**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-KSB**





(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
            3ITEM
                2.
            DESCRIPTION
                OF PROPERTY
            13ITEM
                3.
            LEGAL
                PROCEEDINGS
            13ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            14PART
                IIITEM
                5.
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            14ITEM
                6.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            18ITEM
                7.
            FINANCIAL
                STATEMENTS
            24ITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            25ITEM
                8A.
            CONTROLS
                AND PROCEDURES
            25ITEM
                8B.
            OTHER
                INFORMATION
            26PART
                IIIITEM
                9.
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSON
            26ITEM
                10.
            EXECUTIVE
                COMPENSATION
            32ITEM
                11.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
            33ITEM
                12.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS
            36ITEM
                13.
            EXHIBITS
            37ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            37SIGNATURES
            38







**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 *nnual
      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 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 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.





3


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 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.





4


***Set-top
      Boxes***





On
      April
      21, 2006, Jinshilin Techno acquired IPTV set-top box technology through license
      agreements with Jinshilin. 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 Forests Information Technology Co. Ltd., or
      Shanghai Forests. On November 20, 2006, Jinshilin Techno provided 60 set-top
      boxes to Shanghai Forests which were integrated into a demonstration network
      built by Shanghai Forests, 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.





**Asant** é **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 partnership 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.





5


Jinshilin
      Techno is also cooperating with Shanghai Forests in the deployment of IPTV
      for
      in-home television service to two million rural residents of the Henan Province.
      Shanghai Forests 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 June 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'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.


6


·
            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.








7


**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
      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 Asante’
      Networks.




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:


8


·
            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.





9


***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
        RadioTMproducts.
        Third parties have filed a lawsuit challenging our acquisitionofand
        rights to theintellectual
        property. An unfavorable outcome could prevent us from fully utilizing ourtechnology.*
  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 January 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.





***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.





10


***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. 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 oil our Continuing operations.


11


***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. Additionally, the larger number of shares available
      for sale pursuant to this prospectus may add to the volatility of our common
      stock.





***The
                issuance of the shares to be issued upon conversion of our recently
                issued********7%
                secured convertible debentures and the shares to be issued upon the
                exercise of the warrant issued in connection with the debentures,
                will
                cause the current holders of our common stock to suffer substantial
                dilution of their interests in
                us.***




As
      of the
      date of this report, shares of our common stock were issued upon conversion
      our
      7% secured convertible debentures in the aggregate principal amount of
      $1,275,000 and upon exercise of the warrants issued in connection with the
      debentures. If the remaining shares of our common stock to be issued upon
      conversion of the outstanding principal and interest due under the debentures
      and upon exercise of the warrants issued in connection with the debentures
      are
      issued and registered with the Securities and Exchange Commission for resale,
      up
      to 3,160,000 additional shares of our common stock will be available for sale
      into the public market. This will result in substantial dilution of the
      interests of our current stockholders. The resale of these shares of common
      stock 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 of common stock could
      depress the market price for our common stock.





***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
      that
      an active public market will continue 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 the
      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
      SmallCap. 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.





12


***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.





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 commenced on August 1, 2006, and ending upon thirty
      days (30) days written notice to terminate said lease. This office 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 $3729.38 pursuant to a three
      year lease that commenced in December 2005. We use this facility for product
      development operations as well as administrative offices.





China
      Jinshilin Techno Company, 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
      January 2007.




13


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.





**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





14


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**





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.





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 which have yet to be provided by Berthel Fisher to the
      Company.





On
      February 17, 2004, we completed our acquisition of the TechnoConcepts, Inc.,
      a
      Nevada corporation, by issuing 1,970,000 shares of our common stock and 4,000
      shares of our Series A-1 Preferred stock to the stockholders of the original
      Nevada corporation.





On
      November 17, 2004, we entered into a securities purchase agreement (the
“Purchase Agreement”), a registration rights agreement (the “Registration Rights
      Agreement”), and a security agreement (the “Security Agreement”) with certain
      institutional investors (the “Buyers”). Under the Purchase Agreement, we agreed
      to sell, and the Buyers agreed to purchase, 7% secured convertible debentures
      (the “Debentures”) in the aggregate principal amount of $3,775,000 and warrants
      (“Warrants”) to purchase a total of 608,000 shares of our common stock. One half
      of such warrants were exercisable at $3.50 per share and one half were
      exercisable at $4.00 per share. Net proceeds to the Company from this
      transaction were approximately $3,442,000, after the payment of commissions
      and
      expenses.





The
      Debentures were due and payable on November 17, 2006 and are convertible into
      shares of our common stock at $2.50 per share, subject to certain customary
      anti-dilution adjustments. Interest on the Debentures is due quarterly on the
      last day of each calendar quarter and may, at the Company’s discretion, be paid
      in cash or shares of our common stock assuming certain conditions are satisfied
      (including, that the shares of common stock issuable upon conversion of the
      Debentures have been registered for resale to the public with the Securities
      and
      Exchange Commission). In addition, the Company may require the conversion of
      the
      Debentures into shares of our common stock if certain conditions are satisfied,
      including without limitation, that the average trading price of our common
      stock
      exceeds $7.00 per share for not less than 22 consecutive trading days. 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 Debentures.
      Pursuant to the terms of the Debentures, any interest amount unpaid bears
      interest at the rate of 18% per annum until paid. The Debentures provide for
      various events of default that entitle the holders of the Debentures to require
      the Company to immediately repay an amount equal to at least 130% of the
      outstanding principal amount of the Debentures, plus accrued and unpaid interest
      thereon, in cash. During the pendancy of any default, the interest rate under
      the Debentures is increase to 18% per annum or such lower maximum amount of
      interest permitted to be charged under applicable law. Because the Company’s
      obligations under the Debentures are secured pursuant to the terms of a separate
      Security Agreement with the holders of the Debentures (the “Secured Parties”),
      the occurrence of an event of default which is not cured permits the Secured
      Parties (acting in concert) the right to take possession of all of the assets
      of
      the Company, to operate the business of the Company and to exercise certain
      other rights provided in the Security Agreement.


15


Pursuant
      to the Registration Rights Agreement, the Company agreed to file a registration
      statement covering the resale of the shares of Common Stock issuable upon
      conversion of the Debentures and upon exercise of the Warrants by no later
      than
      January 20, 2005. The Company filed the required registration statement on
      May
      3, 2005. As a result, the Registration Rights Agreement provides that the
      Company is obligated to pay a penalty equal to 1% of the aggregate purchase
      price paid by each purchaser for the Debentures on January 20, 2005 and an
      additional 1% on the 20th of each month thereafter until (and including) April
      20, 2005. Any unpaid amount bears interest at a rate of 18% per annum. The
      Company also agreed to use its best efforts to cause such registration statement
      to be declared effective by the SEC as promptly as possible, but not later
      than
      135 days following the Closing Date. On July 15, 2005, the Debentures were
      amended to extend the period for the registration statement to be declared
      effective from 135 days to 300 days. As of the date hereof, the registration
      statement had not yet been declared effective by the SEC. Failure to have the
      registration statement declared effective, resulted in 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 Buyers in connection with the resale of shares
      pursuant to such registration statement.





The
      Debentures matured and came due on November 17, 2007, and we have failed to
      pay
      the principal amount as of the date of this report. As a result, the holder
      of a
      Debenture can elect to require us to pay a mandatory prepayment amount equal
      to
      at least 130% of the outstanding principal amount, plus all other accrued and
      unpaid amounts under the Debenture. Because our obligations under the Debentures
      are secured pursuant to the terms of the Security Agreement with the holders
      of
      the Debentures, the occurrence of an event of default, which is not cured,
      permits the Debenture holders (acting in concert) to take possession of all
      of
      our assets, to operate our business and to exercise certain other rights
      provided in the Security Agreement. During fiscal 2006, certain Debenture
      holders notified us that they were exercising their conversion right, and as
      a
      result, Debentures worth an 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 wanted to convert their
      Debentures into subordinated promissory notes, and as a result, Debentures
      with
      an aggregate principal amount of $1,250,000 were converted. Subsequent to
      September 30, 2006, additional Debenture holders notified us that they wanted
      to
      convert their Debentures into the subordinated promissory notes, and as a
      result, Debentures with an aggregate principal amount of $1,000,000 were also
      converted.





We
      entered into a securities purchase agreement, dated as of November 17, 2004,
      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 when issued will be
      identical to the warrants issued to the Buyers.





The
      gross
      proceeds from the offering of the Securities were approximately $7,013,675
      in
      cash and other consideration. In connection with the Company’s sale of the
      Debentures, Warrants and the Series B Preferred Shares, 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
      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, the Company 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 Exchange) were sold to a limited number of
      sophisticated accredited investors, (b) the Securities were sold without any
      general solicitation or public advertising, (c) the Buyers provided the Company
      with representations customary for a private placement of securities, and (d)
      the Securities to be delivered to the Buyers will bear restrictive
      legends.





The
      preferences, limitations and relative rights with respect to Series A Preferred
      Stock and Series B Preferred Stock are summarized below. The preferences,
      limitations and relative rights of the Series A Preferred Stock and Series
      B
      Preferred Stock are contained in their entirety in the Company’s Restated
      Certificate of Incorporation which is an exhibit to the registration
      statement.





*Series
      A Preferred Stock*





*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, and rank senior to common stock and shares of Series
      B
      Preferred Stock.





*Dividends.* Shares
      of Series A1 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 par 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 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 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.




16


*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 common stock and Series B Preferred
      Stock by reason of their ownership thereof, 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 on an
      as-converted basis with the common stock on all matters submitted to a vote
      of
      stockholders.





*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 we (i) 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) breach, in a material respect, any material term
      or
      condition of our Restated Certificate 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*





*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, and rank senior to shares of common 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
      per cent per annum or $250.00 per share. Such dividends are payable in cash
      or
      common stock, as our Board of Directors shall 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 quoted on
      the
      Nasdaq National or Small Cap markets.





*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, on an
      as-converted basis, with the holders of our common stock on all matters
      submitted to a vote of stockholders.





*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 we (i)
      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)
      breach, in a material respect, any material term or condition of our Restated
      Certificate 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.





The
      Notes, Debentures, Warrants, Series A Preferred shares, Series B Preferred
      shares (collectively, the “Securities”) were issued in private placement
      transactions which were not registered under the Securities Act of 1933, as
      amended (the “Act), and these Securities may not be offered or sold in the
      United States absent registration under the Act or an applicable exemption
      from
      the registration requirements of the Act.





17


*Series
      B-1 Preferred Stock*





*Designation
      and Amount; Rank.* During
      fiscal 2006, we designated 2,300 shares of our preferred stock as “Series B-1
      Preferred Stock”. As of September 30, 2006, we sold 2,203 shares of Series B-1
      Preferred (convertible to 2,203,000 shares of our common stock) at an aggregate
      purchase price of $5,505,506. Shares of Series B Preferred Stock have no par
      value per share, have a face amount of $2,500, and rank senior to shares of
      common stock but junior to shares of Series A and Series B Preferred Stock.





*Dividends* .
      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 our common stock (at the then current market price),
      as
      our Board of Directors shall 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, 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 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).





*Voting
      Rights* .
      The
      holders of the Series B-1 Preferred Stock have no voting rights.





**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 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.


18





*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 4, 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 subsequent 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 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





·
            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 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 on its Quarterly Report
                  on Form
                  10-QSB for the period ended 3/31/2004 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:





19


·
            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.





·
            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 consolidated financial statements for
      fiscal 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
      its 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
                  partnerships for international deployment of base station
                  systems;
 
 ·
              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 partnerships 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 partnerships 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 strategic initiatives
      include:


·
              preemptively
                  developing partnerships and relationships with processor companies,
                  and
                  wireless communication service providers, emphasizing multiple
                  protocol
                  capabilities and supporting multi-vendor purchase strategies by
                  service
                  providers;
 
 ·
              preemptively
                  developing strategic partnerships with one or more major digital
                  signal
                  processor suppliers;
 
 ·
              developing
                  and maintaining an integrated development team with system, hardware,
                  and
                  software/firmware expertise;
 
 ·
              preemptively
                  developing partnerships and relationships with RF semiconductor
                  service
                  providers and distributing high volume components on an OEM (remarked)
                  basis through one or more of these
                  firms;
 
 ·
              licensing
                  older designs while continuing to develop new hardware and software;
                  and
 
 ·
              developing
                  leading edge software and
                  firmware.


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 wholly owned subsidiary, Asanté Networks, subsequent
      to the acquisition on June 2, 2005. 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, an increase of $1,118,253
      and a direct result of the additional sales generated by Asanté Networks in
      fiscal year 2006. Gross profit for the same period 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, 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 a complete fiscal
      year.





*Off
      Balance Sheet Arrangements*





During
      the year ended September 30, 2006 the Company 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**





Since
      November 2003, we have financed our operations primarily through private sales
      of securities. In November and December 2003, the Company 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.
      These notes carried an interest rate of between 8% and 11% per annum, with
      all
      interest and principal due in April 2004. These notes have been converted into
      767,709 shares of our common stock.





In
      January and February 2004, the Company 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.
      These 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. In November
      2004, the Company entered into a convertible note agreement with a private
      investor for the receipt of $200,000. This note, along with those issued in
      January and February 2004 were converted into an aggregate of 694,571 shares
      of
      Common Stock.





On
      November 17, 2004 we entered into a securities purchase agreement (the “Purchase
      Agreement”), a registration rights agreement (the “Registration Rights
      Agreement”), and a security agreement (the “Security Agreement”) with certain
      institutional investors (the “Buyers”). Under the Purchase Agreement, we agreed
      to sell, and the Buyers agreed to purchase, 7% secured convertible debentures
      (the “Debentures”) in the aggregate principal amount of $3,775,000 and warrants
      exercisable for a total of 608,000 shares of our common Stock, one half of
      such
      warrants are exercisable at $3.50 per share and one half of such warrants are
      exercisable at $4.00 per share. Net proceeds to the Company from this
      transaction were approximately $3,442,000, after the payment of commissions
      and
      expenses.




The
      7%
      secured convertible debentures were due and payable on November 17, 2006, and
      are convertible into shares of our common stock at $2.50 per share, subject
      to
      certain customary anti-dilution adjustments. Interest on the 7% secured
      convertible debentures is due quarterly on the last day of each calendar quarter
      and may, at our discretion, be paid in cash or shares of our common stock
      assuming certain conditions are satisfied (including, that the shares of our
      common stock issuable upon conversion of the 7% secured convertible debentures
      have been registered for resale to the public with the Securities and Exchange
      Commission. In addition, the Company may require the conversion of the 7%
      secured convertible debentures into shares of our common stock if certain
      conditions are satisfied, including without limitation, that the average trading
      price of our common stock exceeds $7.00 per share for not less than 22
      consecutive trading days. On the first day of each month commencing on December
      1, 2005, the Company is required to redeem one-twelfth of the original principal
      amount of the 7% secured convertible debentures.





22


We
      are in
      default under the terms of our outstanding of our 7% secured convertible
      debentures, because (i) our registration statement, required under the
      registration rights agreement associated with the debentures, has not yet been
      declared effective and (ii) the debentures matured and came due on November
      18,
      2007, and as of the date of this report, we have not paid the principal and
      interest due. Therefore, the holder of a debenture can elect to require us
      to
      pay a mandatory prepayment amount equal to at least 130% of the outstanding
      principal amount, plus all other accrued and unpaid amounts under the debenture.
      Because our obligations under the debentures are secured pursuant to the terms
      of a separate security agreement with the holders of the debentures, the
      occurrence of an event of default, which is not cured, permits the debenture
      holders (acting in concert) 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. During fiscal 2006, certain Debenture
      holders notified us that they were exercising their conversion right, and as
      a
      result, Debentures worth an 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 wanted to convert their
      Debentures into subordinated promissory notes, and as a result, Debentures
      with
      an aggregate principal amount of $1,250,000 were converted. Subsequent to
      September 30, 2006, additional Debenture holders notified us that they wanted
      to
      convert their Debentures into the subordinated promissory notes, and as a
      result, Debentures with an aggregate principal amount of $1,000,000 were also
      converted.





We
      entered into a securities purchase agreement also dated as of November 17,
      2004,
      with an institutional investor, pursuant to which we agreed to sell, and the
      institutional investor agreed to purchase, 800 shares of Series B Preferred
      Stock of the Company and warrants exercisable for a total of 800,000 shares
      of
      our common stock in exchange for freely tradeable securities with a market
      value
      of approximately $2,000,000. The Warrants are identical to the Warrants issued
      to the Buyers.





In
      December 2004, the Company entered into a lease agreement with a third party
      for
      its Van Nuys engineering offices. The lease is for a three-year period
      commencing March 1, 2005. The lease obligates the Company to make monthly lease
      payments of $13,543 and provides for annual rent increases and other expense
      obligations of the Company. Prior to March 1, 2005, the Company was occupying
      office space on a month-to-month bases for $1,204 per month.




In
      August
      2005, our subsidiary Techno (Hong Kong) Limited entered into a lease of
      approximately 846 square feet of office space in Hong Kong at a monthly rent
      of
      US $1,600. This lease is held pursuant to a three year lease that commenced
      August 1, 2005 and expires on August 1, 2008.





In
      November 2006, Asanté Networks entered into a lease of approximately 7,000
      square feet of office space in San Jose, California, at a monthly rent of
      $7,591.23. This lease is for twenty five (25) months and commenced on November
      1, 2006, expiring on December 1, 2008.





In
      November 2005, we negotiated a private placement of convertible preferred stock.
      Under the negotiated terms, we have offered up to 2,300 shares of Series B-1
      Preferred Stock ("Series B-1 Preferred"), convertible into 2,300,000 shares
      of
      our common stock, at a purchase price of $2,500 per share for a total of
      $5,750,000.  The Series B-1 Preferred has a dividend rate of 5% per annum,
      payable quarterly, either by cash or through the issuance of common stock at
      the
      option of our Board of Directors. As part of this transaction, we will also
      issue five-year warrants to purchase up to 920,000 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. As of September
      30, 2006, the Company sold 2,203 shares of Series B-1 Preferred (convertible
      to
      2,203,000 shares of common stock) at an aggregate purchase price of
      $5,505,506.


23




Effective
      May 30, 2006, we 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 these agreements, we granted a security interest
      in
      all of our assets (including, without limitation, our intellectual property)
      in
      favor of the investors, subordinated to our existing 7% secured convertible
      debentures and certain A/R facilities. The security interest terminates upon
      payment or satisfaction of all of our obligations under the agreements. Under
      the agreements, we issued to the investors our secured subordinated promissory
      notes in the principal amount of $8,359,520. The secured subordinated promissory
      notes carry an 8% annual rate of interest on the principal amount of the loan.
      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. We may, at our option, prepay any of the
      secured subordinated promissory notes in whole or in part without penalty.
      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. As part of the consideration for the sale of these
      notes, we 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 amount of warrants issued was
      8,359,520.




During
      October, 2005 and April, 2006 the Company issued promissory notes of $950,000
      that matured two months after date of issue and now are due upon demand. These
      promissory notes bear interest at a rate of 8% per annum. There is no penalty
      for prepayment. There is a finder’s fee of 10% of proceeds. As
      part
      of the consideration for the sale of the promissory notes, we issued
      5-year warrants to purchase shares of our common stock at an exercise price
      of
      $3.00, with each note purchaser receiving a pro rata share of the warrant pool. 469,000 shares of our common stock are issuable under these warrants .





In
      July
      2006 our subsidiary, China Jinshilin Techno Company, Ltd, entered into a lease
      for approximately 4309 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.





In
      August
      2006 we entered into a lease for 3,200 square feet of office space located
      at
      14945 Ventura Blvd, Suite 300, Sherman Oaks, California. This space is held
      pursuant to 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.





In
      August
      2006 we entered into a lease for 1,202 square feet of office space located
      at
      2182 DuPont Dr. Suites #13 & 15, Irvine, California. This space is held
      pursuant to a month to month term commenced on August 1, 2006, and ending upon
      thirty days (30) days written notice to terminate said lease. This office
      provides for monthly rental payments of $2,283.80.





We
      anticipate incurring capital expenditures of approximately $1,000,000
      during the current fiscal year ending September 30, 2007.





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
      adjustment that might result from the outcome of this uncertainty. We expect
      our
      cash requirements will be significant throughout our current fiscal year, as
      we
      continue our research and development efforts, and attempt to execute on our
      business strategy through working capital growth and capital expenditures.
      The
      amount and timing of cash requirements will depend on market acceptance of
      our
      products and the resources we devote to researching and developing, marketing,
      selling and supporting our products





We
      believe that our 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 our needs, we may seek additional equity
      or
      debt financing. In addition, any material acquisition of complementary
      businesses, products or technologies or material joint venture could require
      us
      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
      we raise additional funds through the issuance of equity securities the
      percentage ownership of our stockholders would be 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.




**ITEM
          7. FINANCIAL STATEMENTS**
 24
 **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 3 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.
 
 
 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
                    shareholder' 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
                    
                    
                    2005Revenues: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 Stockholders’ Deficit
  Preferred
                      Stock
                  
                  
                  Common
                      Stock
                  
                  
                  Paid-In
                  
                  
                  Subscriptions
                  
                  
                  AccumulatedShares
                  
                  
                  Amount
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Receivable
                  
                  
                  DeficitBalances,
                      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**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.
          The
          Company was incorporated under the laws of the State of Nevada in May,
          2003.
 
 In
          April
          2005, Asante 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 Asante Technology Corp. The
          Acquisition Corp. maintains a 52-53 week fiscal year ending on the Saturday
          closest to September 30. On October 17, 2005, Asante Acquisition Corp.
          completed
          a reorganization with RegalTech Inc. (“RegalTech”), a publicly traded Delaware
          corporation. The Reorganization provided for the merger of 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.
 
 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 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, Asante Acquisition Corp., 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 a cash equivalent.
  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 are 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.
        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 18,776,020 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 year 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
              
              2005Net
                  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 Board 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 stockholders’ 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 Corporate 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 Asante 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 Corporate 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
                  stockholders’ 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
        of
        $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 our 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 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 that we 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 Series B and Series
        B-1
        Preferred Stock by reason of their ownership thereof, 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 we (i) 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) breach,
        in a
        material respect, any material term or condition of our Restated Certificate
        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 us; or (iii) any material representation or warranty made by us
        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
        us 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 National or Small Cap Markets.
  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, 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 the
        Company (i) 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)
        breaches, in  a material respect, any material term or condition of the
        Company’s Certificate 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.
  2,300
        shares have been designated as “Series B-1 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 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 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, 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
        adjustment that might result from the outcome of this uncertainty. We expect
        our
        cash requirements will be significant throughout our fiscal year 2007, as
        we
        continue our research and development efforts, and attempt to execute on
        our
        business strategy through working capital growth and capital expenditures.
        The
        amount and timing of cash requirements will depend on market acceptance of
        our
        products and the resources we devote to researching and developing, marketing,
        selling and supporting our products
 
 We
        believe that our current cash and cash equivalents on hand should be sufficient
        to fund our operations for at least the next 2 months. Thereafter, if current
        sources are not sufficient to meet our needs, we may seek additional equity
        or
        debt financing. In addition, any material acquisition of complementary
        businesses, products or technologies or material joint venture could require
        us
        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
        we raise additional funds through the issuance of equity securities the
        percentage ownership of our stockholders would be 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.
 
 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 (the "Buyers"). Pursuant to the Purchase
        Agreement, the Company agreed to sell, and the Buyers agreed to purchase,
        7%
        Secured Convertible Debentures (the “Debentures”) in the aggregate principal
        amount of $3,775,000 and warrants (“Warrants”) exercisable for a total of
        608,000 shares of the Company’s common stock, par value $.001 per share ("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. Net proceeds to the Company from
        this
        transaction were approximately $3,442,000, after the payment of commissions
        and
        expenses.
 
 F-23
  TechnoConcepts,
        Inc.
 And
        Subsidiaries
 Notes
        to
        Financial Statements
 September
        30, 2006
 
 Note
        5-
        Convertible Debentures (continued)
 
 The
        Debentures were due and payable on November 17, 2006 and are convertible
        into
        shares of our common stock at $2.50 per share, subject to certain customary
        anti-dilution adjustments. Interest on the Debentures is due quarterly on
        the
        last day of each calendar quarter and may, at the Company’s discretion, be paid
        in cash or shares of our common stock assuming certain conditions are satisfied
        (including, that the shares of common stock issuable upon conversion of the
        Debentures have been registered for resale to the public with the Securities
        and
        Exchange Commission). In addition, the Company may require the conversion
        of the
        Debentures into shares of our common stock if certain conditions are satisfied,
        including without limitation, that the average trading price of our common
        stock
        exceeds $7.00 per share for not less than 22 consecutive trading days. On
        the
        first day of each month commencing on December 1, 2005, the Company were
        required to redeem one-twelfth of the original principal amount of the
        Debentures. Pursuant to the terms of the Debentures, any interest amount
        unpaid
        bears interest at the rate of 18% per annum until paid. The Debentures provide
        for various events of default that entitle the holders of the Debentures
        to
        require the Company to immediately repay an amount equal to at least 130%
        of the
        outstanding principal amount of the Debentures, plus accrued and unpaid interest
        thereon, in cash. During the pendancy of any default, the interest rate under
        the Debentures is increase to 18% per annum or such lower maximum amount
        of
        interest permitted to be charged under applicable law. Because the Company’s
        obligations under the Debentures are secured pursuant to the terms of a separate
        Security Agreement with the holders of the Debentures (the “Secured Parties”),
        the occurrence of an event of default which is not cured permits the Secured
        Parties (acting in concert) the right to take possession of all of the assets
        of
        the Company, to operate the business of the Company and to exercise certain
        other rights provided in the Security Agreement.
 
 Pursuant
        to the Registration Rights Agreement, the Company agreed to file a registration
        statement covering the resale of the shares of Common Stock issuable upon
        conversion of the Debentures and upon exercise of the Warrants by no later
        than
        January 20, 2005. The Company filed the required registration statement on
        May
        3, 2005. As a result, the Registration Rights Agreement provides that the
        Company is obligated to pay a penalty equal to 1% of the aggregate purchase
        price paid by each purchaser for the Debentures on January 20, 2005 and an
        additional 1% on the 20th of each month thereafter until (and including)
        April
        20, 2005. Any unpaid amount bears interest at a rate of 18% per annum. The
        Company also agreed to use its best efforts to cause such registration statement
        to be declared effective by the SEC as promptly as possible, but not later
        than
        135 days following the Closing Date. On July 15, 2005, the Debentures were
        amended to extend the period for the registration statement to be declared
        effective from 135 days to 300 days. As of the date hereof, the registration
        statement had not yet been declared effective by the SEC. Failure to have
        the
        registration statement declared effective, resulted in 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 Buyers in connection with the resale of shares
        pursuant to such registration statement.
 
 F-24
  TechnoConcepts,
        Inc.
 And
        Subsidiaries
 Notes
        to
        Financial Statements
 September
        30, 2006
 
 Note
        5-
        Convertible Debentures (continued)
 
 The
        Debentures matured and came due on November 17, 2007, and we have failed
        to pay
        the principal amount as of the date of this report. As a result, the holder
        of a
        Debenture can elect to require us to pay a mandatory prepayment amount equal
        to
        at least 130% of the outstanding principal amount, plus all
        other
        accrued and unpaid amounts under the Debenture. Because our obligations under
        the Debentures are secured pursuant to the terms of the Security Agreement
        with
        the holders of the Debentures, the occurrence of an event of default, which
        is
        not cured, permits the Debenture holders (acting in concert) to take possession
        of all of our assets, to operate our business and to exercise certain other
        rights provided in the Security Agreement.
  In
        connection with the Company’s sale of the Debentures, Warrants and the Series B
        Preferred Shares, 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 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 (other than those issued pursuant to the Exchange)
        were sold to a limited number of sophisticated accredited investors, (b)
        the
        securities were sold without any general solicitation or public advertising,
        (c)
        the Buyers provided the Company with representations customary for a private
        placement of securities, and (d) the securities delivered to the Buyers bare
        restrictive legends.
 
 During
        fiscal 2006, certain Debenture holders notified the Company that they were
        exercising their conversion right and as a result, Debentures worth an aggregate
        principal amount of $1,275,000 were converted into 510,000 shares.
 
 Also
        during fiscal 2006, certain Debenture holders notified the Company that they
        wanted to convert their debentures into the note payable as more fully described
        in Note 6 and as a result Debentures with an aggregate principal amount of
        $1,250,000 were converted into the bridge note payable.
 
 Subsequent
        to September 30, 2006 certain Debenture holders notified the Company that
        they
        wanted to convert their Debentures into the note payable as more fully described
        in Note 6 and as a result Debentures with an aggregate principal amount of
        $1,000,000 were converted into the bridge note payable
 
 As
        of
        September 30, 2006 the convertible debentures consisted of the
        following:
 
 Convertible
                  debentures
              
              $
              1,250,000Less:
                  unamortized conversion costs
              
              
              (68,899
              )$
              1,181,101
  F-25
  TechnoConcepts,
        Inc.
 And
        Subsidiaries
 Notes
        to
        Financial Statements
 September
        30, 2006
 
 Note
        5-
        Convertible Debentures (continued)
 
 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.
  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.
  Pursuant
        to the Note Purchase Agreement, the Company issued to the investors its secured
        subordinated promissory notes in the aggregate principal amount of $8,359,520
        (the "Notes"), which carry an 8% annual rate of interest on the principal
        amount
        of the notes. The Notes will mature on the date (the "Maturity Date") that
        is
        the earlier of (i) one year from the date of issuance of each Note, (ii)
        the
        date on which the Company consummates the closing of the Company's next equity
        financing or series of equity financings which in the aggregate total no
        less
        than $7,000,000 (the "Subsequent Financing") 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 the Note in whole or in part
        without penalty.
  Under
        the
        terms of the 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
        Agreement, the 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, 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 total amount of warrants issued was 8,359,520, with 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-26
  TechnoConcepts,
        Inc.
 And
        Subsidiaries
 Notes
        to
        Financial Statements
 September
        30, 2006
  NOTE
        6
        Notes Payable (continued)
  Subsequent
        to September 30, 2006 an investor elected to convert $2,250,000 of his
        subordinated promissory note into 1,500,000 shares of the Company’s common
        stock.
  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
 
 NOTE
        7
        NOTES PAYABLE
 
 During
        October, 2005 and April, 2006 the Company issued promissory notes of $950,000
        that matured two months after the date of issue and now are due upon demand.
        These promissory notes bear interest at a rate of 8% per annum. There is
        no
        penalty for prepayment. There is a finder’s fee of 10% of proceeds, payable upon
        maturity. At the option of each note holder, the outstanding principal balance
        and all accrued interest thereon, shall be converted into the same stock
        class,
        share price and terms as the next round of equity investment in the Company
        of a
        minimum of $5 million (including conversion of the amounts described herein)
        (the “Next Financing”); provided, however, that such conversion shall only occur
        if the Next Financing occurs on or before the Maturity Date.
 
 As
        part
        of the consideration, the Company issued
        5-year warrants to purchase shares of its common stock at an exercise price
        of
        $3.00, with each note purchaser to receive a pro rata share of the warrant
        pool.
        The amount of warrants issued was 469,000, with 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.
 
 As
        of
        September 30, 2006 the Notes payable consisted of the following:
 
 Notes
                  payable
              
              $
              950,000Less:
                  unamortized issuance costs
              
              
              (476,152
              )$
              473,848
  F-27
  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 the
        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 is no longer required.
        It is
        management’s position that the deferred tax asset be recorded when there is
        positive evidence it will be realized.
 
 F-28
  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 PARTIED
  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-29
  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, Asante Acquisition Corp. (“Acquisition Corp.”) acquired
        substantially all of the assets (collectively, the “Asante Assets”) of Asante
        Technologies, Inc. (“Asante”). The acquisition of these assets was consummated
        pursuant to an Agreement and Plan of Acquisition among Asante, the Company,
        and
        Acquisition Corp. dated as of February 25, 2005. In connection with the
        acquisition, Acquisition Corp. purchased the Asante 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,
        Asante Acquisition Corp. completed a reorganization with RegalTech Inc.(
        “RegalTech”), a publicly traded Delaware corporation. The Reorganization
        provided for the merger of Acquisition Corp. and RegalTech, pursuant to the
        companies’ Agreement and Plan of Reorganization dated August 31, 2005.
        RegalTech’s name was changed to Asante Networks, Inc. (“Asante Networks”) and is
        trading on the Pink Sheets under the ticker symbol “ASTN”.
  F-30
  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 Asante
        Networks, which when converted will represent approximately eighty-five percent
        (85%) of the outstanding shares of Asante 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
        Asante 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, Asante 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 Asante 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,
        a
        registration rights agreement, and a security agreement with certain
        institutional investors. Pursuant to the Purchase Agreement, the Company
        agreed
        to sell, and the Buyers agreed to purchase, 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 to a financial advisor warrants
        exercisable for a total of 169,120 shares of the Company’s common stock, 120,800
        are exercisable at $2.50, 24,160 are exercisable at $3.50 per share and 24,160
        are exercisable at $4.00 per share. The warrants are exercisable at any time
        until November 17, 2009. Pursuant to certain antidilution terms of the warrants
        issued in connection with the sale of the 7% Secured Convertible Debentures,
        adjustments to the exercise price and to the number of warrant shares were
        required upon the issuance of the Notes Payable 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 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 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 March 31, 2010. Similarly, pursuant to the antidilution terms
        of the
        warrants issued in connection with the sale of the Series B Preferred Stock,
        adjustments to the exercise price and to the number of warrant shares were
        also
        required upon the issuance of the bridge 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-31
  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 100,000 warrants, exercisable
        for three years, to purchase shares of the Company's common stock at $3.75
        per
        share.
 
 In
        September 2005, the Company issued to a financial advisor 75,000 warrants,
        exercisable for three years, to purchase shares of the Company’s common stock at
        $4.50 per share.
  In
        September 2005, the Company issued to consultants warrants to purchase 40,000
        shares of the Company’s common stock. The warrants are exercisable for a period
        of three years at $3.75 per share.
 
 In
        September 2005, the Company issued to a financial advisor warrants to purchase
        10,000 shares of the Company’s common stock, exercisable for three years at
        $6.00 per share.
  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, exercisable over three years at $3.85 per share.
 
 During
        fiscal 2006, the Company completed a private placement of 2,203 shares of
        preferred stock at a price of $2500 per share for $5,506,000. The Company
        also
        issued to the investors warrants to purchase an aggregate of 880,880 shares
        of
        common stock at an exercise price of $1.00 per share.
  In
        November 2005 the Company entered into a series of Note Purchase Agreements
        with
        a number of investors, As part of the consideration, the Company issued
        469,000 warrants exercisable over 5 years to purchase shares of its common
        stock
        at an exercise price of $3.00.
  On
        May
        30, 2006 the Company entered into a series of Note Purchase Agreements with
        a
        number of investors, As part of the consideration, the Company issued
        8,359,520 warrants exercisable over 5 years to purchase shares of its common
        stock at an exercise price of $1.00.
  At
        September 30, 2006, warrants exercisable for 14,613,520 shares of the Company’s
        common stock were outstanding. Of this amount, warrants exercisable for
        13,600,400 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-32
  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
                
                
                13,420,400
                
                $
                1.15Exercised
                
                
                —
                
                
                —Canceled
                
                
                —
                
                
                —Warrants
                    outstanding andExercisable
                    atSeptember
                    30, 2006
                
                
                14,613,520
                
                $
                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 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-33
  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 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-34
  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 eligibility 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-35
 
 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 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.
 
 F-36




**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 the 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.





25


(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


26





(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.


27


**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.


28


**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.


29


**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 the stockholders 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


30




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 director qualified candidates suggested
      by
      our stockholders. Stockholders can suggest qualified candidates for nomination
      as 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 understood the Code of Business
      Ethics.


31




Our
      Board
      of Directors, in April 2004, also adopted a separate Code of Business Ethics
      for
      the 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.





The
      Code
      of Business Ethics for the CEO and Senior Financial Officers is filed as an
      exhibit to this Annual Report on Form 10-KSB. 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 current fiscal
      year 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**


**Annual
                Compensation****Name
                and**
              **Principal
                Position**
            
            **Year**
            
            **Salary**
            
            **Bonus**
            
            **Other**
              **Annual**
              **Compensation**
            
            **All
                Other Compensation****Antonio
                Turgeon ,**
              Chairman
                and
              Chief
                Executive Officer
            
            
            2006
              2005
            
            $
              $
            240,000
              180,000
            
            $
              $
            0
              0
            
            $
              $
            0
              0
            
            $
              $
            0
              0**Ron
                Hickling ,**
              
              Chief
                Technology Officer
            
            
            2006
              2005
            
            $
              $
            154,000
              105,000
            
            $
              $
            0
              0
            
            $
              $
            0
              0
            
            $
              $
            0
              0**Michael
                Handelman**,
              Chief
                Financial
              Officer
            
            
            2006
              2005
            
            $
              $
            127,500
              93,750
            
            $
              $
            0
              0
            
            $
              $
            0
              0
            
            $
              $
            0
              0**Dr
                Feng Yuh Juang ,**
              
              Vice
                Chairman
            
            
            2006
              2005
            
            $
              $
            120,000
              90,000
            
            $
              $
            0
              0
            
            $
              $
            0
              0
            
            $
              $
            0
              0**Eric
                Pommer**,
              
              Vice
                President and General Counsel
            
            
            2006
              2005
            
            $
              $
            125,000
              81,667
            
            $
              $
            0
              0
            
            $
              $
            0
              0
            
            $
              $
            0
              0




32


**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. 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
      held by (i) each person known by us to be the owner of more than 5% of our
      outstanding shares of common stock, (ii) each director, (iii) each named
      executive officer, and (iv) all executive officers and directors as a
      group:


33


**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




34




(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.








35


**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**





We
      are
      party to an agreement with an entity in which one of our Directors, Richard
      Hines, has a financial interest. The agreement calls for the entity to perform
      consulting services and strategic marketing to government and international
      agencies with general assistance in support of marketing the products of the
      Company. The agreement also calls for monthly fees of $10,000 and runs from
      August 1, 2004 until January 31, 2006. In December 2006, the Company entered
      into a Separation and release agreement with Richard T. Hines Consulting, (“RTH
      Consulting”), 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.


36


**ITEM
      13. EXHIBITS**





Exhibit
                Number
            
            Description
                of Exhibit23
            
            Consent
                of Seligson & Giannattasio, LLP31.1
            
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Executive
                Officer31.2
            
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Financial
                Officer32
            
            Rule
                13a-14(b)/15d-14(b) Certification of Chief Executive Officer and
                Chief
                Financial Officer








***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




2006Audit
                  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.




37




**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:
                January 15, 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
              Principal
                Executive Officer)
            January
                15, 2007ANTONIO
                  E. TURGEON/s/
                Michael Handelman
            
            Chief
                Financial Officer and Principal Accounting and Financial
              Officer)
            January
                15, 2007MICHAEL
                HANDELMANRONALD
                HICKLING
            
            Director
            January
                15, 2007/s/
                George Lange
            
            Director
            January
                15, 2007GEORGE
                LANGE/s/
                John Mansfield
            
            Director
            January
                15, 2007JOHN
                MANSFIELDDR.
                FENG YUH JUANG
            
            Director
            January
                15, 2007Director
            January
                15, 2007RICHARD
                HINES/s/
                Michael Ussery
            
            Director
            January
                15, 2007MICHAEL
                USSERY