for shares of the Company’s common stock
              
              
              
              10-KSB
              
              9/30/04
              
              10.1.1
              
              1/14/0510.2.1
              
              First
                  Amendment to Securities Purchase Agreement, dated November 17,
                  2004, among
                  the Company and the investors in the Company’s 7% Secured Convertible
                  Debentures and warrants exercisable for shares of the Company’s common
                  stock
              
              
              
              10-KSB
              
              9/30/04
              
              10.1.2
              
              1/14/0510.3
              
              Registration
                  Rights Agreement, dated November 17, 2004, among the Company and
                  the
                  investors in the Company’s 7% Secured Convertible Debentures and warrants
                  exercisable for shares of the Company’s common stock
              
              
              
              10-KSB
              
              9/30/04
              
              10.2
              
              1/14/0510.4
              
              Security
                  Agreement, dated November 17, 2004, among the Company and the investors
                  in
                  the Company’s 7% Secured Convertible Debentures and warrants exercisable
                  for shares of the Company’s common stock
              
              
              
              10-KSB
              
              9/30/04
              
              10.3
              
              1/14/0510.5
              
              Preferred
                  Stock Purchase Agreement, dated November 17, 2004, between the
                  Company and
                  Triumph Research Partners LLC, pursuant to which the Company issued
                  and
                  sold 800 shares of its Series B preferred stock
              
              
              
              10-KSB
              
              9/30/04
              
              10.4
              
              1/14/0510.6
              
              Securities
                  Purchase Agreement, dated November 17, 2005, among the Company
                  and the
                  investors in an aggregate of 2,203 shares of the Company’s Series B-1
                  preferred stock
              
              X10.7
              
              Note
                  Purchase Agreement, dated August 2, 2006, between the Company and
                  the
                  investors in an aggregate for up to $1,000,000 in subordinated
                  convertible
                  promissory notes
              
              X10.8
              
              Note
                  Purchase Agreement, dated May 2006 through November 2006, between
                  the
                  Company and the investors in an aggregate for up to $10,000,000
                  in Series
                  A secured subordinated promissory notes
              
              X10.9
              
              Employment
                  Agreement, dated as of December 22, 2004, between the Company and
                  Antonio
                  Turgeon
              
              X10.10
              
              Employment
                  Agreement, dated as of September 15, 2004, between the Company
                  and Dr.
                  Feng Yuh (Richard) Juang
              
              X
  36
  10.11
              
              Employment
                  Agreement, dated as of September 25, 2004, between the Company
                  and Ronald
                  M. Hickling
              
              X10.12
              
              Executive
                  Employee Agreement, dated January 24, 2007, between the Company
                  and
                  Richard Hahn
              
              
              
              8-K
              
              
              
              10.1
              
              1/30/0710.13
              
              Confidentiality
                  and Inventor’s Assignment Agreement, dated January 24, 2007, between the
                  Company and Richard Hahn
              
              
              
              8-K
              
              
              
              10.1
              
              1/30/0710.14
              
              Consulting
                  Agreement, dated July 19, 2004, between the Company and Richard
                  T.
                  Hines
              
              
              
              10-KSB/A
              
              9/30/04
              
              10.6
              
              5/2/0510.15
              
              Separation
                  and Release Agreement, dated December 7, 2006, among the Company,
                  Richard
                  T. Hines and Richard T. Hines Consulting, Inc.
              
              
              
              8-K
              
              
              
              10.1
              
              12/14/0610.16
              
              The
                  Company’s 2005 Equity Incentive Plan
              
              X10.17
              
              Multi-Tenant
                  Office Lease, dated December 20, 2004, between Electro Rent Corporation
                  and the Company for the Company’s corporate headquarters at 6060 Sepulveda
                  Blvd., Suite 202, Van Nuys, California 91411
              
              X10.17.1
              
              Sublease,
                  dated June 27, 2006, between Moon Mesa Media, LLC, and Sheryl Hardy
                  (“sublessor”) and the Company for the premises at 14945 Ventura Boulevard,
                  Suite 300, Sherman Oaks, California 91403
              
              X10.17.2
              
              Office
                  Building Lease, dated July 6, 2006, between JMA Trust, Michael
                  Hirsh &
                  Patricia Knapp and the Company for the premises at 2182 Dupont
                  Drive,
                  Irvine, California 92612
              
              X10.17.3
              
              Lease
                  Agreement, dated November 13, 2006, between Adaptec, Inc. and the
                  Company
                  for the premises at 673 South Milpitas Boulevard, Milpitas, California
                  95035
              
              X10.17.4
              
              Lease
                  Agreement, dated August 1, 2005, between Hong Kong Science &
                  Technology Parks Corp. and the Company for the premises at the
                  Innovation
                  Center in Hong Kong Science Park in Hong Kong, China
              
              X10.17.5
              
              English
                  translation of Rental Agreement, dated June 20, 2006, between Joint
                  Development Company of Hi-tech Park and China Jinshilin Techno
                  Company
                  Ltd. for the premises at the Technology Industry Building in Caohejing
                  New
                  Technology Development Zone, in Shanghai, China
              
              X14.1
              
              The
                  Company’s Code of Ethics for the Chief Financial Officer and Senior
                  Financial Officers
              
              
              
              10-KSB
              
              9/30/04
              
              10.4
              
              1/14/0521.1
              
              Subsidiaries
                  of the Company
              
              
              
              SB-2/A
              
              
              
              21
              
              8/28/0223.1
              
              Consent
                  of Seligson & Giannattasio, LLP
              
              X31.1
              
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Executive
                  Officer
              
              X31.2
              
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Financial
                  Officer
              
              X32
              
              Rule
                  13a-14(b)/15d-14(b) Certification of Chief Executive Officer and
                  Chief
                  Financial Officer
              
              X
 
 37
 
 ***Reports
        on Form 8-K***
 
 No
        reports on Form 8-K were filed during the last quarter of the period covered
        by
        this report.
 
 **ITEM
        14.**
 
 **PRINCIPAL
        ACCOUNTANT FEES AND SERVICES**
 
 **2005**Audit
                  fees
              
              
              53,015Tax
                  fees
              
              
              756All
                  other fees
              
              
              —Total
              
              
              53,771
  **2006**Audit
                  fees
              
              
              45,763Tax
                  fees
              
              
              1,000All
                  other fees
              
              
              —Total
              
              
              46,763
  The
        Audit
        Committee developed a policy relating to the pre-approval of all audit and
        non-audit services provided by the independent auditors. These services may
        include audit services, audit-related services, tax services and other
        services.
  38
 
 **SIGNATURES**
 
 In
        accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
        this report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
  **TECHNOCONCEPTS,
                  INC.**Dated:
                  February 14, 2007
              By:
              /s/ Antonio
                  E. TurgeonPresident
                  and CEO
  In
        accordance with the Exchange Act, this report has been signed below by the
        following persons on behalf of the registrant and in the capacities and on
        the
        dates indicated.
 
 Signatures
              
              Title
              
              Date/s/
                  Antonio E. Turgeon
              
              Chairman
                  of the Board, President and Chief Executive Office
              
              February
                    14, 2007ANTONIO
                  E. TURGEON
              
              Principal
                    Executive Officer/s/
                  Michael Handelman
              
              Chief
                  Financial Officer and Principal Accounting and
              
              February
                      14, 2007MICHAEL
                  HANDELMAN
              
              FinancialOfficerDirector
              
              February
                      14, 2007RONALD
                  HICKLING/s/
                  George Lange
              
              Director
              
              February
                      14, 2007GEORGE
                  LANGE/s/
                  John Mansfield
              
              Director
              
              February
                      14, 2007JOHN
                  MANSFIELDDirector
              
              February
                      14, 2007DR.
                  FENG YUH JUANGDirector
              
              February
                      14, 2007RICHARD
                  HINES/s/
                  Michael Ussery
              
              Director
              
              February
                    14, 2007MICHAEL
                  USSERY
  39