**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-KSB**


Amendment
      No. 2


(Mark
      One)





x ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
      the
      Fiscal Year Ended September 30, 2006





o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF
      1934





For
      the
      transition period from ____________ to _____________





Commission
      File No. 333-90682





**TechnoConcepts,
      Inc.**


(Formerly
      known as Technology Consulting Partners, Inc.)


(Name
      of
      Small Business Issuer in its charter)





Colorado
            84-1605055(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer Identification No.)





6060
      Sepulveda Blvd. #202


Van
      Nuys,
      Ca. 91411


(Address
      of principal executive offices)(Zip code)





Issuer's
      telephone number, including area code:   (818) 988-3364





Securities
      registered pursuant to Section 12(b) of the Act:





Title
                of each class
            Name
                of each exchange on which
              each
                is registeredNone
            None





Securities
      registered pursuant to Section 12(g) of the Act:





Common
      Stock, no par value


(Title
      of
      Class)





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports); and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. x





Indicate
      by check mark whether the registrant is a shell company as defined in Rule
      12b-2
      of the Exchange Act. Yes o No x





The
      Issuer’s revenues for the fiscal year ended September 30, 2006 were
      $2,808,924.





The
      number of shares of the registrant’s common stock, no par value per share,
      outstanding as of January 13, 2007 was 31,391,316. The aggregate market value
      of
      the voting and non-voting common equity held by non-affiliates of the registrant
      on January 13, 2007, based on the last sales price on the OTC Bulletin Board
      as
      of such date, was approximately $52,831,584.














DOCUMENTS
      INCORPORATED BY REFERENCE




None





Transition
      Small Business Disclosure Format: Yes o No x













**TABLE
      OF CONTENTS**





PagePART
                IITEM
                1.
            DESCRIPTION
                OF BUSINESS
            
            1ITEM
                2.
            DESCRIPTION
                OF PROPERTY
            
            12ITEM
                3.
            LEGAL
                PROCEEDINGS
            
            12ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            12PART
                II
            
            
            13ITEM
                5.
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            
            13ITEM
                6.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            
            18ITEM
                7.
            FINANCIAL
                STATEMENTS
            
            F-1ITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            
            24ITEM
                8A.
            CONTROLS
                AND PROCEDURES
            
            24ITEM
                8B.
            OTHER
                INFORMATION
            
            25PART
                III
            
            
            25ITEM
                9.
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSON
            
            25ITEM
                10.
            EXECUTIVE
                COMPENSATION
            
            31ITEM
                11.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
            
            32ITEM
                12.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS
            
            35ITEM
                13.
            EXHIBITS
            
            36ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            
            39SIGNATURES













**FORWARD-LOOKING
      STATEMENTS**





*This
      annual report on Form 10-KSB contains forward-looking statements
      that*  *involve
      risks and uncertainties. These forward-looking statements are
      not*  *historical
      facts but rather are based on current expectations, estimates
      and*  *projections
      about our industry, our beliefs and assumptions. We use words
      such*  *as
      “anticipate,”“expect,”“intend,”“plan,”“believe,”“foresee,”“estimate”*  *and
      variations of these words and similar expressions to identify*  *forward-looking
      statements. These statements are not guarantees of future*  *performance
      and are subject to certain risks, uncertainties and other
      factors,*  *some
      of which are beyond our control, are difficult to predict and could
      cause*  *actual
      results to differ materially from those expressed or forecasted in
      the*  *forward-looking
      statements. These risks and uncertainties include those*  *described
      in “Risk Factors” and elsewhere in*  *this
      annual report. You should not place undue reliance on these*  *forward-looking
      statements, which reflect our view only as of the date of this* a *annual
      report.*





**PART
      I**





**ITEM
      1. DESCRIPTION OF BUSINESS**





**Overview**





We
      are
      engaged in the business of designing, developing, manufacturing and marketing
      wireless communications semiconductors, or microchips.





We
      are in
      the process of attempting to commercialize proprietary technology that we refer
      to as True Software RadioTM. True Software RadioTM is an advanced delta-sigma
      microchip architecture that converts radio frequency, or RF, signals directly
      into digital data. The technology is designed to dramatically improve the way
      that wireless signals are received and transmitted, by making possible
      device-to-device communication across otherwise incompatible networks and
      competing wireless standards (e.g., CDMA, TDMA, GSM, GPRS, G3, Bluetooth, WiFi,
      WiMAX, WiBro, etc.), creating true convergence for the wireless industry.
“Software radio" is an industry term, referring to wireless receivers and
      transmitters that can be controlled and reconfigured by software commands and
      that can process radio signals digitally for better performance. To date, we
      have not generated any revenues from the sale of such microchips or the
      licensing of rights to the underlying technology. We are currently in the
      process of seeking to arrange financing to further our efforts to commercialize
      this technology.





Through
      our wholly-owned subsidiary, Jinshilin Techno Ltd., or Jinshilin Techno, formed
      in December 2005 and based in Shanghai, China, we are seeking to provide
      marketing, sales and technical support for our True Software RadioTM technology
      in China. On April 21, 2006, Jinshilin Techno acquired Internet Protocol
      television (IPTV) set-top box (STB) technology through license agreements with
      Jinshilin Technologies Development Company Ltd. Jinshilin Techno currently
      offers an IPTV set-top box that also features Voice over Internet Protocol,
      or
      VOIP, capability and can receive IP data transmissions through the household
      electrical power grid. Jinshilin Techno expects that future generation set-top
      boxes will support multi-protocol wireless connectivity with television, DVD
      players and other multi-media devices, by integrating True Software RadioTM into
      IPTV set-top boxes.





We
      also
      own a controlling interest in Asanté Networks Inc., based in San Jose,
      California. Asanté provides Ethernet networking solutions for Apple Computer and
      the small-to-medium business retail markets, offering the IntraCore® and
      FriendlyNET® product families, integrating voice, data, and video over wireless
      and wired networks with unified management and authentication. In fiscal 2006,
      Asanté Networks’ net sales were lower by $2,272,953, or 44.26%, than in the
      comparable twelve-month period of fiscal 2005. This was primarily the result
      of
      decreases in orders and sales of products into the business retail
      markets.





**Our
      History and Development**





We
      were
      organized under the name Technology Consulting Partners, Inc., or TCP, in
      September 2001. At the time of TCP’s incorporation, its intention was to provide
      high technology consulting services to its clients. Through September 30, 2003,
      most of TCP’s efforts were devoted to organizing the company and raising
      approximately $120,000 in a private offering. On December 15, 2003, TCP entered
      into an agreement and plan of merger with TechnoConcepts Inc., a Nevada
      corporation, or TCI Nevada, under which TCP acquired all of the issued and
      outstanding shares of capital stock of TCI Nevada in exchange for shares of
      TCP
      representing a controlling interest in TCP. This transaction was completed
      on
      February 17, 2004. TCP acquired TCI Nevada primarily for TCI Nevada’s
      intellectual property (and other intangible assets), including pending, expired
      provisional and issued patents, trademarks, certain maskrights, semiconductor
      devices, and prototype hardware and software, which underlie our True Software
      RadioTM technology. At the time of this acquisition, the acquired assets had a
      book value of approximately $7.0 million, net of an adjustment of approximately
      $1.0 million to the initial valuation of such assets related to the expired
      provisional patents and trademarks. We have taken an impairment charge equal
      to
      the full book value of the other intellectual property and intangible assets
      acquired in the transaction, as of the fiscal year ended September 30, 2005.
      The
      impairment charge reflects the absence of revenue-generating contracts following
      our conducting demonstrations of the True Software RadioTM technology to
      potential industry partners in July 2005. At the time we conducted those
      demonstrations, we had hoped to generate funding from prospective partners
      to
      further our research and development efforts to produce commercial products
      utilizing the technology.





1


In
      May
      2005, we formed Techno (Hong Kong) Limited, a wholly-owned subsidiary organized
      to perform production design and application-specific engineering and to provide
      product support in Asia for our microchip products.





In
      June
      2005, we acquired the assets and significant liabilities of Asanté Technologies
      Inc. in exchange for 1,161,170 shares of our common stock, valued at $4.306
      per
      share, such that the aggregate value of the transaction was $5 million. In
      October 2005, we restructured Asanté, merging it into RegalTech Inc., a publicly
      traded Delaware corporation. RegalTech's name was changed to Asanté Networks
      Inc. (PNK:ASTN). We own shares of Asanté Networks’ preferred stock, which are
      convertible into eighty five (85%) percent of Asanté Networks common stock on a
      non-dilutable basis.





In
      December 2005, we formed Jinshilin Techno Ltd. as a wholly owned subsidiary,
      based in Shanghai, to provide marketing, sales and technical support for our
      True Software RadioTM technology in China.





**Wireless
      Communications Market**





According
      to a publicly available forecast by the World Semiconductor Trade Statistics
      organization, or WSTS, in October 2006, the global semiconductor market was
      expected to reach $247 billion by the end of 2006. The WSTS forecast predicts
      that the worldwide market will grow by 8.6% in 2007 and 12.1% in 2008, with
      Asia-Pacific as the fastest growing regional market, with a continuously growing
      demand for electronic products such as PCs, digital consumer appliances and
      mobile communications. We believe that more and better wireless receivers and
      transmitters will be required to operate these electronic products, which
      include mobile phones, personal digital assistants (PDAs), Bluetooth and
      WiFi-enabled laptop and handheld computers, and other consumer devices. For
      example, the automotive industry now requires more wireless receiver and
      transmitter microchips for their communications, navigation and “infotainment”
components, including telematics, GPS, multimedia systems, audio systems, rear
      seat entertainment and gaming, in addition to AM/FM/XM radio tuners. We believe
      that the dramatic increase of these and other wireless applications presents
      growing opportunities for our reconfigurable microchips that can serve multiple
      purposes.





Global
      sales of mobile phones are expected to experience another year of strong growth
      in 2007, with estimated consumer demand for 1.1 billion phones, according to
      a
      survey done by The Gartner Group, which was published in the International
      Herald Tribune, November 22, 2006. Gartner estimates there will be 2.6 billion
      mobile phones in use by the end of 2009. While consumer demand for mobile phones
      grows, the handset electronics and wireless infrastructure is still supported
      by
      competing protocols, frequencies, data rate standards and other incompatible
      transceiver technologies, making multi-band multi-mode technology a virtual
      necessity. Further, ultra-wideband services will begin to penetrate the mobile
      phone market in 2007, rising to an annual penetration rate of 20% by 2011,
      according to a July 2006 report from IMS Research. We believe that True Software
      RadioTM microchips, providing software-reconfigurable multi-band, multi-mode, and
      ultra-wideband capabilities, will provide the single-chipset solution that
      the
      market will need.





**Product
      Development**





***True
      Software RadioTM***





In
      August
      2006, we produced our first engineering run of wireless transmitter and receiver
      microchips, based on our True Software RadioTM technology. On November 29, 2006,
      we announced the finalization of the product datasheet that will serve as the
      baseline for our initial commercial production run of the True Software RadioTM
wireless receiver and transmitter chips. The datasheet was based on the
      completion of parametric characterization of the first silicon germanium (SiGe)
      microchips we fabricated. The characterization process measured the function
      and
      performance parameters of the transmitter and receiver chips as they operated
      continuously across multiple frequency bands. We are now in position to offer
      the True Software RadioTM (TSRTM) TC-RX1000ES / TC-TX1000ES 0.18μ SiGe transceiver
      chip sets, which convert full-spectrum data from RF to digital signals and
      digital to RF signals. The part number suffix ES indicates engineering samples,
      which can be used by original design manufacturers (ODMs) and original equipment
      manufacturers (OEMs) to develop their applications and products. We believe
      these microchips will provide the key to flexible software defined radio (SDR)
      systems.





"Software
      radio" and “software defined radio” are industry terms which refer to wireless
      receivers and transmitters that can be controlled and reconfigured by software
      commands and that can process radio signals digitally for better performance.
      However, in today's wireless devices, only the RF signal processing (information
      interpretation) can be performed digitally. Wireless transmitters and receivers
      still utilize conventional analog transceiver circuitry based on technology
      first developed in the early 1900s. Existing SDR systems rely on single and
      multiband RF transceivers that do not cover a wide and continuous frequency
      range. Our True Software RadioTM technology makes it possible for wireless
      transmitters and receivers, as well as the radio signal processing, to be fully
      controlled and reconfigured by software commands across a wide range of
      frequencies and frequency bands. Our patented and patent-pending True Software
      RadioTM technology is an advanced delta-sigma microchip architecture that
      converts RF signals directly into digital data for the wireless receiver and
      directly from digital data into radio signals for the wireless transmitter.
      We
      believe that direct conversion wireless technology will replace current
      conventional analog transceiver circuitry, providing fully software-controlled
      single-transceiver wireless devices that can operate across different networks
      and frequency bands, in multiple modes and with multiple wireless standards,
      with higher resolution and greater bandwidth than conventional circuitry. True
      Software RadioTM microchips replace the analog front end, intermediate frequency
      (I/F) processing, analog-to-digital conversion (ADC), and digital filtering
      sections of today’s conventional wireless transmitters and receivers. Because
      the technology simplifies design and reduces component costs, we believe that
      True Software RadioTM is an ideal platform for OEMs and ODMs to develop new
      wireless broadband, mobile data, cellular, and other next-generation wireless
      applications.








2


***Set-top
      Boxes***





On
      April
      21, 2006, Jinshilin Techno acquired IPTV set-top box technology through license
      agreements with Jinshilin Technologies Development Company Ltd. Jinshilin Techno
      also designs and sells products for Internet Television (IPTV), Stream Media
      Protocol Processing, and Broadcasting Software for IPTV-Set-Top Boxes. We expect
      future generation set-top boxes to support multi-protocol wireless connectivity
      with television, DVD players and other multi-media appliances, by integrating
      True Software RadioTM into Jinshilin Techno's IPTV-STB. In July 2006, we received
      final approval for the subsidiary from the People’s Republic of
      China.





In-Stat,
      a provider of research, market analysis and forecasts, projects that China’s
      IPTV market will experience a gradual but solid increase from 2006 to 2010,
      with
      annual unit shipments of digital cable set-top boxes projected to grow to 12
      million in 2010. We believe we are poised to take advantage of this projected
      demand. In September 2006, Jinshilin Techno entered into a three-year agreement
      of cooperation with Shanghai Forest Electronics Technology Co. Ltd., or Shanghai
      Forest. On November 20, 2006, Jinshilin Techno provided 60 set-top boxes to
      Shanghai Forest which were integrated into a demonstration network built by
      Shanghai Forest, together with Shanghai Alcatel Network Support System Company
      Inc., for the Television and Broadcast Bureau. As of December 15, 2006, the
      demonstration network had successfully completed all scheduled demonstrations
      and tests.





**Asanté**  **Networks’
      Product Offerings**





Asanté
      Networks’ solutions consist of the IntraCore® and FriendlyNET® product families,
      integrating voice, data, and video over wireless and wired networks with unified
      management and authentication. In April 2006, Asanté announced the release of
      its most advanced, state-of-the-art 2-chip switch solution, the IntraCore®
38480. The IntraCore® 38480 provides no frame loss and full-wire speed with
      minimized latency. Designed to be a space-saver in the rack and wiring closet,
      it can also eliminate cross switch traffic. With 96-gigabit switching fabric,
      the IntraCore 38480 supports full-wire speed on all ports. It has advanced
      traffic control based on L2-L7 data of incoming frames. Asanté Networks is also
      pursuing discussions with several network equipment manufacturers regarding
      the
      establishment of a strategic business 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.





3


Jinshilin
      Techno is also cooperating with Shanghai Forest in the deployment of IPTV for
      in-home television service to two million rural residents of the Henan Province.
      Shanghai Forest is working on the project with the Television and Broadcast
      Bureau of the Henan Province. The project contemplates the initial deployment
      of
      100,000 set-top boxes by the end of July 2007, with a total of two million
      units
      to be provided by the end of 2009. Jinshilin Techno provided 60 set-top boxes
      to
      Shanghai Forests, which were integrated into a demonstration network built
      by
      Shanghai Forests, in cooperation with Alcatel Network Support System Company
      Inc., for the Television and Broadcast Bureau. As of December 15, 2006, the
      demonstration network had successfully completed all scheduled demonstrations
      and tests.





**Manufacturing
      and Production**





***True
      Software Radio***





We
      have
      established a business relationship with Jazz Semiconductor, an independent
      wafer foundry located in Newport Beach, California, to fabricate the True
      Software RadioTM microchips. Fabrication of the first engineering run of our
      microchips was completed in August 2006. We anticipate additional engineering
      runs prior to our first commercial production run, now expected in the first
      half of 2007. Jazz Semiconductor offers successive generations of its SiGe
      BiCMOS microchip fabrication process, which supports the features that
      facilitate our reconfigurable, frequency agile designs.





In
      the
      fourth quarter of calendar 2006, we finalized the preliminary product datasheet
      that will serve as the baseline for our initial commercial production run of
      our
      True Software RadioTM wireless receiver and transmitter microchips and the
      completion of the microchips’ parametric characterization. The characterization
      process measured the function and performance parameters of the microchips
      as
      they operated continuously across multiple frequency bands.





We
      have
      also entered into preliminary discussions with a large Taiwan-based
      semiconductor manufacturing company for the future production of our lower
      power
      microchip designs, using their CMOS microchip fabrication process.





***IPTV
      Set-top Boxes***





In
      December 2006, Jinshilin Techno entered into an MOU with Changzhou Xingqiu
      Electronic Co., Ltd. (Xingqiu), a manufacturing company that concentrates on
      the
      design, sale and production of high-quality communication devices, high-volume
      electronics, and audio and video products. Xingqiu earned the ISO9001:2000
      International Accreditation for strict and effective quality assurance, and
      for
      products that comply with international authority safety standards, such as
      America's UL and European Union's CE. The MOU establishes the framework in
      which
      Xingqiu will fabricate Jinshilin Techno's IPTV set-top box products. Xingqiu
      will finance and manufacture Jinshilin Techno's IPTV set-top boxes in accordance
      with delivery requirements and project specifications provided by Jinshilin
      Techno's customers. We believe that Xingqiu possesses the expertise and capacity
      to deliver Jinshilin Techno's products in a timely and cost effective manner.
      Further, Jinshilin Techno plans to work with Xingqiu to co-develop, market,
      and
      sell successive generations of IPTV set-top boxes, including those that will
      integrate the True Software RadioTM technology.





**Technology**





Our
      True
      Software RadioTM technology is a semiconductor architecture that defines the
      electrical conductivity of microchips and how the electrical conductivity is
      controlled, so that radio signals are converted directly into digital data
      by
      the wireless receiver and are converted directly from digital data into radio
      signals by the wireless transmitter. We believe that direct conversion wireless
      technology will replace current conventional analog transceiver circuitry,
      providing fully software-controlled single-transceiver wireless devices that
      can
      operate across different networks and frequency bands, in multiple modes and
      with multiple wireless standards. True Software RadioTM microchips can replace
      the analog front end, intermediate frequency (I/F) processing, analog-to-digital
      conversion (ADC), and digital filtering sections of today’s conventional
      wireless transmitters and receivers. Because the technology simplifies design
      and reduces component costs, we believe that True Software RadioTM is an ideal
      platform for original equipment manufacturers (OEMs) and original design
      manufacturers (ODMs) to develop new wireless broadband, mobile data, cellular,
      and other next-generation wireless applications.





**Intellectual
      Property**





Under
      U.S. patent law, a “provisional patent application” is an application for patent
      filed in the U.S. Patent and Trademark Office, which will not mature into an
      issued patent unless a non-provisional application is filed within twelve
      months. A provisional patent application can establish an early effective filing
      date for subsequent non-provisional applications. The provisional filing also
      allows the term "Patent Pending" to be applied to the invention.





From
      January through October 2006, we have filed both provisional and non-provisional
      patent applications with the U.S. Patent and Trademark Office,
      including:





·
            a
                provisional patent application for the "Single Input, Single Output,
                Multi-Band RF Front End." The invention makes it possible for a single
                radio frequency, or RF, receiver microchip to replace multiple-tuned
                RF
                front end transceivers, reducing both cost and power
                consumption.








4





·
            a
                provisional patent application for a new method to reduce power in
                high-speed digital wireless devices. The "Low Power, Low Voltage,
                Digitally Trim-able Active Back-termination LVDS driver" is a low
                voltage
                differential signaling (LVDS), low noise, low power, low amplitude
                circuit
                for high-speed (gigabits per second) data transmission. We anticipate
                that
                this invention can be used in the digital interface circuits of many
                high
                speed microchips, including digital wireless receivers and
                transmitters.





·
            a
                patent application for the "Adaptive Narrowband Interference Canceller
                for
                Broadband Systems." This invention cancels unwanted radio signals
                that
                interfere with wireless reception, is fully software programmable,
                can be
                adapted for use in many digital radio receivers, and claims the benefit
                of
                a provisional patent filing in September
                2005.





·
            a
                provisional patent application for a proprietary innovation that
                dramatically reduces noise and distortion in high dynamic range RF
                amplifiers, enabling wireless devices to receive weak radio
                signals.





·
            a
                patent application for a circuit that automatically eliminates
                quantization noise while adjusting to the correct frequency.




We
      currently have additional applications in process and anticipate future patent
      filings to establish a full family of patents, comprising the basis for our
      overall True Software RadioTM technology.





In
      addition to patent protection, we rely on the laws of trade secrets and of
      unfair competition to protect our proprietary rights. We attempt to protect
      our
      trade secrets and other proprietary information through confidentiality
      agreements with prospective strategic partners, customers and suppliers. We
      also
      require proprietary information and/or inventors’ assignment and non-disclosure
      agreements from all of our employees and consultants. Although we intend to
      protect our rights vigorously, there can be no assurance that all these measures
      will be successful.





We
      believe that, because of the rapid pace of technological change in the wireless
      communications industry, patent and trade secret protections are extremely
      important - but they must also be supported by other dynamics such as expanding
      the knowledge, ability and experience of our personnel, new product
      introductions and continual product enhancements.





**Competition**





There
      are
      several companies that have successfully developed multiple-frequency front-end
      transceiver modules based upon integrating several analog circuits into a single
      integrated component. Certain companies have created integrated circuits with
      multiple radio transceivers that can work with multiple networks. Many of these
      companies have financial, technical, marketing, sales, manufacturing,
      distribution and other resources substantially greater than ours. However,
      the
      solutions offered by most of these companies are restricted to predefined
      frequencies and frequency bands and therefore are limited to specific protocols
      and standards. Further, if either the fixed frequency band(s) or fixed
      standard(s) changes, then a new hardware component has to be designed and
      installed, thus increasing the product and maintenance cost. This is similar
      in
      concept to designing a radio receiver that selects only two, three or four
      stations out of the full frequency band to listen to. By analogy, our True
      Software RadioTM microchips allow the radio to be tuned to any frequency in the
      band and in any frequency band, as determined by software programming that
      can
      be changed by a simple software upgrade or revision.





Certain
      competitors are developing methods to combine some of the discrete analog
      components and to enable portions of the circuit architecture to be
      software-programmed for filtering specific diverse signals. While this
      technology may provide greater programmability, it is nonetheless based on
      conventional superheterodyne (analog) architecture and therefore not truly
      frequency agile and still not fully programmable.





Another
      group of competitors are developing “Low-IF” and “Zero-IF” conversion
      technologies, to minimize or even eliminate intermediate frequency processing
      sections of the radio circuit. However, these competitors still use analog-based
      semiconductor architecture that is slower and less flexible than our True
      Software RadioTM microchip architecture. Because of the slower speed of the
      competitors’ microchips, these competitors are forced to use “undersampling”
methods to convert the RF signal from analog to digital. We believe that
“undersampling” inherently limits the resolution that can be achieved in digital
      signal produced by our “oversampling” direct conversion method. In other words,
      we believe that True Software RadioTM produces cleaner, quieter radio signals, as
      required by the wireless industry.





Another
      company is developing a superconductor microelectronic device for direct
      conversion of radio signals to digital, which may match or exceed the
      performance of the True Software RadioTM microchip. However, the method being
      developed requires a “compact cryocooler,” because the electronic components
      will have to be super-cooled to 4 degrees Kelvin to attain this level of
      performance. In contrast, True Software RadioTM requires no special environmental
      accommodations.




We
      plan
      to compete on the basis of product features, quality, reliability, price, and
      dedicated customer support. We believe our technology provides a significant
      competitive advantage with respect to each of these factors.





5


**RISK
      FACTORS**





***We
      have not yet generated any revenues from the sale of our core True Software
      RadioTM or IPTV Set-Top Box products and we may not generate any significant
      revenues from these products.***





Our
      limited historical performance may make it difficult for you to evaluate the
      success of our business to date and to assess its future viability. We are
      an
      early stage development company whose business is focused on the wireless
      communications industry. We may not achieve our objectives or be able to
      successfully implement our strategy. We may never be able to successfully
      commercialize our products. Accordingly, we may never generate significant
      revenues from these products. As noted in our financial statements included
      in
      this annual report, our independent auditors have noted that there is
      substantial doubt regarding our ability to continue as a going concern. In
      addition, our early stage of development means that we have less insight into
      how market and technology trends may affect our business. The revenue and income
      potential of our business is unproven and the market we are addressing is
      rapidly evolving. You should consider our business and prospects in light of
      the
      risks, expenses and challenges that we will face as an early-stage company
      seeking to develop and manufacture new products in a growing and rapidly
      evolving market.




***We
      expect to continue to incur losses and experience negative cash
      flows.***  **





We
      expect
      to have significant operating losses and to record significant net cash outflow
      in the near term. Our business has not generated sufficient cash flow to fund
      the commercialization of our proprietary technology and our planned operations
      without resorting to external sources of capital. We anticipate that finishing
      product commercialization and establishing market share for our True Software
      RadioTM technology will require substantial capital and other expenditures. Since
      our inception, we have incurred net losses in each year of our operations.
      As a
      result of ongoing operating losses, we had an accumulated deficit of
      approximately $17.8 million as of September 30, 2006. We expect to incur
      substantial losses for the foreseeable future, and may never recognize
      significant revenues or become profitable. Even if we do achieve profitability,
      we may be unable to sustain or increase our profitability in the future, which
      could materially decrease the market value of our common stock. We expect to
      continue to incur significant capital expenditures and anticipate that our
      expenses will increase substantially in the foreseeable future as we seek to
      continue to research and develop our products, attempt to implement our business
      strategy, implement internal systems and infrastructure in conjunction with
      our
      growth, and hire additional personnel. We do not know whether we will ever
      recognize significant revenues and, if we do, whether revenues will grow rapidly
      enough to absorb these expenses.





***We
                will need additional capital to fund our operations and finance our
                growth, and we may not be able to obtain it on terms acceptable to
                us or
                at all.***





While
      we
      believe that our existing assets, anticipated debt and equity financing, and
      expected revenue growth should be sufficient to fund our operations in fiscal
      year 2007, it is quite likely that we will need additional capital to fund
      our
      operations and finance our growth. If we expand more rapidly than currently
      anticipated, if our working capital needs exceed our current expectations,
      or if
      we make acquisitions, we will need to raise additional capital from equity
      and/or debt sources. If we cannot obtain financing on terms acceptable to us
      or
      at all, we may be forced to curtail our planned business expansion and may
      be
      unable to fund our ongoing operations.





***Our
                success depends on the acceptance and use of our True Software
                RadioTM********technology.***





Our
      success will depend, to a large extent, on the acceptance of our True Software
      RadioTM technology in a market that is only beginning to define itself. Our
      strategy is currently to consummate relationships with strategic partners that
      can facilitate our entry into a variety of markets in North America and Asia.
      Eventual success will also depend on our ability to deliver reliable products
      and services to interested wireless products/service providers on time and
      within required performance parameters. There can be no assurances that any
      market for our products and services will ever develop.





***Adoption
                of a universal wireless telecommunications transmissions protocol
                may
                significantly diminish the need for our products and
                technology.***




If
      a
      universal mobile telecommunications protocol, such as UMTS or W-CDMA, is adopted
      internationally for cellular communications, the industry may no longer need
      the
      capabilities of technologies such as True Software RadioTM to address competing
      wireless protocols. While True Software RadioTM would continue to provide
      frequency agility and a more efficient utilization of bandwidth, the demand
      for
      our technology may be significantly diminished, impacting anticipated sales
      and
      revenues.





***Jinshilin
      Techno is conducting significant operations in China, and for at least an
      interim period, the majority of our consolidated revenues may be derived from
      these operations.***




Our
      subsidiary, Jinshilin Techno, based in Shanghai, China, is in the process of
      seeking to develop, produce and distribute IPTV set-top boxes for the Chinese
      market. Jinshilin Techno has entered into commercial arrangements with third
      parties based in China. In the short term, we expect that these activities
      will
      represent the source of the majority of our revenues other than from the
      operations of Asanté ’ Networks.




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:





6





·
            we
                will be able to capitalize on the economic
                reforms;





·
            the
                Chinese government will continue its pursuit of economic reform
                policies;





·
            the
                economic policies, even if pursued, will be
                successful;





·
            economic
                policies will not be significantly altered from time to time;
                and





·
            business
                operations in China will not become subject to the risk of
                nationalization.





Negative
      impact upon economic reform policies or nationalization could result in a total
      investment loss in our subsidiary.





Further,
      because many reforms are unprecedented or experimental, they are expected to
      be
      refined and improved. Other political, economic and social factors, such as
      political changes, changes in the rates of economic growth, unemployment or
      inflation, or in the disparities in per capita wealth between regions within
      China, could lead to further readjustment of the reform measures. This refining
      and readjustment process may negatively affect our operations.





China's
      economy has a high growth rate, has experienced high rates of inflation, and
      the
      rate of inflation may continue to increase. In response, the Chinese government
      has taken measures to restrain its expansive economy. These measures have
      included restrictions on the availability of domestic credit (including credit
      available from manufacturers), reducing the purchasing capability of certain
      customers, and limited re-centralization of the approval process for purchases
      of some foreign products. These measures alone may not succeed in slowing down
      the economy’s perceived excessive expansion or in controlling inflation, and may
      result in severe disturbances in the Chinese economy. The Chinese government
      may
      adopt additional measures to further combat inflation, including the
      establishment of freezes or restraints on certain projects or
      markets.





To
      date,
      reforms to China's economic system have not adversely impacted our operations
      and are not expected to adversely impact our operations in the foreseeable
      future. However, there can be no assurance that the reforms to China's economic
      system will continue or that we will not be adversely affected by changes in
      China's political, economic and social conditions and by changes in policies
      of
      the Chinese government, such as changes in laws and regulations, measures which
      may be introduced to control inflation, changes in the rate or method of
      taxation, imposition of additional restrictions on currency conversion and
      remittance abroad, and reduction in tariff protection and other import
      restrictions.





***Because
      we are conducting significant operations in China, for an interim period the
      majority of our consolidated revenues may be in Chinese renminbi (RMB), with
      a
      comparatively lesser amount in U.S. dollars. Thus, our revenues and operating
      results may be impacted by exchange rate fluctuations in the RMB against the
      U.S. dollar.***





Until
      July 2005, the RMB was tied to the dollar. At that time, the People’s Bank of
      China, the central bank, adopted a new exchange-rate regime for the RMB,
      allowing a managed float.





In
      September 2006, the rate of appreciation of the RMB accelerated significantly
      from its previous pace. The People’s Bank of China is reported to be in favor of
      a faster rate of appreciation, and therefore the rate of appreciation may
      continue to be relatively rapid. Exchange rate volatility may rise and the
      current trading bands against the U.S. dollar may be widened, also leading
      to a
      faster rate of appreciation. A higher-value RMB may mean that we would report
      lower U.S. dollars for the revenue anticipated.





We
      have
      not tried to reduce our exposure to exchange rate fluctuations by using hedging
      transactions. However, we may choose to do so in the future. The availability
      and effectiveness of any hedging transactions may be limited and we may not
      be
      able to successfully hedge our exchange rate risks. Accordingly, we may
      experience economic losses and negative impacts on future earnings and equity
      as
      a result of these foreign exchange rate fluctuations.




***One
                or more competitors may develop products and/or gain market acceptance
                before we do.***





The
      global wireless telecommunications market is intensely competitive and is
      subject to rapid technological change, evolving industry standards and
      regulatory developments. Our potential competitors include many large domestic
      and international companies that have substantially greater financial,
      manufacturing, technological, marketing, distribution and other resources,
      installed customer bases, and long-standing relationships with customers. If
      we
      fail to execute our strategy in a timely or effective manner, our competitors
      may be able to seize the marketing opportunities we have identified. Our
      business strategy is complex and requires that we successfully and
      simultaneously complete many tasks, including but not limited to the successful
      completion of our technology commercialization effort, continuing to establish
      strategic alliances with wireless telecommunications providers, the introduction
      of our new True Software RadioTM technology and products to the market,
      establishment of quality fabricators to support sales of the products, delivery
      of our products and services on-time and within required specifications, and
      continued maintenance, upgrade and improvement of our technology. There can
      be
      no assurance that we will be able to successfully execute all elements of our
      strategy.








7







***The
                wireless telecommunications infrastructure market may grow more slowly
                than we expect or may experience a downturn, and it is possible that
                our
                True Software RadioTM and IPTV Set Top Box products may never achieve
                market acceptance..***




Growth
      in
      demand for and acceptance of our new products is highly uncertain. We believe
      that many of our potential customers may not be fully aware of the benefits
      of
      True Software RadioTM or our IPTV Set Top Box technology or may choose to acquire
      other products or services. It is possible that our True Software RadioTM and our
      IPTV Set Top Box products and services may never achieve market acceptance.
      If
      the market for our products does not develop or grows more slowly than we
      currently anticipate, our business, financial condition, and operating results
      would be materially adversely affected.




***We
      rely substantially on our intellectual property in developing our True Software
      Radio*** ***TM*** ***products. Third parties have filed a lawsuit challenging our acquisition of
      and
      rights to the intellectual property. An unfavorable outcome could prevent us
      from fully utilizing our technology.***




On
      December 30, 2005, a lawsuit, which named the Company as an additional
      defendant, was filed in the Superior Court, State of California, for the County
      of Los Angeles (Case No. BC345311). The plaintiffs were investors in Fiber
      Optic
      Techno Inc, a company which sold certain assets to TCI Nevada in May 2003,
      including a pending patent application and two expired provisional patent
      applications relating to True Software RadioTM technology. The plaintiffs allege
      that the sale was for less than fair consideration and constitutes a fraudulent
      conveyance by Fiber Optic Techno. They seek to set aside the transaction and
      assert claims for compensatory and punitive damages. At the time we purchased
      the assets, the pending patent application was in contention at the U.S. Patent
      and Trademark Office and also was the subject of state court litigation brought
      by different plaintiffs. We litigated these intellectual property issues and
      eventually obtained a dismissal. The U.S. Patent and Trademark Office
      subsequently issued U.S. Patent No. 6,748,025 to the Company in June 2004.
      The
      parties to the lawsuit have engaged in substantial written discovery and limited
      deposition discovery. Mediation was unsuccessful, and we are contesting the
      case
      vigorously. Our demurrer attacking the sufficiency of the plaintiffs' First
      Amended Complaint is expected to be heard in February 2007, The litigation
      has
      been expensive and time-consuming and may divert resources from our core
      business. If the litigation results in an unfavorable outcome and we are unable
      to license the technology or to


develop
      an alternative technology, we may be unable to fully utilize our technology,
      and
      the results of our operations could therefore be negatively
      impacted.




***We
                may be unable to protect our intellectual property adequately, which
                could
                cause us to lose any competitive advantage afforded by our intellectual
                property.***





Our
      ability to compete effectively against competing technologies will depend,
      in
      part, on our ability to protect our current and future proprietary technology,
      product designs and manufacturing processes through a combination of patent,
      copyright, trademark, trade secret and unfair competition laws. We may not
      be
      able to adequately protect our intellectual property and may need to defend
      our
      intellectual property against infringement claims, either of which could result
      in the loss of our competitive advantage and materially harm our business and
      profitability.





Third
      parties may claim that we are infringing their intellectual property rights.
      Any
      claims made against us regarding patents or other intellectual property rights
      could be expensive and time consuming to resolve or defend, would divert our
      management and key personnel from our business operations and may require us
      to
      modify or cease marketing our products or services, develop new technologies
      or
      products/services, acquire licenses to proprietary rights that are the subject
      of an infringement claim or refund to our customers all or a portion of the
      amounts they paid for infringing products. If such claims are asserted, we
      cannot assure you that we would prevail or be able to acquire any necessary
      licenses on acceptable terms, if at all. In addition, we may be requested to
      defend and indemnify certain of our customers and resellers against claims
      that
      our products infringe the proprietary rights of others. We may also be subject
      to potentially significant damages or injunctions against the sale of certain
      products/services or use of certain technologies.





Although
      we believe that our intellectual property rights are sufficient to allow us
      to
      develop our technology and to sell our planned products/services without
      violating the valid proprietary rights of others, we cannot assure you that
      our
      technologies or products/services do not infringe the proprietary rights of
      third parties or that third parties will not initiate infringement actions
      against us.




***We
                plan to expand rapidly and managing our growth may be
                difficult.*****





Our
      business may grow rapidly both geographically and in terms of the number of
      products and services we offer. We cannot be sure that we will successfully
      manage such growth, if it occurs. If sufficient working capital cannot is not
      available, or if we are not successful in raising additional capital to execute
      our business strategy and grow the depth and breadth of our wireless products
      and services, we may be forced to discontinue our operations.




8





***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.








9





***Our
                management team may not be able to successfully implement our business
                strategies.***





If
      we are
      able to successfully execute our business strategies, we will likely experience
      rapid growth in the scope of our operations and the number of our employees,
      which is likely to place a significant strain on our senior management team
      and
      other resources. In addition, we may encounter difficulties in effectively
      managing the budgeting , forecasting and other process control issues presented
      by this rapid growth. We may seek to augment or replace members of our
      management team or we may lose key members of our management team, and we may
      not be able to attract new management talent with sufficient skill and
      experience.





***We
                are in default under the terms of our outstanding 7% secured convertible
                debentures.***




On
      November 17, 2004, we issued 7% secured convertible debentures in the aggregate
      principal amount of $3,775,000. On November 17, 2006, the principal amounts,
      together with accrued and unpaid interest, on the then outstanding debentures
      became due and payable. As of this date, debentures in the aggregate principal
      of $250,000 were outstanding. The holders of debentures in the aggregate
      principal amount of $3,525,000 had previously either converted their debentures
      into shares of our common stock or exchanged their debentures for subordinated
      promissory notes that are scheduled to mature beginning in May 2007 and
      continuing through December 2007. We have been unable to pay the amounts owing
      with respect to the outstanding debentures as of the maturity date. As such,
      we
      are in default under the terms of our outstanding debentures and the holders
      of
      such debentures have the right to exercise their rights and remedies provided
      under the debentures, the related securities purchase agreement, the related
      security agreement or any document or instrument delivered in connection with
      or
      pursuant to the debentures. In that regard, the holders of the outstanding
      debentures (acting in concert) have the right to take possession of all of
      our
      assets and operate our business, and to seek to enforce the payment of the
      amounts due and payable. If the debenture holders exercise any of their rights
      and remedies, we may be required, among other things, to repay the amounts
      due,
      which would leave us with little or no working capital in our business. This
      would have a material adverse effect on our continuing operations.





***We
                have other outstanding debt obligations secured by our assets and
                a
                default of those obligations could adversely affect our financial
                and
                operating results.***





Effective
      May 30, 2006, we entered into a series of secured promissory notes in an
      aggregate amount of $8,359,520, subordinated to our existing 7% secured
      convertible debentures and certain accounts receivable facilities. These notes
      will mature on the date that is the earlier of (i) one year from the date of
      issuance of each secured subordinated promissory note, (ii) the date on which
      we
      consummate the closing of our next equity financing or series of equity
      financings which in the aggregate total is no less than $7,000,000 or (iii)
      the
      sale of the Company or sale of substantially all of the Company's assets any
      time prior to the maturity date. The holders may declare the notes immediately
      due and payable upon the occurrence of any of the following events of default:
      (i) our failure to pay the principal when due, (ii) our material breach of
      any
      of the covenants or conditions made in the note purchase agreement or the other
      transaction documents, (iii) the Company's filing of a voluntary bankruptcy
      proceeding, or (iv) the filing of an involuntary bankruptcy petition against
      the
      Company that is not dismissed or discharged within 180 days. If any of these
      events of default were to occur and the note holders exercise any of their
      rights and remedies, we could be required, among other things, to repay the
      amounts due, which would leave us with little or no working capital in our
      business. This would have a material adverse effect on our continuing
      operations.





***The
                large number of our shares eligible for public sale could cause our
                stock
                price to decline.***





The
      market price of our common stock could decline as a result of the resale of
      the
      shares of common stock issuable upon conversion of the debentures and the
      exercise of the warrants issued in our November 2004 private placement or the
      perception that these sales could occur. These sales also might make it more
      difficult for us to sell equity securities in the future at a time and price
      that we deem appropriate.





***The
                issuance of (i) the shares to be issued upon conversion of
                our******7%
                secured convertible debentures and upon the conversion of convertible
                preferred stock and (ii) the shares to be issued upon the exercise
                of the
                warrants issued in connection with the debentures, the secured
                subordinated promissory notes, and the unsecured promissory notes
                now
                payable on demand will all cause the current holders of our common
                stock
                to suffer substantial dilution of their interests in
                us.***




As
      of
      September 30, 2006, the number of shares of our common stock issuable upon
      conversion of our 7% secured convertible debentures and our convertible
      preferred stock amounted to an aggregate of 35,503,000, of which the conversion
      of preferred stock into 34,703,000 shares common stock is subject to substantial
      restrictions as set forth in the applicable certificates of designation of
      the
      various series of preferred stock. The number of shares of our common stock
      issuable upon the exercise of warrants issued in connection with our debentures,
      our secured subordinated promissory notes and our unsecured promissory notes
      amounted to an aggregate of 16,635,723, of which 15,862,603 shares are subject
      to Rule 144 restrictions and 773,120 shares would be unrestricted. The weighted
      average exercise price of these warrants is $1.15, and the average remaining
      contractual life of these warrants is 3.8 years. We are obligated to file and
      have declared effective by the SEC a registration statement registering the
      resale of 3,560,000 of these shares. The resale of these shares will increase
      the number of our publicly traded shares, which could depress the market price
      of our common stock, and thereby affect the ability of our stockholders to
      realize the current trading price of our common stock. Moreover, the mere
      prospect of the resale of these shares could depress the market price for our
      common stock.





10


***Our
      stock price can be extremely volatile, and there is no assurance there will
      be
      an active market for our stock.***  **





Our
      common stock is traded on the OTC Bulletin Board. There can be no assurance
      of
      an active public market for the common stock, or that the market price for
      the
      common stock will not decline below its current price. Such price may be
      influenced by many factors, including, but not limited to, investor perception
      of us and our industry and general economic and market conditions. The trading
      price of the common stock could be subject to wide fluctuations in response
      to
      announcements of our business developments or our competitors, quarterly
      variations in operating results, and other events or factors. In addition,
      stock
      markets have experienced extreme price volatility in recent years. This
      volatility has had a substantial effect on the market prices of companies,
      at
      times for reasons unrelated to their operating performance. Such broad market
      fluctuations may adversely affect the price of our common stock. In addition,
      companies that have experienced volatility in the market price of their stock
      have been the subject of securities class action litigation. We may be involved
      in securities class action litigation in the future. This litigation often
      results in substantial costs and a diversion of management’s attention and
      resources.




***Trading
                on the OTC Bulletin Board may be sporadic because it is not a stock
                exchange, and stockholders may have difficulty selling our
                shares.***





Our
      common stock is quoted on the OTC Bulletin Board. Trading in stock quoted on
      the
      OTC Bulletin Board is often thin and characterized by wide fluctuations in
      trading prices, due to many factors that may have little to do with an OTC
      Bulletin Board company’s operations or business prospects. Moreover, the OTC
      Bulletin Board is not a stock exchange, and trading of securities on the OTC
      Bulletin Board is often more sporadic than the trading of securities listed
      on
      the Nasdaq. Accordingly, you may have difficulty reselling any of the shares
      you
      purchase from the selling security holders.





***If
                we fail to remain current in the filing with the SEC of our periodic
                reports under the Securities Exchange Act of 1934, our common stock
                could
                cease to be eligible to trade on OTC Bulletin Board, which would
                limit the
                ability of broker-dealers to sell shares of our common stock and
                the
                ability of stockholders to sell our shares in the secondary
                market.***





Companies
      trading on the OTC Bulletin Board, such as us, must be reporting issuers under
      Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”) , and must be current in their reports under Section 13 of the Exchange
      Act, in order to maintain price quotation privileges on the OTC Bulletin Board.
      If we fail to remain current on our reporting requirements, shares of our common
      stock could be removed from the OTC Bulletin Board. As a result, the market
      liquidity for our securities could be severely adversely affected by limiting
      the ability of broker-dealers to sell our securities and the ability of
      stockholders to sell their securities in the secondary market.





***Our
                common stock is subject to the “penny stock” rules of the SEC and the
                trading market in shares of our common stock is limited, which makes
                transactions in our common stock cumbersome and may reduce the value
                of an
                investment in our common
                stock.***





Rule
      15g-9 under the Exchange Act defines “penny stock,” for the purposes relevant to
      us, as any equity security that has a market price of less than $5.00 per share
      or with an exercise price of less than $5.00 per share, subject to certain
      exceptions. For any transaction involving a penny stock, unless exempt, the
      rules require that a broker or dealer approve a person’s account for
      transactions in penny stocks and the broker or dealer receive from the investor
      a written agreement to the transaction, setting forth the identity and quantity
      of the penny stock to be purchased. In order to approve a person’s account for
      transactions in penny stocks, the broker or dealer must obtain financial
      information and investment experience objectives of the person and make a
      reasonable determination that the transactions in penny stocks are suitable
      for
      that person and the person has sufficient knowledge and experience in financial
      matters to be capable of evaluating the risks of transactions in penny stocks.
      The broker or dealer must also deliver, prior to any transaction in a penny
      stock, a disclosure schedule prescribed by the Commission relating to the penny
      stock market, which, in highlight form sets forth the basis on which the broker
      or dealer made the suitability determination and that the broker or dealer
      received a signed, written agreement from the investor prior to the transaction.
      Generally, brokers may be less willing to execute transactions in securities
      subject to the “penny stock” rules. This may make it more difficult for
      investors to dispose of our common stock and cause a decline in the market
      value
      of our stock. Disclosure also has to be made about the risks of investing in
      penny stocks in both public offerings and in secondary trading and about the
      commissions payable to both the broker-dealer and the registered representative,
      current quotations for the securities and the rights and remedies available
      to
      an investor in cases of fraud in penny stock transactions. Finally, monthly
      statements have to be sent disclosing recent price information for the penny
      stock held in the account and information on the limited market in penny
      stocks.





***We
                do not expect to pay dividends on our common
                stock.***





We
      have
      not declared dividends on our common stock since our incorporation and we have
      no present intention of paying dividends on our common stock. We are also
      restricted by the terms of certain debt and other agreements as to the
      declaration of dividends.




11




**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 that commenced on August 1, 2006, and ends upon
      thirty days (30) days written notice to terminate said lease. This lease
      provides for monthly rental payments of $2,283.80. These facilities house
      additional engineering offices as well as certain product development
      operations. Management believes that our present engineering offices are
      adequate to meet our immediate current needs.




Asanté
      Networks Inc., our subsidiary, leases approximately 7,000 square feet of office
      space in San Jose, Ca. This space is held pursuant to a twenty five (25) month
      lease that commenced on November 1, 2006 and provides for monthly rental
      payments of $7,591.23. Asanté uses this facility as executive offices as well as
      sales and administrative offices.





Techno
      (Hong Kong) Limited, our subsidiary, leases approximately 846 square feet of
      office space in Hong Kong at a monthly rent of US $1,604 pursuant to a three
      year lease that commenced in August 2005. We use this facility for product
      development operations as well as administrative offices.





Jinshilin
      Techno Ltd., another subsidiary, leases approximately 4,309 square feet of
      office space in Shanghai, China at a monthly rent of US $3,729 pursuant to
      a two
      year lease that commenced in July 2006. These facilities house our executive
      offices as well as certain administrative operations. Management believes that
      our present offices are adequate to meet our immediate current needs.




**ITEM
      3. LEGAL PROCEEDINGS**





We
      are
      subject to legal proceedings from time to time in the ordinary course of our
      business. As of September 30, 2006, we were not aware of any pending or
      threatened legal proceedings that could, in management’s opinion, have a
      material adverse impact on operations, assets or financial
      condition.





On
      December 30, 2005, a lawsuit, which named the Company as an additional
      defendant, was filed in the Superior Court, State of California, for the County
      of Los Angeles (Case No. BC345311) for nonpayment of promissory notes issued
      to
      the plaintiffs by the primary defendant, Fiber Optic Techno, Inc. (formerly
      TechnoConcepts Inc.), a California corporation, which sold some of its
      assets to the Company in May 2003 for a fair consideration. The plaintiffs
      seek
      to set aside the transaction, as a fraudulent transfer, and assert claims for
      compensatory and punitive damages. The assets purchased by the Company included
      all rights to the TechnoConcepts trademark and to the then-pending patent
      application for the Direct Conversion Delta Sigma Receiver. At the time the
      assets were purchased by the Company, the patent application was in contention
      at the U.S. Patent and Trademark Office and also was the subject of State Court
      litigation brought by different plaintiffs, which litigation has since been
      dismissed. The U.S. Patent and Trademark Office issued U.S. Patent No. 6,748,025
      to the Company for the Direct Conversion Delta Sigma Receiver in June 2004.
      On
      or about April 13, 2006, the State Court action (Case No. BC345311) was removed
      to the United States Bankruptcy Court, Central District of California (BK No.
      SV
      06-10520-MT), by petition of the plaintiffs. On June 14, 2006, on motion made
      by
      the Company, the Bankruptcy Court remanded the case back to the State Court.
      The
      parties have engaged in substantial written discovery and limited deposition
      discovery. A mediation was unsuccessful, and the Company has instructed its
      attorneys to contest the case vigorously. The Company’s demurrer attacking the
      sufficiency of plaintiffs’ First Amended Complaint is expected to be heard in
      February 2007.





On
      December 19, 2006, a lawsuit was filed in the Superior Court, State of
      California, for the County of Sacramento (Case No. AS05420) against Asanté
Technologies, Inc., Asanté Acquisition Corporation, and the Company for
      nonpayment of legal fees incurred by Asanté Technologies prior to and in
      connection with the acquisition of that company’s assets and business by
      TechnoConcepts. Judgment is sought in the amount of $98,069 plus attorneys’ fees
      and costs. The Company intends to defend against this lawsuit and to dispute
      the
      amount of fees owed.





There
      can
      be no assurance that the ultimate resolution of these matters will not have
      a
      material adverse effect on our business or results of operations.





**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS**





On
      May
      18, 2006, by written consent of a majority of the holders of the outstanding
      shares of common stock and equivalents entitled to vote, the Company’s articles
      of incorporation were amended to increase the number of authorized shares to
      100,000,000 and the number of preferred shares to 10,000,000.





12


**PART
      II**





**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





**Market
      Information**





Our
      common stock commenced trading in the over-the-counter market on December 23,
      2003, and prices for the common stock were quoted on the OTC Electronic Bulletin
      Board (“OTCBB”) under the symbol “TCPT.” No trading took place during the fiscal
      year ended September 30, 2003.





Prior
      to
      the merger of Technology Consulting Partners Inc. and TechnoConcepts Inc.,
      a
      Nevada corporation, in February 2004, there was no established trading market
      in
      our common stock and trading therein was sporadic.





In
      February 2004, we changed our name to “TechnoConcepts, Inc.” and the trading
      symbol of our common stock was changed to “TCPS.”





The
      following table sets forth the high and low bid prices of our common stock
      in
      the over-the-counter market for the periods indicated. The bid prices represent
      prices between dealers, and do not include retail markups, markdowns or
      commissions, and may not represent actual transactions.





**QUARTER
                ENDED**
            
            **HIGH
                BID**
            
            **LOW
                BID**December
                31, 2004
            
            $
            4.90
            
            $
            3.25March
                31, 2005
            
            $
            5.55
            
            $
            3.50June
                30, 2005
            
            $
            5.00
            
            $
            3.56September
                30, 2005
            
            $
            4.59
            
            $
            3.05December
                31, 2005
            
            $
            3.65
            
            $
            1.70March
                31, 2006
            
            $
            2.93
            
            $
            1.70June
                30, 2006
            
            $
            2.50
            
            $
            1.70September
                30, 2006
            
            $
            2.01
            
            $
            1.23





As
      of
      January 13, 2007, there were approximately 975 holders of record of our common
      stock.







**Dividends**





We
      have
      not paid any cash dividends on our common stock since inception and presently
      anticipate that all earnings, if any, will be retained for development of our
      business and that no dividends on our common stock will be declared in the
      foreseeable future. Any future dividends will be subject to the discretion
      of
      our Board of Directors and will depend upon, among other things, future
      earnings, operating and financial condition, capital requirements, general
      business conditions and other pertinent facts. Therefore, there can be no
      assurance that any dividends on our common stock will be paid in the
      future.





**Recent
      Sales of Unregistered Securities**





*Convertible
      Notes/Debentures*





Initial
      and Subsequent Notes





In
      November and December 2003, we entered into various unsecured convertible note
      agreements with private investors for the receipt of an aggregate of $333,675,
      in consideration for our issuance of promissory notes (the “Initial Notes”).
      These notes carried an interest rate of between 8% and 11% per annum, with
      all
      interest and principal due in April 2004. At the time of maturity, the notes
      were converted into 765,715 shares of our common stock.





In
      January and February 2004, we entered into various unsecured convertible note
      agreements with private investors for the receipt of an aggregate of $905,000,
      in consideration for our issuance of promissory notes (the “Subsequent Notes”
and together with the Initial Notes, the “Notes”). In November 2004, we issued
      additional Subsequent Notes in an aggregate amount of $200,000. The Subsequent
      Notes carried an interest rate of 10% per annum payable quarterly in cash or
      stock, with all interest and principal due on January 31, 2005. The notes were
      convertible into shares of our common stock at any time after June 30, 2004.
      All
      of the Subsequent Notes have been converted into 694,571 shares of our common
      stock.





13


7%
      Secured Convertible Debentures and Warrants





On
      November 17, 2004, we entered into a securities purchase agreement, a
      registration rights agreement, and a security agreement with certain
      institutional investors. Under the purchase agreement, we sold 7% secured
      convertible debentures in the aggregate principal amount of $3,775,000, warrants
      exercisable for a total of 608,000 shares of our common stock and shares of
      our
      Series B preferred stock (described below). One half of such warrants were
      exercisable at $3.50 per share and one half of such warrants were exercisable
      at
      $4.00 per share. Due to a subsequent financing which triggered an anti-dilution
      adjustment, the number of shares of our common stock for which the warrants
      can
      be exercised increased to 3,060,000 and the exercise price was adjusted to
      $1.00. The gross proceeds from the offering of the 7% secured convertible
      debentures, the warrants and the shares of Series B preferred stock were
      approximately $7,013,675 in cash and other consideration. Net proceeds to the
      Company from this transaction were approximately $3,442,000, after the payment
      of commissions and expenses. In connection with this transaction, we paid
      commissions to Duncan Capital, LLC, as placement agent, in the approximate
      amount of $332,550 and also issued warrants exercisable for 120,800 shares
      of
      our common stock at $2.50 per share, 24,160 shares at $3.50 per share and 24,160
      shares at $4.00 per share to Duncan Capital.




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





The
      7%
      secured convertible debentures were due and payable on November 17, 2006. During
      fiscal 2006, certain debenture holders notified us that they were exercising
      their conversion right, and as a result, debentures in the aggregate principal
      amount of $1,275,000 were converted into 510,000 shares of our common stock.
      Also during fiscal 2006, certain debenture holders notified us that they were
      willing to exchange their debentures for secured subordinated promissory notes
      (described below) and, as a result, debentures in the aggregate principal amount
      of $1,250,000 were exchanged for our secured subordinated promissory notes.
      Subsequent to September 30, 2006, additional debenture holders notified us
      that
      they were willing to exchange their debentures for our secured subordinated
      promissory notes and, as a result, debentures in the aggregate principal amount
      of $1,000,000 were also exchanged. Debentures in the aggregate principal amount
      of $250,000 remained outstanding as of November 17, 2006. As of the date of
      this
      report, we have not paid the principal and interest due with respect to those
      debentures and are, accordingly, in default. We are also in default because
      (i)
      our registration statement, required under the registration rights agreement
      associated with the debentures, has not been declared effective, and (ii) the
      Company did not redeem the debentures as required commencing on December 1,
      2005. Therefore, the holders of the outstanding debentures can elect to require
      us to pay a mandatory repayment amount equal to at least 130% of the outstanding
      principal amount, plus all other accrued and unpaid amounts under such
      debentures. The terms of a separate security agreement provide that, upon the
      occurrence of an event of default which is not cured, the debenture holders
      (acting in concert) have the right to take possession of all of our assets,
      to
      operate our business and to exercise certain other rights provided in the
      security agreement associated with the debentures.





8%
      Promissory Notes and Warrants





During
      October, 2005 and April, 2006, we issued 8% promissory notes in the aggregate
      principal amount of $665,000 and $285,000, respectively. As part of the
      consideration, we issued 5-year warrants to purchase an aggregate of 469,000
      shares of our common stock at an exercise price of $3.00 per share, with each
      purchaser of the promissory notes receiving a pro rata share of the warrant
      pool
      consistent with the principal amount of the notes purchased. The promissory
      notes matured two months after the date of issuance, and now are due upon
      demand. We paid a finder’s fee of 10% of the gross proceeds upon maturity of
      these notes.





8%
      Secured Subordinated Promissory Notes





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





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





14


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





As
      part
      of the consideration for the sale of these notes, we issued 5-year warrants
      to
      purchase shares of our common stock at an exercise price of $1.00, with each
      note purchaser to receive a pro rata share of the warrant pool of warrants.
      The
      warrants issued are exercisable for an aggregate of 8,359,520 shares of our
      common stock.





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





*Series
      A Preferred Stock*





On
      February 17, 2004, we completed our acquisition of TechnoConcepts, Inc., a
      Nevada corporation, and issued 1,970,000 shares of our common stock and 16,000
      shares of our Series A preferred stock pursuant to the Agreement and Plan of
      Merger by and between Technology Consulting Partners Inc. and TechnoConcepts
      Inc., dated December 15, 2003.





*Designation
      and Amount; Rank* .
      16,000
      shares of our preferred stock have been designated as “Series A” preferred
      stock. The shares of Series A preferred stock are divided into Series A-1 and
      Series A-2. Shares of Series A preferred stock have no par value per share,
      have
      a face amount of $1,000 per share, and rank senior to our Series B preferred
      stock and our common stock.





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





*Conversion* . Each
      share of Series A preferred stock is convertible, at the option of the holder
      thereof, at any time after January 31, 2006, into a number of shares of common
      stock determined by dividing the aggregate face amount of the shares to be
      converted by the conversion price, which shall be an amount equal to the lesser
      of (i) 100% of the average of the closing bid prices for our common stock
      occurring during the five trading days immediately prior to the date of
      conversion, and (ii) $.50 per conversion share. The number of shares of our
      common stock to be issued upon conversion is subject to anti-dilution protection
      in the event of certain dilutive issuances by the Company. Notwithstanding
      the
      foregoing, shares of Series A-1 preferred stock can only be converted upon
      the
      satisfaction of a number of conditions precedent, including the filing and
      issuance of certain patents and that we have gross revenues in any fiscal year
      of at least $75,000,000 as disclosed in a periodic report filed with the
      Securities and Exchange Commission under the Securities Exchange Act of 1934,
      as
      amended. The shares of Series A preferred stock are also subject to mandatory
      conversion upon the occurrence of certain events.




*Conversion
      at Maturity* .
      On the
      date three (3) years following the issue date of the shares of Series A
      preferred stock (i.e., February 17, 2007), such shares are to be automatically
      converted into the number of shares of our common stock equal to the face amount
      per shares divided by the conversion price then in effect; provided that, with
      respect to the shares of Series A-l preferred stock, the conditions precedent
      (other than the minimum revenue condition) shall have been satisfied. If, on
      the
      maturity date, (i) we do not have a sufficient number of authorized and unissued
      shares of our common stock to issue shares of common stock upon conversion
      of
      the Series A preferred shares, (ii) our common stock is not actively traded
      on
      the Nasdaq market, or (iii) a mandatory redemption event (as described below)
      has occurred and is continuing, each holder of shares of Series A preferred
      stock has the option, upon written notice, to retain its rights as a holder
      of
      such Series A preferred shares. If the patent conditions have not been satisfied
      on the maturity date, then the holders of Series A-1 preferred stock will not
      be
      entitled to convert their preferred shares until the earlier of: (a) the
      satisfaction of the patent conditions or (b) five years from the issue date
      of
      the shares of Series A-1preferred stock. Currently the only patent condition
      that remains unsatisfied is that a patent must issue for the benefit of the
      Company based on the patent application filed on the Direct Conversion
      Delta-Sigma Receiver (application number PCT/US00/02665).








15





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





*Voting
      Rights.* The
      holders of the Series A preferred stock have the right to vote with the common
      stock on all matters submitted to a vote of stockholders, as if the Series
      A
      preferred shares were converted to shares of common stock on the record
      date.





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





*Series
      B Preferred Stock*





On
      November 17, 2004, we entered into a securities purchase agreement with an
      institutional investor, under which we agreed to sell, and the institutional
      investor agreed to purchase, 800 shares of our Series B preferred stock and
      warrants exercisable for a total of 320,000 shares of our common stock for
      consideration valued at $2,000,000. The warrants are identical to the warrants
      issued to the purchasers of our 7% secured convertible debentures.





*Designation
      and Amount; Rank.* 800
      shares of our preferred stock have been designated as “Series B” preferred
      stock. Shares of Series B preferred stock have no par value per share, have
      a
      face amount of $2,500 per share, and rank senior to shares of common stock
      and
      to any subsequently issued series of preferred stock, but junior to shares
      of
      Series A preferred stock.





*Dividends.* Shares
      of Series B preferred stock bear dividends, payable quarterly at the rate of
      ten
      (10%) per cent per annum or $250.00 per share. Such dividends are payable in
      cash or common stock, as our board of directors may determine.





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





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





*Voting
      Rights.* The
      holders of the Series B preferred stock have the right to vote with the holders
      of our common stock on all matters submitted to a vote of stockholders, as
      if
      the Series B preferred shares were converted to shares of common stock on the
      record date.





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




16





*Series
      B-1 Preferred Stock*





In
      November 2005, we negotiated a private placement of convertible preferred stock.
      Under the negotiated terms, we sold 2,203 shares of Series B-1 preferred stock,
      convertible into 2,203,000 shares of our common stock, at a purchase price
      of
      $2,500 per share for total gross proceeds of $5,505,506.  The Series B-1
      preferred has a dividend rate of 8% per annum, payable quarterly either in
      cash
      or through the issuance of common stock at the option of our board of directors.
      As part of this transaction, we also issued five-year warrants to purchase
      880,000 shares of the Company's common stock, one-half of the warrants at an
      exercise price of $3.00 per share and the remaining half at an exercise price
      of
      $4.00 per share.




*Designation
      and Amount; Rank.* Shares
      of Series B-1 preferred stock have no par value per share, have a face amount
      of
      $2,500 per share, and rank senior to shares of common stock and to any
      subsequently issued series of preferred stock, but junior to shares of Series
      A
      and Series B preferred stock.





*Dividends* .
      Shares
      of Series B-1 preferred stock bear dividends at the rate of eight percent (8%)
      per annum, or $200.00 per share, payable on a quarterly basis. Such dividends
      are payable in cash or in shares of our common stock (at the then current market
      price), as our board of directors may determine.




*Conversion* .
      Each
      share of Series B-1 preferred stock is convertible, at the option of the holder
      thereof, at any time into 1,000 shares of our common stock, subject to certain
      anti-dilution adjustments. Provided there is an effective registration statement
      covering the resale of the shares of common stock into which the shares of
      Series B-1 preferred stock is convertible, the shares of Series B-1 preferred
      stock are automatically converted into shares of our common stock on the date
      when the market price of our common stock exceeds $5.00 for twenty (20)
      consecutive trading days.




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




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




*Common
      Stock and Warrants Exercisable for Shares of Common Stock*





In
      January 2004, we issued 50,000 shares of our common stock to Berthel Fisher
      & Company Financial Services, Inc. pursuant to the terms of a cooperation
      letter between the parties in consideration for investment banking and
      advisory services.





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





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




In
      September 2005, we issued to consultants warrants to purchase 40,000 shares
      of
      our common stock at an exercise price of $3.375 per share. The warrants are
      exercisable for a three-year period.





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





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





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




In
      issuing the securities discussed above, we relied upon the exemption from
      registration afforded by Section 4(2) of the Act, in that: (a) the securities
      (other than those issued pursuant to the acquisition of TechnoConcepts, Inc.,
      a
      Nevada corporation) were sold to a limited number of sophisticated accredited
      investors, (b) the securities were sold without any general solicitation or
      public advertising, and (c) the investors in such securities provided us with
      representations customary for a private placement of securities.





17


The
      preferences, limitations and relative rights with respect to Series A, Series
      B,
      and Series B-1 preferred stock are summarized above. The preferences,
      limitations and relative rights of the Series A, Series B, and Series B-1
      preferred stock are contained in their entirety in our articles of
      incorporation, which is an exhibit to this annual statement.





**ITEM
      6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**





*The
      following discussion and analysis should be read in conjunction
      with*  *the
      financial statements and notes thereto included elsewhere in this annual report
      on Form*  *10-KSB
      for the fiscal year ended September 30, 2006. Except for the historical
      information contained herein, the discussion*  *in
      this Form 10-KSB contains certain forward looking statements that
      involve*  *risks
      and uncertainties, such as statements of our plans, objectives,*  *expectations
      and intentions. The cautionary statements made in this Form
      10-KSB*  *should
      be read as being applicable to all related forward statements
      wherever*  *they
      appear in this Form 10-KSB. Our actual results could differ
      materially*  *from
      those discussed here.*





**General**





We
      are
      engaged in the business of designing, developing, manufacturing and marketing
      wireless communications semiconductors.





We
      are in
      the process of attempting to commercialize proprietary technology that we refer
      to as True Software RadioTM. True Software RadioTM is an advanced delta-sigma
      semiconductor architecture that converts radio frequency, or RF, signals
      directly into digital data. The technology is designed to dramatically improve
      the way that wireless signals are received and transmitted by making possible
      device-to-device communication across otherwise incompatible networks and
      competing wireless standards (e.g., CDMA, TDMA, GSM, GPRS, G3, Bluetooth, WiFi,
      WiMAX, WiBro, etc.), creating true convergence for the wireless industry.
“Software radio" is an industry term, referring to wireless receivers and
      transmitters that can be controlled and reconfigured by software commands and
      that can process radio signals digitally for better performance. To date, we
      have not generated any revenues from the sale of such microchips or the
      licensing of rights to the underlying technology. We are currently in the
      process of seeking to arrange financing to further our efforts to commercialize
      this technology.





Through
      our wholly-owned subsidiary, Jinshilin Techno Ltd., or Jinshilin Techno, formed
      in December 2005 and based in Shanghai, China, we are seeking to provide
      marketing, sales and technical support for our True Software RadioTM technology
      in China. On April 21, 2006, Jinshilin Techno acquired Internet Protocol
      television (IPTV) set-top box (STB) technology through license agreements with
      Jinshilin Technologies Development Company Ltd. Jinshilin Techno currently
      offers an IPTV set-top box that features Voice over Internal Protocol, or VOIP,
      capability and can receive IP data transmissions through the household
      electrical power grid. Jinshilin Techno expects that future generation set-top
      boxes will support multi-protocol wireless connectivity with television, DVD
      players and other multi-media devices, by integrating True Software RadioTM into
      IPTV set-top boxes.





We
      also
      own a controlling interest in Asanté Networks Inc., based in San Jose,
      California. Asanté provides Ethernet networking solutions for Apple Computer and
      the small-to-medium business retail markets, offering the IntraCore® and
      FriendlyNET® product families, integrating voice, data, and video over wireless
      and wired networks with unified management and authentication. In fiscal 2006,
      Asanté Networks’ net sales were lower by $2,272,953, or 44.26%, than in the
      comparable twelve-month period of fiscal 2005. This was primarily the result
      of
      decreases in orders and sales of products into the business retail
      markets.





*Restatement
      of Previously Issued Financial Statements and Review by the Securities and
      Exchange Commission*





On
      March
      24, 2005, the staff of the Securities and Exchange Commission’s Division of
      Corporate Finance (the “Staff”) notified us that they had reviewed our
      registration statement on Form SB-2 filed May 3, 2005, our annual report on
      Form
      10-KSB for the fiscal year ended September 30, 2004 (as amended), our quarterly
      report on Form 10-QSB for the quarterly period ended December 31, 2004 (as
      amended), and our reports on Form 8-K during our fiscal year 2004. They provided
      us with comments and requested our response to their questions and additional
      information. During the succeeding 18 months, we corresponded with the Staff,
      and they also reviewed our other filings, including: our Form 8-K filed May
      2,
      2005, our Amendment No. 1 to the registration statement on Form SB-2, our annual
      report on Form 10-QSB for the fiscal year ended September 30, 2005, and our
      quarterly reports on Forms 10-QSB for the quarterly periods ended March 31,
      2005, June 30, 2005 and December 31, 2005. As a result of our correspondence
      with the Staff and after consultation with our registered independent accounting
      firm, Seligson & Giannattasio LLP, and with the concurrence of the audit
      committee of our Board of Directors, management determined that the recognition
      and reporting of certain intellectual property and other intangible assets,
      including goodwill, should be restated in our previously issued consolidated
      financial statements to, among other things, record material impairment charges
      to certain intellectual property and other intangible assets, as well as to
      goodwill. Management also concluded that further evaluation of our policies
      concerning the recognition and reporting of those assets would be required.
      As
      part of that evaluation, the Company engaged a third-party accounting firm,
      Squar, Milner, Miranda & Williamson LLP, to assist us in our determination
      of the appropriate interpretation and application of U.S. generally accepted
      accounting principles (“US GAAP”) related to accounting for assets acquired in a
      business combination to be used in research and development activities, goodwill
      and other intangible assets. In January 2007, based in part on our discussions
      with the Staff and with the concurrence of our independent registered accounting
      firm, we concluded our review of our policies regarding the recognition and
      reporting of intellectual property and other intangible assets, including
      goodwill, under US GAAP. With the concurrence of the audit committee of our
      Board of Directors and as authorized by resolution of our Board of Directors,
      management determined to make adjustments to:




18





·
            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 the interim financial statements
                included in its quarterly report on Form 10-QSB for the period ended
                March
                31, 2004, and subsequently carried it as such on its
                books;





(3)
            all
                other intellectual property and other intangible assets acquired
                in
                connection with the acquisition of TCI Nevada, with an aggregate
                book
                value of approximately $7.0 million, have been entirely written off
                as of
                September 30, 2005; the Company first recorded this amount as Other
                Assets
                under Intellectual Property and Patents in the interim financial
                statements included in its quarterly report on Form 10-QSB for the
                period
                ended March 31, 2004, and subsequently carried it as such on its
                books;
                and





(4)
            goodwill
                in an incremental amount of $5,663,629 has been written off as of
                September 30, 2005; such goodwill had been recorded in connection
                with
                Company’s acquisition of all of the assets of Asanté Technologies, Inc. in
                June 2005, and then carried on the Company’s books as Other Assets under
                Goodwill.




*Reasons
      for the Adjustment and Restatement of Previously Issued Financial
      Statements*





With
      respect to item (1) above, the Company’s management determined that the
      consultancy expense should have been recorded in the quarterly period ended
      December 31, 2003, the period in which the Company agreed to issue shares of
      its
      common stock in consideration for the related consulting services, rather than
      the period in which the shares were issued.





With
      respect to items (2) and (3), the Company acquired the intellectual property
      and
      other intangible assets in question in connection with the acquisition of TCI
      Nevada. That transaction was accounted for as a “reverse acquisition.” The
      Company determined that TCI Nevada’s initial capitalization of those assets (in
      connection with TCI Nevada’s acquisition of such assets in May 2003) was
      unaffected by the transaction. The assets consist principally of semiconductor
      circuit “architecture.” Semiconductor “architecture” refers to the structural
      design of semiconductor material, which determines the electrical conductivity
      of the semiconductor materials and how the electrical conductivity is
      controlled. Management has concluded that:





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 audited consolidated financial
      statements as of and for the fiscal year ended September 30, 2005, reflect
      the
      recording of an impairment charge of $529,162 with respect to the goodwill
      recorded in connection with the acquisition of all of the assets of Asanté
Technologies, Inc. in June 2005. The Company has determined that it should
      have
      recorded an impairment charge equal to the full book value of the goodwill
      at
      that time, in the amount of $6,192,791, based on the recognizable trend, as
      of
      September 30, 2005, of declining net sales of this business.




**Plan
      of Operations**





We
      plan
      to design, develop and, using foundry partners, manufacture application specific
      integrated circuits (ASICs), microchips, chipsets and other electronic
      components based on our proprietary technology and to license these products
      to
      major telecommunications equipment suppliers for integration into their wireless
      communications products. As a development stage company, we have not yet
      commercialized our proprietary technology, but we believe we are making good
      progress in doing so. We are in the process of developing relationships with
      a
      number of major wireless communications companies, in order to incorporate
      our
      proprietary technology across a broad spectrum of consumer, industrial,
      and government applications.




We
      have
      not earned any revenues to date on our core True Software RadioTM technology. Our
      strategy is to become a leading provider of wireless communication technology
      by
      offering True Software RadioTM ASICs and chipsets to major telecommunications
      equipment and component suppliers for integration into their wireless
      communications products.





We
      intend
      to continue to seek to establish strategic relationships with both component
      manufacturers and “total solution” providers. We believe that incorporation of
      our True Software RadioTM technology will enable prospective industry partners to
      provide less expensive service along with seamless roaming and global
      interoperability, thereby enabling new and enhanced services and applications
      such as mobile e-commerce, position location, mobile multimedia web browsing,
      including music and video downloads, public safety and homeland security.
      Elements of our strategy include:





***Selling
      to the Portable Device Market***





We
      anticipate opportunities in the portable device market (defined here as the
      aggregation of handsets, PDAs, and other niche wireless access devices), which
      include:





·
            sales
                of True Software RadioTM “engines” (essentially very small wireless
                “motherboards”) to portable device
                manufacturers;





·
            non-recurring
                engineering fees for integration services to large manufacturers
                that want
                to adopt True Software RadioTM technology into their products and license
                fees based upon units sold under their own brand names (embedded
                products); and





·
            OEM
                licensing agreements for physical/data link layer software to handset
                manufacturers.




We
      have
      not entered into definitive agreements of the type referred to above as of
      the
      date of this report.





20


***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;





·
            licensing
                of base station software for physical and data link layer processing
                to
                infrastructure makers;





·
            strategic
                partnerships for international deployment of base station systems;
                and





·
            non-recurring
                engineering (NRE) fees for the development of custom interfaces to
                our
                physical/data link layer software to government agencies and to their
                contractors.




We
      have
      not entered into definitive agreements of the type referred to above as of
      the
      date of this report.




***Public
      Safety***





Our
      True
      Software RadioTM technology can provide seamless communications between various
      local public safety and other government agencies that otherwise may not be
      able to “talk” to one another during an emergency. We are actively seeking
      strategic 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**





**Fiscal
      year ended September 30, 2006 compared to fiscal year ended September 30, 2005**





*Revenues*




Net
      sales
      for the year ended September 30, 2006 were $2,908,924, an increase of $1,910,663
      as compared to $898,261 of net sales for the year ended September 30, 2005.
      Sales were generated by our subsidiary, Asanté Networks Inc. The increase is
      attributable to owning Asanté Networks the entire fiscal year. However, Asanté
Networks’ net sales for fiscal 2006 were lower by $2,272,953, or 44.26%, than in
      the previous twelve-month period. This was primarily the result of decreases
      in
      orders and sales of products into the business retail markets, caused in part
      by
      obsolescence of the subsidiary’s products. Overall sales revenues continue to be
      subject to heavy competitive pressures negatively impacting selling prices
      of
      networking products and causing the delay of product deliveries from
      vendors.





*Cost
      of   Sales and Gross Profit*




Cost
      of
      sales for the year ended September 30, 2005, was $1,976,537. Cost of sales
      for the year ended September 30, 2005 was $858,284. The increase of $1,118,253
      in fiscal 2006 was a direct result of owning Asanté Networks for the entire
      fiscal year.





Gross
      profit for fiscal 2006 was $832,387 as compared to $39,977 for the fiscal year
      ended September 30, 2005, an increase of $792,410. Our gross profit as a
      percentage of net sales was 29.63% as compared to 4.5% for the year ended
      September 30, 2005.





*General
      and Administrative Expenses*




We
      incurred general and administrative expenses of $15,239,939 in fiscal 2006,
      an
      increase of $6,636,356 over the fiscal year ended September 30, 2005, in which
      we incurred $8,603,583 of such expenses. This increase is a direct result of
      increased overhead expenses including investor relations, investment banking
      fees, consulting costs, engineering costs, research and development costs and
      professional fees and expenses incurred by Asanté Networks for the entire fiscal
      year.





*Off
      Balance Sheet Arrangements*




During
      the year ended September 30, 2006, we did not engage in any off-balance sheet
      arrangements as defined in Item 303(c) of the SEC's Regulation S-B.





**Fiscal
      year ended September 30, 2005 compared to the nine months ended September 30,
      2004**





Revenues





Net
      sales
      for the year ended September 30, 2005 were $898,261. Sales were generated by
      our
      wholly owned subsidiary, Asanté Acquisition Corporation, subsequent to the
      acquisition on June 2, 2005. Overall sales revenues continue to be subject
      to
      heavy competitive pressures negatively impacting selling prices of networking
      products and delay of products from vendors.





Cost
      of
  Sales and Gross Profit





Cost
      of
      sales for the year ended September 30, 2005, was $858,284. Gross profit for
      the same period was $39,971. The Company's gross profit as a percentage of
      net
      sales was 4.5%. Management feels this will increase due to a different sales
      mix
      in the upcoming quarter with increased sales of products with better gross
      profit.





General
      and Administrative Expenses





We
      incurred General and Administrative expenses of $ 8,603,583, an increase of
      $
      8,191,644 over the nine months ended September30, 2004, in which we incurred
      $411,939 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 our subsidiary Asanté Acquisition
      Corporation. Included in this increase was $1,217,321 of non cash
      items.





Off
      Balance Sheet Arrangements





During
      the year ended September 30, 2005 the Company did not engage in any off-balance
      sheet arrangements as defined in Item 303(c) of the SEC's Regulation
      S-B.





22


**Liquidity
      and Capital Resources**





To
      date,
      we have been a primarily a development stage company and have generated revenues
      during the fiscal year ending September 30, 2006, only from the operations
      of
      our subsidiary, Asanté Networks Inc. As of September 30, 2006, our assets
      totaled $3,093,083 consisting of $932,690 in cash, $197,863 in accounts
      receivable, $688,114 in inventory (including reserves of $444,000) and $180,883
      in prepaid expenses. Our liabilities totaled $9,884,976, consisting of
      $1,250,000 from our 7% convertible debentures that are in default, $8,359,520
      of
      secured subordinated notes payable that are scheduled to become due and payable
      beginning in May 2007 and continuing through December 2007, $950,000 of
      unsecured notes payable on demand, $13,667,000 of capital leases payable,
      $2,956,876 of accounts payable, $1,975,902 of expenses payable, and $715,825
      of
      notes due to related parties.





Subsequent
      to September 30, 2006, some of the holders of our 7% secured convertible
      debentures notified us that they wanted to exchange their debentures for our
      secured subordinated promissory notes, and as a result, debentures with an
      aggregate principal amount of $1,000,000 were so exchanged, such that
      immediately following such exchange debentures in the aggregate principal amount
      of $250,000 remained outstanding. We are currently negotiating with the holders
      of the debentures that remain outstanding a settlement and satisfaction for
      the
      default condition.





We
      have
      incurred a cumulative loss from operations of $48,830,529; have negative working
      capital of $8,329,426 and negative cash flow from operations of $11,453,733.
      We
      anticipate incurring capital expenditures of approximately $1,000,000
      during the fiscal year ending September 30, 2007. We expect our operating
      cash requirements will also be significant throughout fiscal year 2007, as
      we
      continue our research and development efforts, and attempt to execute on our
      business strategy. The amount and timing of cash requirements will depend on
      our
      completion of commercial products, market acceptance of our products and the
      resources we devote to researching and developing, marketing, selling and
      supporting our products. Moreover, the responsibilities of a public company
      will
      require the Company to meet certain legal and accounting requirements and to
      incur related expenses. In addition to the normal risks associated with an
      unproven business venture, there can be no assurance that our business plan
      will
      be successfully executed, even if adequate financing is secured.





Since
      November 2003, we have financed our operations primarily through private sales
      of preferred convertible securities in the amount of $7,505,506 and the debt
      described above. Subsequent to September 30, 2006, we have sought additional
      debt and equity financing. As we raise additional funds through the issuance
      of
      equity securities and equity securities equivalents, the percentage ownership
      of
      our existing stockholders is reduced. If we are unable to raise sufficient
      funds
      on acceptable terms we may not succeed in executing our strategy and achieving
      our business objective. In particular, we could be forced to limit our product
      development and marketing activities, forego attractive business opportunities
      and we may lose the ability to respond to competitive pressures. There can
      be no
      assurance that sufficient funding will be obtained to keep the Company operating
      over the next twelve months. Nor can any assurance be made that the Company
      will
      generate substantial revenues or that the business operations will prove to
      be
      profitable. These conditions raise substantial doubt about the Company’s ability
      to continue as a going concern. The accompanying financial statements reflect
      ongoing losses, negative cash flows from operating activities, negative working
      capital and shareholders’ deficit. The financial statements do not include any
      adjustments that might result from the outcome of these
      uncertainties.





**Net
      Operating Loss**





We
      have
      accumulated approximately $$27,400,000 of net operating loss carry forwards
      as
      of September 30, 2006, which may be offset against taxable income and income
      taxes in future years through 2026. The use of these losses to reduce future
      income taxes will depend on the generation of sufficient taxable income prior
      to
      the expiration of the net operating loss carry forwards in 2026. No tax benefit
      has been reported in the financial statements for the year ended September
      30,
      2006, because we believe there may be a chance that the carry forward will
      expire unused. Accordingly, the potential tax benefit of the loss carry forward
      is offset by a valuation allowance of the same amount.




23


**ITEM
      7. FINANCIAL STATEMENTS**




**REPORT
      OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Stockholders and


Board
      of
      Directors


TechnoConcepts,
      Inc.


Van
      Nuys,
      CA





We
      have
      audited the accompanying balance sheet of TechnoConcepts, Inc. and subsidiaries
      as of September 30, 2006, 2005 and 2004, the related statements of operations,
      changes in shareholders’ deficit and cash flows for the periods then ended.
      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, 2005 and 2004 and the result of its
      operations and its cash flows for the periods then ended in conformity with
      accounting principles generally accepted in the United States of
      America.





The
      accompanying financial statements have been prepared assuming the Company will
      continue as a going concern. As discussed in Note 4 to the financial statements,
      the Company has had significant recurring losses. The realization of a major
      portion of its assets is dependent upon its ability to meet its future financing
      requirements, and the success of future operations. These factors raise
      substantial doubt about the Company’s ability to continue as a going concern.
      The financial statements do not include any adjustments that might result from
      this uncertainty.





As
      disclosed in Note 2 to the consolidated financial statements, the accompanying
      financial statements for the years ended September 30, 2005 and 2004 have been
      restated.





/s/
      Seligson & Giannattasio, LLP


Seligson
      & Giannattasio, LLP


White
      Plains, NY


May
      11,
      2007




F-1


TechnoConcepts,
      Inc.


And
      Subsidiaries


Consolidated
      Balance Sheets




September
                30,
              2006
            
            September
                30, 2005 (restated)
            
            September
                30, 2004 (restated)ASSETSCurrent
                assets:Cash
            
            $
            932,690
            
            
            190,669
            
            
            66,558Accounts
                receivable, net of allowance for doubtfulaccounts
                of $60,632, $90,040 and $0 respectively
            
            
            197,863
            
            
            318,202Inventory,
                net of reserves of $444,000, $534,851 and $0 respectively
            
            
            244,114
            
            
            499,543Prepaid
                expenses
            
            
            180,883
            
            
            328,723
            
            
            727Total
                current assets
            
            
            1,555,550
            
            
            1,337,137
            
            
            67,285Fixed
                assets, net
            
            
            979,868
            
            
            383,525
            
            
            28,743Other
                assets:Intellectual
                Property
            
            
            
            
            
            
            
            
            6,990,000Deposits
            
            
            104,439
            
            
            77,251
            
            
            0Debt
                issuance costs, net
            
            
            9,226
            
            
            250,762
            
            
            82,875Total
                assets
            
            $
            2,649,083
            
            
            2,048,675
            
            
            7,168,903




See
      accompanying notes to consolidated financial statements




F-2


TechnoConcepts,
      Inc.


And
      Subsidiaries


Consolidated
      Balance Sheets





September
                30,
            
            September
                30,
            
            September
                30,2006
            
            2005
                (Restated)
            
            2004
                (Restated)LIABILITIES
                AND SHAREHOLDERS' EQUITY (DEFICIT)Current
                liabilities:Convertible
                notes payable,net
                of unamortized debt issuance costs of $68,899
            
            $
            1,181,101
            
            $
            0
            
            $
            0Notes
                payable,net
                of unamortized debt issuance costs of $5,791,763
            
            
            2,567,757Notes
                payablenet
                of unamortized debt issuance costs of $476,152
            
            
            473,848Note
                payable
            
            
            
            
            
            750,000
            
            
            921,985Line
                of credit
            
            
            
            
            
            331,639Current
                portion of capital leases
            
            
            
            
            
            10,567Capital
                leases payable
            
            
            13,667Accounts
                payable
            
            
            2,956,876
            
            
            2,163,838
            
            
            9,000Accrued
                expenses payable
            
            
            1,975,902
            
            
            1,076,336
            
            
            258,989Customer
                deposits
            
            
            
            
            
            278,806Due
                to related parties
            
            
            715,825
            
            
            263,698
            
            
            160,000Total
                current liabilities
            
            
            9,884,976
            
            
            4,874,884
            
            
            1,349,974Capital
                leases payable less current maturities
            
            
            
            
            
            17,123Convertible
                note payable
              net
                of unamortized debt issuance costs of $1,872,673
            
            
            
            
            
            1,902,327Total
                liabilities
            
            
            9,884,976
            
            
            6,794,334
            
            
            1,349,974Minority
                interest
            
            
            614,122Shareholders'
                equity (deficit):Series
                A Preferred stock, no par value, 10,000,000shares
                authorized, 16,000, 16,000 and 32,000 sharesissued
                and outstanding, respectively
            
            
            16
            
            
            16
            
            
            32Series
                B Preferred, no par value, 3,100 authorized, 3,003shares
                issued and outstanding, respectively
            
            
            7,505,506
            
            
            2,000,000
            
            
            0Common
                stock, no par value, 100,000,000shares
                authorized 28,376,734, 27,015,035 and 24,852,671 sharesissued
                and outstanding, respectively
            
            
            28,377
            
            
            27,015
            
            
            24,852Additional
                paid-in capital
            
            
            33,446,615
            
            
            20,490,380
            
            
            8,739,540Subscriptions
                receivable
            
            
            
            
            
            0
            
            
            (4,008
            )Accumulated
                deficit
            
            
            (48,830,529
            )
            
            (27,263,070
            )
            
            (2,941,487
            )Total
                shareholders' equity (deficit)
            
            
            (7,850,015
            )
            
            (4,745,659
            )
            
            5,818,929Total
                liabilities and shareholders' equity (deficit)
            
            $
            2,649,083
            
            
            2,048,675
            
            
            7,168,903




See
      accompanying notes to consolidated financial statements.




F-3


TechnoConcepts,
      Inc.


Consolidated
      Statements of Operations




Year
                Ended
            
            Year
                Ended
            
            Nine
                Months EndedSeptember
                30,
            
            September
                30,
            
            September
                30,2006
            
            2005
                (Restated)
            
            2004
                (Restated)Revenues:Net
                Sales
            
            $
            2,808,924
            
            $
            898,261
            
            $
            0Cost
                of goods sold
            
            
            1,976,537
            
            
            858,284
            
            
            0Gross
                Profit
            
            
            832,387
            
            
            39,977
            
            
            0Operating
                Expenses:General
                and administrative
            
            
            15,239,939
            
            
            8,603,583
            
            
            411,939Loss
                before other income (expense) and income taxes
            
            
            (14,407,552
            )
            
            (8,563,606
            )
            
            (411,939)
            )Other
                income (expense):Interest
                expense, net
            
            
            (7,086,904
            )
            
            (2,164,142
            )
            
            (252,162)
            )Impairment
                of goodwill
            
            
            --
            
            
            (6,192,791
            )
            
            0Impairment
                of intellectual property
            
            
            --
            
            
            (6,990,000
            )
            
            0Minority
                interest
            
            
            135,878
            
            
            --Loss
                before income taxes
            
            
            (21,358,578
            )
            
            (23,910,539
            )
            
            (664,101)
            )Income
                taxes
            
            
            800
            
            
            1,600
            
            
            0Net
                loss
            
            
            (21,359,378
            )
            
            (23,912,139
            )
            
            (664,101)
            )Dividends
                on preferred stock
            
            
            517,525
            
            
            100,000
            
            
            0Net
                loss available to common shareholders
            
            $
            (21,876,903
            )
            $
            (24,012,139
            )
            
            ($664,101)
            )Weighted
                shares outstanding:Basic
            
            
            27,527,784
            
            
            26,378,677
            
            
            19,424,421Diluted
            
            
            27,527,784
            
            
            26,378,677
            
            
            19,424,421Loss
                per share available to common shareholder:Basic
            
            $
            (.79
            )
            $
            (.91
            )
            
            (0.03
            )Diluted
            
            $
            (.79
            )
            $
            (.91
            )
            
            (0.03
            )




See
      accompanying notes to consolidated financial statements




F-4
 
  TechnoConcepts
        Inc.


And
      Subsidiaries


Comprehensive
      Statement of Shareholders’ Deficit




Accumulatedpreferred
                stock
            
            
            Common
                Stock
            
            
            Paid-In
            
            
            Subscriptions
            
            
            DeficitShares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            Receivable
            
            
            (Restated)Balances,
                September 30, 2004
            
            
            32,000
            
            $
            32
            
            
            24,852,671
            
            $
            24,852
            
            $
            9,048,984
            
            $
            (4,008
            )
            $
            (2,240,931
            )


Prior
                period adjustmentsAdjustment
                to purchase priceof
                assets of TechnoConcepts(CA)
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (1,010,000
            )
            
            —
            
            
            —Adjustment
                of valuation ofshares
                issued for consultingfees
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            700,556
            
            
            —
            
            
            (700,556
            )Adjusted
                balance September30,
                2004
            
            
            32,000
            
            
            32
            
            
            24,852,671
            
            
            24,852
            
            
            8,739,540
            
            
            (4,008
            )
            
            (2,941,487
            )


Collection
                of subscriptionreceivable
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            4,008
            
            
            —Beneficial
                conversionfeature
                from the issuanceof
                convertible debentures
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            3,329,200
            
            
            —
            
            
            —Shares
                issued for:


Preferred
                shares
            
            
            800
            
            
            2,000,000
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Conversion
                ofdebentures
            
            
            —
            
            
            —
            
            
            771,480
            
            
            771
            
            
            1,232,854
            
            
            —
            
            
            —Consulting
                services
            
            
            —
            
            
            —
            
            
            229,713
            
            
            230
            
            
            909,483
            
            
            —
            
            
            —Effect
                of merger
            
            
            —
            
            
            —
            
            
            1,161,170
            
            
            1,162
            
            
            4,998,838
            
            
            —
            
            
            —Issuance
                of warrants forservices
                rendered
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            971,005
            
            
            —
            
            
            —Retirement
                of preferredshares
            
            
            (16,000
            )
            
            (16
            )
            
            —
            
            
            —
            
            
            16
            
            
            —
            
            
            —Dividends
                on preferredStock
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (100,000
            )Net
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (23,912,139
            )Balances,
                September 30,


2005
            
            
            16,800
            
            $
            2,000,016
            
            
            27,015,034
            
            $
            27,015
            
            $
            20,180,936
            
            $
            —
            
            $
            (26,953,626
            )


Issuance
                of warrants forservices
                rendered
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            8,999,515
            
            
            —
            
            
            —Conversion
                of debentures
            
            
            —
            
            
            —
            
            
            518,108
            
            
            518
            
            
            1,293,572
            
            
            —
            
            
            —Preferred
                shares issued
            
            
            2,203
            
            
            5,505,506
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Shares
                issued forconsulting
                services
            
            
            —
            
            
            —
            
            
            825,092
            
            
            825
            
            
            1,519,050
            
            
            —
            
            
            —Shares
                issued for employeeBonuses
            
            
            —
            
            
            —
            
            
            15,500
            
            
            16
            
            
            38,269
            
            
            —
            
            
            —Shares
                issued for stockoption
                exercise
            
            
            —
            
            
            —
            
            
            3,000
            
            
            3
            
            
            1,497
            
            
            —
            
            
            —Cost
                of stock options
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            1,413,776
            
            
            —
            
            
            —Dividends
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (517,525
            )Net
                Loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (21,359,378
            )


Balances,
                September 30,2006
            
            
            19,003
            
            $
            7,505,522
            
            
            28,376,734
            
            $
            28,377
            
            $
            33,446,615
            
            
            —
            
            $
            (48,830,529
            )




See
      accompanying notes to consolidated financial statements.


F-5


TechnoConcepts,
      Inc.


And
      Subsidiaries


Consolidated
      Statements of Cash Flows




September
                30,
              2006
            
            
            September
                30,
              2005
                (Restated)
            
            
            September
                30,
              2004(Restated)**Cash
                flows from operating activities:**Net
                loss
            
            $
            (21,359,378
            )
            $
            (23,912,139
            )
            $
            (664,101
            )


Adjustments
                to reconcile net loss from operations tonet
                cash used in operating activities:Depreciation
            
            
            131,736
            
            
            50,097
            
            
            1,556Amortization
                of debt costs
            
            
            4,776,910
            
            
            1,740,618
            
            
            201,268Shares
                issued for services
            
            
            1,519,050
            
            
            1,880,718
            
            
            --Stock
                option expense
            
            
            1,413,775
            
            
            --
            
            
            --Impairment
                of goodwill
            
            
            --
            
            
            6,192,791
            
            
            --Impairment
                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
            )
            
            (727
            )Accounts
                payable
            
            
            793,038
            
            
            97,456
            
            
            21,452Accrued
                expenses
            
            
            122,326
            
            
            728,258
            
            
            (395,096
            )Net
                cash flows from operating activities
            
            
            (11,453,733
            )
            
            (5,785,144
            )
            
            (835,648
            )**Cash
                flows from investing activities:**Net
                Borrowings from related parties
            
            
            452,127
            
            
            (152,451
            
            
            --Acquisition
                of fixed assets
            
            
            (728,079
            )
            
            (348,663
            )
            
            (28,559
            )Net
                cash flows from investing activities
            
            
            (275,952
            )
            
            (501,114
            )
            
            (28,559
            )**Cash
                flows from financing activities:**Proceeds
                from notes payable
            
            
            7,310,365
            
            
            4,525,000
            
            
            905,000Debt
                acquisition costs
            
            
            --
            
            
            (445,800
            )
            
            --Proceeds
                from preferred shares
            
            
            5,505,503
            
            
            2,000,000
            
            
            --Net
                borrowings from bank
            
            
            (331,639
            
            
            331,639
            
            
            --Repayment
                of long-term debt
            
            
            (14,023
            
            
            (4,478
            )
            
            --Stock
                subscription received
            
            
            --
            
            
            4,008
            
            
            --Stock
                options exercised
            
            
            1,500
            
            
            --Net
                cash flows from financing activities
            
            
            12,471,706
            
            
            6,410,369
            
            
            905,000**Net
                change in cash and cash equivalents**
            
            
            742,021
            
            
            124,111
            
            
            40,793**Cash
                and cash equivalents, beginning of period**
            
            
            190,669
            
            
            66,558
            
            
            25,765


**Cash
                and cash equivalents, end of period**
            
            
            932,690
            
            $
            190,669
            
            $
            66,558


**Supplemental
                cash flow information:**Interest
                paid
            
            
            --
            
            $
            --
            
            $
            --


Income
                taxes paid
            
            
            800
            
            $
            800
            
            $
            --


**Non-cash
                investing and financing activities****Shares
                issued in payment of consulting fees**
            
            
            
            
            
            
            
            
            464,348**Shares
                issued for conversion of debt**
            
            
            518,108
            
            
            1,233,625
            
            
            316,675




See
      accompanying notes to consolidated financial statements.




F-6





TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




NOTE
      1
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




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





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





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





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






F-7


TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      1-
      Summary of Significant Accounting Policies (continued)





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




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




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





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




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





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




Fixed
      assets are comprised as follows at September 30:




2006
            
            2005
                (restated)
            
            2004
                (restated)Furniture
                and fixtures
            
            $
            271,469
            
            $
            185,927
            
            $
            ----


Computer
                and office equipment
            
            
            2,412,401
            
            
            2,410,535
            
            
            30,451Computer
                Software
            
            
            673,887
            
            
            64,427
            
            
            ----Leasehold
                improvements
            
            
            248,228
            
            
            217,017
            
            
            ----3,605,985
            
            
            2,877,906
            
            
            30,451Accumulated
                depreciation
            
            
            2,626,117
            
            
            2,494,381
            
            
            1,708$
            979,868
            
            $
            383,525
            
            $
            28,743






Computer
      and office equipment under capital leases totaled $41,532 at September 30,
      2006
      and 2005. There were no computer and office equipment under capital leases
      at
      September 30, 2004.







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
            
            
            2005
                (restated)
            
            
            2004
                (restated)Licenses
            
            $
            66,007
            
            $
            ----
            
            $
            ----


Consulting
                fees
            
            
            53,789
            
            
            134,938
            
            
            ----Equipment
                rental
            
            
            35,822
            
            
            77,251
            
            
            ----Inventory
            
            
            13,237
            
            
            76,600
            
            
            ----Insurance
            
            
            6,096
            
            
            ----
            
            
            ----Other
            
            
            5,932
            
            
            39,934
            
            
            727$
            180,883
            
            $
            328,723
            
            $
            727




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 are as follows at September 30:




2006
            
            
            2005
                (restated)
            
            
            2004
                (restated)Raw
                materials
            
            $
            94,755
            
            $
            91,122
            
            
            ----


Finished
                goods
            
            
            593,359
            
            
            943,272
            
            
            ----688,114
            
            
            1,034,394
            
            
            ----Less:
                reserve for obsolescence
            
            
            (444,000
            )
            
            (534,851
            )
            
            ----$
            244,114
            
            $
            499,543
            
            $
            ----




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








F-9


TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




NOTE
      1-
      Summary of Significant Accounting Policies (continued)





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




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




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


Accrued
      Expense





Accrued
      expenses consist of the following at September 30:




2006
            
            
            2005
                (restated)
            
            
            2004
                (restated)Loan
                Fees
            
            $
            285,000
            
            $
            ----
            
            $
            ----


Director
                Fees
            
            
            50,000
            
            
            160,000
            
            
            ----Interest
            
            
            801,557
            
            
            134,595
            
            
            53,904Dividends
            
            
            617,525
            
            
            100,000
            
            
            ----Commissions
            
            
            94,108
            
            
            92,598
            
            
            ----Vacation
                Pay
            
            
            10,314
            
            
            68,755
            
            
            ----Warranty
            
            
            73,688
            
            
            109,983
            
            
            ----Taxes
            
            
            18,966
            
            
            1,600
            
            
            ----Other
            
            
            24,744
            
            
            408,805
            
            
            205,085




Total
            
            $
            1,975,902
            
            $
            1,076,336
            
            $
            258,989








F-10




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      1-
      Summary of Significant Accounting Policies (continued)





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




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




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





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




Year
                Ended
              September
                30,
            
            
            Year
                Ended
              September
                30,
            
            
            Year
                Ended
              September
                30,2006
            
            
            2005
                (restated)
            
            
            2004
                (restated)Basic
                weighted average shares outstanding
            
            
            27,527,784
            
            
            26,378,677
            
            
            19,424,421


Dilutive
                effect of stock options
            
            
            ----
            
            
            ----
            
            
            ----Dilutive
                effect of warrants
            
            
            ----
            
            
            ----
            
            
            ----


Diluted
                weighted average shares outstanding
            
            
            27,527,784
            
            
            26,378,677
            
            
            19,424,421








F-11


TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      1-
      Summary of Significant Accounting Policies (continued)





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





The
      fair
      value of each option grant was estimated on the date of the grant using the
      Black-Scholes option-pricing model with the following weighted average
      assumptions for the fiscal years ended September 30, 2006, 2005 and 2004:
      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,
              2006
            
            
            Year
                  Ended
                September
                  30,
              2005
                (restated)
            
            
            Year
                  Ended
                September
                  30,
              2004
                (restated)Net
                loss available to common shareholders, as restated
            
            $
            (21,876,903
            )
            $
            (24,012,139
            )
            $
            (664,101
            )


Effect
                of stock options, net of tax (prior to adoption of FAS
                123R)
            
            
            (325,135
            )
            
            (1,166,173
            )
            
            (165,458
            )


Proforma
                net loss available to common shareholders
            
            $
            (22,202,038
            )
            $
            (25,178,312
            )
            $
            (829,559
            )


Proforma
                diluted loss per share available to common shareholders
            
            $
            (.81
            )
            $
            (.95
            )
            $
            (.04
            )





Recently
      Issued Accounting Pronouncements




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




FASB
      No.
      155:




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




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




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




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




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




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




F-13





TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      1-
      Summary of Significant Accounting Policies (continued)




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




Recently
      Issued Accounting Pronouncements (continued)




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




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




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




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







F-14


TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





NOTE
      1-
      Summary of Significant Accounting Policies (continued)




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






NOTE
      2
      RESTATEMENT AND RECLASSIFICATION OF PREVIOUSLY ISSUED FINANCIAL
      STATEMENTS




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





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





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





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







F-15




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





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





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




Restatement
      Impact on Consolidated Statement of Operations


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




2005
            
            
            2004As
                  Previously
              Reported
            
            
            As
                Restated
            
            
            As
                  Previously
              Reported
            
            
            As
                RestatedRevenues
            
            $
            898,261
            
            $
            898,261
            
            $
            0
            
            $
            0




Cost
                of Sales
            
            
            858,284
            
            
            858,284
            
            
            0
            
            
            0




Gross
                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
              Reported
            
            As
                Restated
            
            As
                  Previously
              Reported
            
            As
                RestatedAssetsCurrent
                AssetsCash
            
            $
            190,669
            
            $
            190,669
            
            $
            66,558
            
            $
            66,558




Accounts
                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
            
            
            82,875




Total
                assets
            
            $
            15,712,304
            
            $
            2,048,675
            
            $
            8,178,903
            
            $
            7,168,903




Liabilities
                and Shareholders’ DeficitCurrent
                Liabilities


Line
                of Credit
            
            $
            331,639
            
            $
            331,639
            
            $
            0
            
            $
            0


Note
                Payable
            
            
            750,000
            
            
            750,000
            
            
            921,985
            
            
            921,985Current
                portion of capital leases
            
            
            10,567
            
            
            10,567
            
            
            0
            
            
            0Accounts
                payable
            
            
            2,163,838
            
            
            2,163,838
            
            
            9,000
            
            
            9,000Accrued
                expenses
            
            
            1,076,336
            
            
            1,076,336
            
            
            258,989
            
            
            258,989Customer
                deposits
            
            
            278,806
            
            
            278,806
            
            
            0
            
            
            0Due
                to related parties
            
            
            263,698
            
            
            263,698
            
            
            160,000
            
            
            160,000Total
                current liabilities
            
            
            4,874,884
            
            
            4,874,884
            
            
            1,349,974
            
            
            1,349,974Capital
                leases payable less current maturities
            
            
            17,123
            
            
            17,123
            
            
            0
            
            
            0Convertible
                note payable
            
            
            1,902,327
            
            
            1,902,327
            
            
            0
            
            
            0Total
                liabilities
            
            
            6,794,334
            
            
            6,794,334
            
            
            1,349,974
            
            
            1,349,974Shareholders’
                DeficitSeries
                A Preferred stock
            
            
            16
            
            
            16
            
            
            32
            
            
            32Series
                B Preferred stock
            
            
            2,000,000
            
            
            2,000,000
            
            
            0
            
            
            0Common
                stock
            
            
            27,015
            
            
            27,015
            
            
            24,852
            
            
            24,852Additional
                paid in capital
            
            
            20,490,380
            
            
            20,490,380
            
            
            9,048,984
            
            
            8,739,540Subscriptions
                receivable
            
            
            0
            
            
            0
            
            
            (4,008
            )
            
            (4,008
            )Accumulated
                deficit
            
            
            (13,599,441
            )
            
            (27,263,070
            )
            
            (2,240,931
            )
            
            (2,941,487
            )Total
                shareholders’ deficit
            
            
            8,917,970
            
            
            (4,745,659
            )
            
            6,828,929
            
            
            5,818,929




Total
                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 common
                shareholders
            
            
            ($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 share
              available
                to common shareholder
            
            
            (0.12
            )
            
            (0.27
            )
            
            (0.18
            )
            
            (0.12
            )







F-19




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




NOTE
      3
      PREFERRED STOCK





Series
      A preferred stock





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





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





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




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




F-20


TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





Note
      3-
      preferred stock (continued)





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





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





Series
      B preferred stock





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




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





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




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




F-21




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





Note
      3-
      preferred stock (continued)





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





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




Series
      B-1 preferred stock





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





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





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




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




F-22




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




Note
      3-
      preferred stock (continued)





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





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





NOTE
      4
      GOING CONCERN





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





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





NOTE
      5
      CONVERTIBLE DEBENTURES





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





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





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





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





F-23


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





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





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





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





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




F-24




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





Note
      5-
      Convertible Debentures (continued)





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




F-25




TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006





Note
      5-
      Convertible Debentures (continued)







NOTE
      6
      NOTES PAYABLE




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





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





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





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





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





F-26





TechnoConcepts,
      Inc.


And
      Subsidiaries


Notes
      to
      Financial Statements


September
      30, 2006




NOTE
      6
      Notes Payable (continued)






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





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




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





NOTE
      7
      NOTES PAYABLE





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





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





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




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




F-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
                  30,2006
            
            
            September
                  30,2005
                (restated)
            
            
            September
                  30,2004
                (restated)Deferred
                tax assetsNet
                operating loss
            
            $
            10,963,511
            
            $
            4,000,782
            
            $
            645,996Inventory
                reserve
            
            
            177,600
            
            
            213,940
            
            
            **----**Interest
                payable
            
            
            320,622
            
            
            53,838
            
            
            103,098Bad
                debt allowance
            
            
            24,333
            
            
            76,016
            
            
            ----Other
            
            
            784
            
            
            ----
            
            
            63,693Intellectual
                property
            
            
            2,986,667
            
            
            3,200,000
            
            
            404,000Goodwill
            
            
            2,146,834
            
            
            2,265,452
            
            
            ----Total
                deferred tax assets
            
            
            16,620,351
            
            
            9,810,028
            
            
            1,216,787Less:
                valuation allowance
            
            
            16,620,351
            
            
            9,810,028
            
            
            (1,216,787)$
            ----
            
            $
            ----
            
            $
            ----





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





F-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,
              
              September
                  30,2006
              
              2005
                  (restated)
              
              2004
                  (restated)Current:Federal
              
              $
              ----
              
              $
              ----
              
              $
              ----State
              
              
              800
              
              
              1,600
              
              
              ----800
              
              
              1,600
              
              
              ----Deferred: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,
              2006
            
            Year
                Ended
              September
                30,
              2005
                (restated)
            
            Year
                Ended
              September
                30,
              2004
                (restated)U.S.
                Federal income tax statutory rate
            
            
            (34
            )%
            
            (34
            )%
            
            (34
            )%State
                income tax, net of federal income tax benefit
            
            
            (
                6
            )%
            
            (
                6
            )%
            
            (
                6
            )%Other-
                primarily net operating losses
            
            
            40
            %
            
            40
            %
            
            40
            %----
            %
            
            ----
            %
            
            ----
            %




NOTE
      9
      RELATED PARTY TRANSACTIONS




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





NOTE
      10
      LEASE





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




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






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





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


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




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




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




NOTE
      12
      COMMON STOCK ISSUED FOR CONSULTING SERVICES




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





NOTE
      13
      WARRANTS





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





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





F-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 warrants to purchase 100,000
      shares of the Company’s common stock at an exercise price of $3.75 per share.
      The warrants are exercisable for the three- year period.





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




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





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





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





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




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




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




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





F-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
            
            
            15,442,603
            
            $
            1.15Exercised
            
            
            —
            
            
            —Canceled
            
            
            —
            
            
            —Warrants
                outstanding andExercisable
                atSeptember
                30, 2006
            
            
            16,635,723
            
            $
            1.15




NOTE
      14
      OPTIONS





In
      September 2005, the Company’s Board of Directors adopted the 2005 Equity
      Incentive Plan (the “2005 Plan”), pursuant to which up to 12,000,000 shares of
      common stock may be issued to officers, employees, non-employee directors,
      and
      consultants either through the award of restricted stock or through the exercise
      of grants of incentive stock options or nonqualified stock options. The exercise
      price of an option granted under the 2005 Plan generally may not be less than
      the fair market value of the Company’s common stock on the date of grant.
      Subject to the terms of the 2005 Plan, the Board of Directors is authorized
      to
      select optionees and to determine the number of shares covered by each option,
      its exercise price, a vesting schedule, and certain other terms.





F-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 outstanding as
      of
      September 30, 2006, is $2.67. The weighted average exercise price for all
      outstanding options as of September 30, 2006 is $2.67 and the weighted average
      remaining contractual life of warrants outstanding is 2.6 years. The table
      below
      summarizes options outstanding as of September 30, 2006:




Shares
            
            Option
                Price Per ShareOptions
                outstanding - September 30, 2004
            
            
            600,000
            
            $
            0.50-$3.50Granted
            
            
            2,252,500
            
            $
            2.91-$3.50Canceled
            
            
            —
            
            
            —Exercised
            
            
            —
            
            
            —Options
                outstanding - September 30, 2005
            
            
            2,852,500
            
            $
            0.50-$3.50Granted
            
            
            1,365,000
            
            $
            1.62-$2.62Canceled
            
            
            (50,000
            )
            
            2.91Exercised
            
            
            (5,000
            )
            
            2.91Options
                outstanding - September 30, 2006
            
            
            4,162,500
            
            $
            0.50-$2.91Options
                exercisable- September 30, 2006
            
            
            1,693,425
            
            $
            0.50-$2.91




NOTE
      15
      FOREIGN SALES





During
      the year ended September 30, 2006, sales by region were broken down as
      follows:





US
            91%Europe
            6%Others
            3%




F-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 the employee’s eligibility to participate in
      the Company’s benefit plans and incentive bonuses which are payable based upon
      the attainment of certain profitability goals. Among other provisions, the
      agreements include a non-compete clause for varying periods not exceeding three
      years following termination of employment.





The
      aggregate commitment for future salaries as of September 30, 2006 excluding
      bonuses and benefits is as follows:





Fiscal
      year ending September 30,





2007
            
            $
            829,6672008
            
            $
            260,0002009
            
            $
            66,667





NOTE
      17
      CAPITAL LEASE OBLIGATIONS





The
      Company leases a phone system under a capital lease. The lease calls for monthly
      payments of $1,463, has a length of 3 years with an interest rate of
      10.58%





Future
      minimum lease payments are as follows:




Year
                EndedSeptember
                302007$
            14,109less
                interest portion
            
            
            442Present
                value of net minimum lease payments
            
            
            13,667Less
                current portion
            
            
            13,667$
            0




F-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 provisions,
      the agreement provides for the release of the Company’s obligations under a
      consulting agreement, entered into August 2004, under which RTH Consulting
      was
      to perform consulting services and strategic marketing to government and
      international agencies with general assistance in support of marketing the
      products of the Company for 18 months in exchange for $10,000 per month, plus
      options to purchase up to 75,000 shares of the Company’s common stock at an
      exercise price of $5.75 per share. In addition, Mr. Hines resigned as a
      director, received a one-time payment of $108,691 and retained the ability
      to
      exercise previously granted options for the purchase of 90,000 shares of the
      Company’s common stock.





F-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 our disclosure controls and procedures, management
      recognizes that any controls and procedures, no matter how well designed and
      operated, can provide only reasonable assurance of achieving the desired control
      objectives, and management necessarily is required to apply its judgment in
      evaluating the cost-benefit relationship of possible controls and
      procedures.





*Evaluation
      of disclosure controls and procedures*





As
      required by SEC Rule 13a-15(b), we carried out an evaluation, under the
      supervision and with the participation of our chief executive officer and chief
      financial officer, of the effectiveness of the design and operation of our
      disclosure controls and procedures as of the end of the fiscal year covered
      by
      this report.





Based
      on
      the foregoing, our chief executive officer and chief financial officer have
      concluded that, for the reasons set forth below, our disclosure controls and
      procedures were not adequate to ensure that the information required to be
      disclosed by us in reports we file or submit under the Exchange Act is recorded,
      processed, summarized and reported within the time periods specified in the
      rules and forms of the Securities and Exchange Commission.




*Management’s
      annual report on internal control over financial reporting*




Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
      under the Exchange Act. Our internal control over financial reporting is
      designed to provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external purposes
      in
      accordance with U.S. generally accepted accounting principles (“US GAAP”). Our
      internal control over financial reporting includes those policies and procedures
      that:




(i)
            pertain
                to the maintenance of records that, in reasonable detail, accurately
                and
                fairly reflect the transactions and dispositions of our
                assets;




(ii)
            provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                preparation of financial statements in accordance with US GAAP, and
                that
                our receipts and expenditures are being made only in accordance with
                authorizations of our management and directors;
                and




(iii)
            provide
                reasonable assurance regarding prevention or timely detection of
                unauthorized acquisition, use or disposition of assets that could
                have a
                material effect on the financial
                statements.




Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions or that the degree of compliance
      with the policies or procedures may deteriorate.




A
      material weakness is (i) a significant deficiency or (ii) a combination of
      significant deficiencies, which result(s) in there being more than a remote
      likelihood that a material misstatement of the annual or interim financial
      statements will not be prevented or detected on a timely basis by employees
      in
      the normal course of their assigned functions. The terms “material weakness” and
“significant deficiency” are used here as defined in the Public Company
      Accounting Oversight Board’s (PCAOB) Auditing Standard No. 2.




Our
      chief
      executive officer and chief financial officer conducted an evaluation of the
      effectiveness of our internal control over financial reporting as of September
      30, 2006, as required by Exchange Act Rule 13a-15(c). Our management’s
      evaluation and assessment of our internal control over financial reporting
      identified the following three material weaknesses.




(1)
            As
                of March 31, 2004, our management did not have an accurate and complete
                understanding of US GAAP to properly record consultancy expenses
                associated with the issuance of the Company’s common stock. Consultancy
                expenses should have been recorded in the quarterly period in which
                the
                Company agreed to issue shares of its common stock in consideration
                for
                the related consulting services. As a result of this deficiency in
                our
                internal control over financial reporting, we have corrected the
                accounting as described in the notes to the consolidated financial
                statements appearing elsewhere in this Annual
                Report.




(2)
            As
                of September 30, 2005, our management did not have an accurate and
                complete understanding of US GAAP to properly adjust the initial
                valuation
                of trademarks and expired provisional patents acquired in connection
                with
                the Company’s acquisition of TechnoConcepts, Inc., a Nevada corporation
                (“TCI Nevada”) in February 2004. At the time of the initial valuation of
                these assets, management should have recognized that the subject
                of the
                trademarks had no “brand” value and that the technology underlying the
                provisional patents was effectively part of an ongoing research and
                development effort at the time of their acquisition. As a result
                of this
                deficiency in our internal control over financial reporting, we were
                required to restate our consolidated financial statements as described
                in
                the notes to the consolidated financial statements appearing elsewhere
                in
                this annual report on Form 10-KSB.





24




(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








25





(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.





26




**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.





27




**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.





28




**Dr.
      Oleg Panfilov** ,
      Chief
      Scientific Officer, received his Ph.D. degree from the Moscow Institute of
      Long
      Radio Communication in 1971 (Russia). Working in the fields of signal and data
      processing Dr. Panfilov held different positions from engineer to the director
      of laboratory. Since his immigration to the United States in 1979 he has worked
      as a senior math analyst in Bedford Research Associates, as a research scientist
      and staff engineer in Unisys Corporation, a senior consulting analyst in NCR,
      a
      distinguished member of technical staff in Motorola and as an independent
      consultant in the system design of Doppler radars, computer systems and networks
      as well as in wireless communication systems. Dr. Panfilov has devoted a
      considerable portion of his professional career to identifying prospective
      technologies providing the highest return on investments. The results of his
      research and findings have been published in over forty domestic and
      international publications and he is a frequent lecturer at international
      conferences on high performance computer systems, networks and communication
      systems.





**Section
      16(a) Beneficial Ownership Reporting Compliance**





Based
      solely upon our review of Forms 3, 4 and 5 and amendments thereto furnished
      to
      us under Rule 16a-3(e) of the Securities Exchange Act of 1934, as amended (the
      “Securities Exchange Act”) during the fiscal year ended September 30, 2006 and
      written representations received by us pursuant to Securities and Exchange
      Commission rules, none of our directors, officers, or any beneficial owner
      of
      more than 10 percent of any class of our equity securities failed to file,
      on a
      timely basis, any reports required by Section 16(a) of the Securities Exchange
      Act.




**Director
      Independence**





The
      Board
      believes that the interests of its shareholders are best served by having at
      least a majority of objective independent representatives on the
      Board.





In
      determining independence, the Board applies the standards established by the
      Nasdaq Stock Market. In conjunction with this report, the Board has evaluated
      all relationships between each director, and the Company and has made the
      following determinations with respect to the “independence” of each
      director:




**Director**
            
            **Status**Antonio
                Turgeon
            
            Not
                independentDr.
                Feng Yuh Juang
            
            Not
                independentRichard
                Hines
            
            Not
                IndependentRonald
                Hickling
            
            Not
                IndependentMichael
                Ussery
            
            IndependentGeorge
                Lange
            
            IndependentJohn
                Mansfield
            
            Independent





29




Based
      on
      the foregoing analysis, it was determined that a majority of our directors
      are
      not “independent” directors under the standards established by Nasdaq. The
      Company intends to take steps to appoint additional independent directors to
      our
      Board of Directors as soon as it is able to do so.





The
      Board
      will continually monitor the standards established for director independence
      under applicable law or listing requirements and will take all reasonable steps
      to assure compliance with those standards.




**Committees
      of the Board**





In
      order
      to facilitate the various functions of our Board of Directors, in February
      2004,
      the Board created a standing Audit Committee and a standing Corporate
      Governance/Nominating Committee.





*Audit
      Committee.* The
      Audit Committee operates pursuant to a written charter that was adopted in
      February 2004. Under its charter, the Audit Committee is given the sole
      authority and responsibility for the appointment, retention, compensation and
      oversight of our independent auditors, including pre-approval of all audit
      and
      non-audit services to be performed by our independent auditors. The Board has
      determined that John Mansfield, the chairman of the Company’s Audit Committee,
      meets the Securities and Exchange Commission criteria of an audit committee
      financial expert.





*Corporate
      Governance/Nominating Committee.* The
      Corporate Governance/Nominating Committee is responsible for implementing and
      carrying out appropriate processes by which nominees for election as directors
      are selected.





Committee
      assignments are re-evaluated annually and approved by our Board of Directors
      at
      its annual meeting that follows the annual meeting of stockholders.





**Board
      Meetings and Executive Sessions**





During
      the year ended September 30, 2006, our Board of Directors held four formal
      meetings.





By
      resolution adopted by our Board of Directors, commencing in 2004, the
      non-management members of the Board will meet on a regular basis, not less
      than
      twice annually, in executive session without management present. Executive
      sessions are to be led by a “Lead Director” designated by the non-management
      directors. An executive session is held in conjunction with each regularly
      scheduled Board meeting and other sessions may be called by the Lead Director
      in
      his or her own discretion or at the request of the Board.





**Nomination
      of Directors**





In
      assessing potential director nominees, the Corporate Governance/Nominating
      Committee is expected to look for candidates who possess a wide range of
      experience, skills, areas of expertise, knowledge and business judgment, high
      integrity and demonstrated superior performance or accomplishments in his or
      her
      professional undertakings. The Corporate Governance/Nominating Committee may
      utilize the services of a search firm to help identify candidates for director
      who meet the qualifications outlined above.





The
      Board
      will also consider for nomination as a director qualified candidates suggested
      by our shareholders. Shareholders can suggest qualified candidates for
      nomination as a director by writing to our corporate secretary at 6060 Sepulveda
      Blvd., Suite 202, Van Nuys, CA 91411. Submissions that are received that meet
      the criteria outlined above are forwarded to the Corporate Governance/Nominating
      Committee for further review and consideration.





**Codes
      of Ethics**





In
      February 2004, our Board of Directors adopted a Code of Business Ethics covering
      all officers, directors and employees. We require all employees to adhere to
      the
      Code of Business Ethics in addressing legal and ethical issues encountered
      in
      conducting their work. The Code of Business Ethics requires that our employees
      avoid conflicts of interest, comply with all laws and other legal requirements,
      conduct business in an honest and ethical manner and otherwise act with
      integrity and in the Company’s best interest. All of our employees are required
      to certify that they have reviewed and understand the Code of Business
      Ethics.





30




In
      April
      2004, our Board of Directors also adopted a separate Code of Business Ethics
      for
      our CEO and senior financial officers. This Code of Ethics supplements our
      general Code of Business Ethics and is intended to promote honest and ethical
      conduct, full and accurate reporting, and compliance with laws as well as other
      matters. Any person wishing to receive, without charge, a copy of such code
      of
      ethics, should request the same by writing to our corporate secretary at 6060
      Sepulveda Blvd., Suite 202, Van Nuys, CA 91411.





**Contacting
      the Board**





Any
      shareholder who desires to contact our Lead Director or the other members of
      our
      Board of Directors may do so by writing to: Board of Directors, TechnoConcepts,
      Inc. 6060 Sepulveda Blvd., Suite 202, Van Nuys, CA 91411. Communications
      received electronically or in writing are distributed to the Lead Director
      or
      the other members of the Board as appropriate depending on the facts and
      circumstances outlined in the communication received. For example, if any
      complaints regarding accounting, internal accounting controls and auditing
      matters are received, then they will be forwarded to the Chairman of the Audit
      Committee for review.





**Compensation
      Committee Interlocks and Insider Participation**





None
      of
      our executive officers served during 2006 as a member of our Board of Directors
      or compensation committee of any entity that has had one or more executive
      officers who served as a member of our Board of Directors or Compensation
      Committee.




**ITEM
      10. EXECUTIVE COMPENSATION**





**Compensation
      of Executive Officers**





During
      the period beginning February 17, 2004, the date upon which the Exchange was
      consummated and ending September 30, 2004, no salary or any other compensation
      was paid to the Company’s Chief Executive Officer or any officer or employee of
      the Company for the services provided to us. During the Company’s fiscal year
      ending September 30, 2007, Antonio E. Turgeon, our President and Chief Executive
      Officer, will be paid a base salary of $240,000, Ronald M. Hickling, our Chief
      Technology Officer, will be paid a base salary of $168,000, Michael Handelman,
      our Chief Financial Officer, will be paid a base salary of $200,000, Eric
      Pommer, our Vice President and General counsel, will be paid a base salary
      of
      $125,000 and Dr. Feng Yuh Juang, our Vice Chairman, will be paid a base salary
      of $120,000.





**Summary
      Compensation Table**


**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







31




**Employment
      Contracts**





As
      of
      September 30, 2006, we had a three year employment contract with Antonio Turgeon
      commencing on January 1, 2005 at an annual salary of $240,000. The Company
      also
      has a three year employment contract with Richard Juang commencing on January
      1,
      2005 at an annual salary of $120,000, and Ron Hickling commencing on January
      1,
      2005 at an annual salary of $140,000 that has been increased to $168,000
      annually.





**Compensation
      of Directors**





Commencing
      in April 2004, each director who is not an employee is paid (1) an annual fee
      of
      $20,000, payable in quarterly installments, (2) $1,000 per day per meeting,
      including one travel day for each meeting for out-of-state directors, and (3)
      out-of-pocket expenses. The Company has also agreed to grant each non-employee
      director options to purchase 50,000 shares of our common stock upon the
      Company’s establishment of an option plan and 20,000 options following each
      subsequent shareholders meeting after which the director continues to serve.
      In
      addition, each non-employee director is paid $500 per meeting for each committee
      meeting attended. The Chair of the Audit Committee is paid an annual fee of
      $7,500. Other committee chairs are paid an annual fee of $1,000.





**Equity
      Compensation Plan Information**





In
      September 2005, the Company’s Board of Directors adopted the 2005 Equity
      Incentive Plan (the “2005 Plan”), pursuant to which up to 12,000,000 shares of
      common stock may be issued to officers, employees, non-employee directors,
      and
      consultants either through the award of restricted stock or through the exercise
      of incentive stock options or nonqualified stock options granted under the
      2005
      Plan. The exercise price of an option granted under the 2005 Plan generally
      may
      not be less than the fair market value of the Company’s common stock on the date
      of grant. Subject to the terms of the 2005 Plan, our Board of Directors is
      authorized to select optionees and to determine the number of shares covered
      by
      each option, its exercise price, a vesting schedule, and certain other
      terms.




**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
      AND**  **RELATED
      STOCKHOLDER MATTERS**





The
      following tables sets forth information as of January 14, 2007, based on
      information obtained from the persons named below, with respect to the
      beneficial ownership of shares of our common stock, Series A preferred stock,
      Series B preferred stock and Series B-1 preferred stock, respectively, held
      by
      (i) each person known by us to be the owner of more than 5% of our outstanding
      shares of common stock, Series A preferred stock, Series B preferred stock
      and
      Series B-1 preferred stock, as applicable (ii) each director, (iii) each named
      executive officer, and (iv) all executive officers and directors as a
      group:





32




**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







33




(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.





34




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





In
      December 2006, the Company entered into a separation and release agreement
      with
      Richard T. Hines Consulting (“RTH Consulting”) and its principal, who was then
      serving as a member of the Company’s board of directors. Among other provisions,
      the agreement provides for the release of the Company’s obligations under a
      consulting agreement entered into August 2004, under which RTH Consulting was
      to
      perform consulting services and strategic marketing to government and
      international agencies with general assistance in support of marketing the
      products of the Company for 18 months in exchange for $10,000 per month, plus
      options to purchase up to 75,000 shares of the Company’s common stock at an
      exercise price of $5.75 per share. In addition, Mr. Hines resigned as a
      director, received a one-time payment of $108,691 and retained the ability
      to
      exercise previously granted options for the purchase of 90,000 shares of the
      Company’s common stock.




35




**ITEM
      13. EXHIBITS**





**Incorporated
      by reference**


**Exhibit**
              **Number**
            **Description
                of Exhibit**
            **Filed**
              **herewith**
            **Form**
            **Period**
              **Ending**
            **Exhibit**
            **Filing
                Date**2.1
            Agreement
                and Plan of Merger, dated December 15, 2003, between Technology Consulting
                Partners Inc. and TechnoConcepts Inc., a Nevada
                corporation
            
            8-K
            
            2.1
            2/18/042.2
            Agreement
                and Plan of Acquisition Among Asante Technologies, Inc., and
                TechnoConcepts, Inc. and Asante Acquisition Corp., dated January
                29,
                2005
            X2.3
            Earn-Out
                Agreement, dated February 25, 2005, among Asante Technologies Inc.,
                the
                Company and Asante Acquisition Corp.
            
            8-K
            
            2.02
            6/9/052.4
            Agreement
                and Plan of Reorganization, dated August 31, 2005, between RegalTech,
                Inc.
                and Asante Acquisition Corp.
            
            8-K
            
            2.1
            10/21/053.1
            Restated
                Articles of Incorporation of the Company
            
            10-KSB/A
            9/30/04
            3.1
            5/2/053.1.1
            Articles
                of Amendment to Articles of Incorporation of Technology Consulting
                Partners, Inc., filed with the Colorado Secretary of State on April
                8,
                2004
            X3.1.2
            Certificate
                of Designations to the Restated Articles of Incorporation, as amended,
                setting forth the terms of the Company’s Series A preferred
                stock
            
            10-KSB/A
            9/30/04
            3.1
            5/2/053.1.3
            Certificate
                of Designations to the Restated Articles of Incorporation, as amended,
                setting forth the terms of the Company’s Series B preferred
                stock
            
            10-KSB
            9/30/04
            3.1
            1/14/053.1.4
            Amendment
                to the Restated Articles of Incorporation, as amended, Certificate
                of
                Designations setting forth the terms of the Company’s Series B-1 preferred
                stock and authorizing additional shares
            X3.1.5
            Certificate
                of Designations to the Restated Articles of Incorporation, as amended,
                setting forth the terms of the Company’s Series C preferred
                stock
            X3.2
            Bylaws
                of the Company
            
            10-KSB/A
            9/30/04
            3.2
            5/2/054.1
            Specimen
                stock certificate for common stock of the Company
            X4.2
            Form
                of 7% Secured Convertible Debentures
            
            10-KSB
            9/30/04
            4.1
            1/14/054.3
            Form
                of Warrant to purchase shares of the Company’s common stock issued and
                sold in conjunction with the 7% Secured Convertible
                Debentures
            
            10-KSB
            9/30/04
            4.1
            1/14/054.4
            Form
                of Warrant to purchase shares of the Company’s common stock issued and
                sold in conjunction with the Company’s sale of 8% Promissory Notes from
                October 2005 through April 2006
            X4.5
            Form
                of Warrant to purchase shares of the Company’s common stock issued and
                sold in conjunction with the Company’s sale of 8% Secured Subordinated
                Promissory Notes from May 2006 through December 2006
            X




36




4.6
            Warrant
                to purchase 100,000 shares of the Company’s common stock issued to
                Richstar Venture, Inc., a financial advisor, in June 2005
            X4.7
            Warrant
                to purchase 75,000 shares of the Company’s common stock issued to Cyndel
                & Co. Inc., a financial advisor, in September 2005
            X4.8
            Warrant
                to purchase 75,000 shares of the Company’s common stock issued to SDS
                Capital Group SPC, Ltd., in September 2005, in conjunction with the
                Company’s establishment of a credit facility
            X4.9
            Warrant
                to purchase 75,000 shares of the Company’s common stock issued to Triumph
                Research Partners, in September 2005, in conjunction with the Company’s
                establishment of a credit facility
            X10.1
            Subscription
                Escrow Agreement, among the Company and various investors
            
            SB-2/A
            
            10.1.1
            8/28/0210.2
            Securities
                Purchase Agreement, dated November 17, 2004, among the Company and
                the
                investors in the Company’s 7% Secured Convertible Debentures and warrants
                exercisable for shares of the Company’s common stock
            
            10-KSB
            9/30/04
            10.1.1
            1/14/0510.2.1
            First
                Amendment to Securities Purchase Agreement, dated November 17, 2004,
                among
                the Company and the investors in the Company’s 7% Secured Convertible
                Debentures and warrants exercisable for shares of the Company’s common
                stock
            
            10-KSB
            9/30/04
            10.1.2
            1/14/0510.3
            Registration
                Rights Agreement, dated November 17, 2004, among the Company and
                the
                investors in the Company’s 7% Secured Convertible Debentures and warrants
                exercisable for shares of the Company’s common stock
            
            10-KSB
            9/30/04
            10.2
            1/14/0510.4
            Security
                Agreement, dated November 17, 2004, among the Company and the investors
                in
                the Company’s 7% Secured Convertible Debentures and warrants exercisable
                for shares of the Company’s common stock
            
            10-KSB
            9/30/04
            10.3
            1/14/0510.5
            Preferred
                Stock Purchase Agreement, dated November 17, 2004, between the Company
                and
                Triumph Research Partners LLC, pursuant to which the Company issued
                and
                sold 800 shares of its Series B preferred stock
            
            10-KSB
            9/30/04
            10.4
            1/14/0510.6
            Securities
                Purchase Agreement, dated November 17, 2005, among the Company and
                the
                investors in an aggregate of 2,203 shares of the Company’s Series B-1
                preferred stock
            X10.7
            Note
                Purchase Agreement, dated August 2, 2006, between the Company and
                the
                investors in an aggregate for up to $1,000,000 in subordinated convertible
                promissory notes
            X10.8
            Note
                Purchase Agreement, dated May 2006 through November 2006, between
                the
                Company and the investors in an aggregate for up to $10,000,000 in
                Series
                A secured subordinated promissory notes
            X10.9
            Employment
                Agreement, dated as of December 22, 2004, between the Company and
                Antonio
                Turgeon
            X10.10
            Employment
                Agreement, dated as of September 15, 2004, between the Company and
                Dr.
                Feng Yuh (Richard) Juang
            X




37




10.11
            Employment
                Agreement, dated as of September 25, 2004, between the Company and
                Ronald
                M. Hickling
            X10.12
            Executive
                Employee Agreement, dated January 24, 2007, between the Company and
                Richard Hahn
            
            8-K
            
            10.1
            1/30/0710.13
            Confidentiality
                and Inventor’s Assignment Agreement, dated January 24, 2007, between the
                Company and Richard Hahn
            
            8-K
            
            10.1
            1/30/0710.14
            Consulting
                Agreement, dated July 19, 2004, between the Company and Richard T.
                Hines
            
            10-KSB/A
            9/30/04
            10.6
            5/2/0510.15
            Separation
                and Release Agreement, dated December 7, 2006, among the Company,
                Richard
                T. Hines and Richard T. Hines Consulting, Inc.
            
            8-K
            
            10.1
            12/14/0610.16
            The
                Company’s 2005 Equity Incentive Plan
            X10.17
            Multi-Tenant
                Office Lease, dated December 20, 2004, between Electro Rent Corporation
                and the Company for the Company’s corporate headquarters at 6060 Sepulveda
                Blvd., Suite 202, Van Nuys, California 91411
            X10.17.1
            Sublease,
                dated June 27, 2006, between Moon Mesa Media, LLC, and Sheryl Hardy
                (“sublessor”) and the Company for the premises at 14945 Ventura Boulevard,
                Suite 300, Sherman Oaks, California 91403
            X10.17.2
            Office
                Building Lease, dated July 6, 2006, between JMA Trust, Michael Hirsh
&
                Patricia Knapp and the Company for the premises at 2182 Dupont Drive,
                Irvine, California 92612
            X10.17.3
            Lease
                Agreement, dated November 13, 2006, between Adaptec, Inc. and the
                Company
                for the premises at 673 South Milpitas Boulevard, Milpitas, California
                95035
            X10.17.4
            Lease
                Agreement, dated August 1, 2005, between Hong Kong Science &
                Technology Parks Corp. and the Company for the premises at the Innovation
                Center in Hong Kong Science Park in Hong Kong, China
            X10.17.5
            English
                translation of Rental Agreement, dated June 20, 2006, between Joint
                Development Company of Hi-tech Park and China Jinshilin Techno Company
                Ltd. for the premises at the Technology Industry Building in Caohejing
                New
                Technology Development Zone, in Shanghai, China
            X14.1
            The
                Company’s Code of Ethics for the Chief Financial Officer and Senior
                Financial Officers
            
            10-KSB
            9/30/04
            10.4
            1/14/0521.1
            Subsidiaries
                of the Company
            
            SB-2/A
            
            21
            8/28/0223.1
            Consent
                of Seligson & Giannattasio, LLP
            X31.1
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Executive
                Officer
            X31.2
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Financial
                Officer
            X32
            Rule
                13a-14(b)/15d-14(b) Certification of Chief Executive Officer and
                Chief
                Financial Officer
            X




38


***Reports
      on Form 8-K***





No
      reports on Form 8-K were filed during the last quarter of the period covered
      by
      this report.





**ITEM
      14.**





**PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**





**2005**Audit
                fees
            
            
            53,015Tax
                fees
            
            
            756All
                other fees
            
            
            —Total
            
            
            53,771







**2006**Audit
                fees
            
            
            45,763Tax
                fees
            
            
            1,000All
                other fees
            
            
            —Total
            
            
            46,763




The
      Audit
      Committee developed a policy relating to the pre-approval of all audit and
      non-audit services provided by the independent auditors. These services may
      include audit services, audit-related services, tax services and other
      services.




39





**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:
                May 7, 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
            May
                11, 2007ANTONIO
                E. TURGEON/s/
                Michael Handelman
            
            Chief
                Financial Officer and Principal Accounting and Financial
              Officer
            May
                  11, 2007MICHAEL
                HANDELMANDirector
            May
                  11, 2007RONALD
                HICKLING/s/
                George Lange
            
            Director
            May
                  11, 2007GEORGE
                LANGE/s/
                John Mansfield
            
            Director
            May
                  11, 2007JOHN
                MANSFIELDDirector
            May
                  11, 2007DR.
                FENG YUH JUANGDirector
            May
                  11, 2007RICHARD
                HINES/s/
                Michael Ussery
            
            Director
            May
                  11, 2007MICHAEL
                USSERY