**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**





**x
      ANNUAL REPORT PURSUANT
      TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE**


**ACT
      OF 1934**





**For
      the Fiscal Year Ended June 30, 2007**





**o
      TRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**


**EXCHANGE
      ACT OF 1934**





**For
      the transition period from _________ to __________**





**Commission
      file number: 0-28541**





**QUINTEK
      TECHNOLOGIES, INC.**


(Exact
      name of registrant as specified in its charter)




**California**
            **77-0505346**(State
                or other jurisdiction of incorporation or organization)
            (IRS
                Employer Identification No.)





**17951
      Lyons Circle**


**Huntington
      Beach, California 92647**


**** (Address
      of principal executive offices)





**(714)
      848-7741**


(Registrant's
      telephone number, including area code)





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


Common
      stock, no par value





Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      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





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





Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-B is not contained herein, and will not 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
      Form 10-KSB.





Yes
o
      No x Delinquent filers
      are
      disclosed herein.





Total
      revenues for Fiscal Year Ended June 30, 2007 were $2,121,609.





The
      aggregate market value of the Common Stock held by non-affiliates (as affiliates
      are defined in Rule 12b-2 of the Exchange Act) of the registrant, computed
      by
      reference to the average of the high and low sale price on October 12, 2007,
      was
      $544,008.02.





As
      of
      October 12, 2007 there were 207,923,622 shares of issuer’s common stock
      outstanding.









**QUINTEK
      TECHNOLOGIES, INC.**


**FORM
      10-KSB**




**For
      the Fiscal Year Ended June 30, 2007**


Part
                  I
              
              PageItem
                  1.
              Description
                  of Business.
              3Item
                  2.
              Description
                  of Property.
              15Item
                  3.
              Legal
                  Proceedings.
              15Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders.
              15
  Part
                  ll
              
              PageItem
                  5.
              Market
                  for Common Equity and Related Stockholder Matters.
              16Item
                  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.
              23Item
                  8A.
              Controls
                  and Procedures.
              23Item
                  8B.
              Other
                  Information.
              23
  Part
                  lll
              
              PageItem
                  9.
              Directors,
                  Executive Officers, Promoters and Control Persons; Compliance with
                  Section
                  16(a)of
                  the Exchange Act.
              24Item
                  10.
              Executive
                  Compensation.
              25Item
                  11.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              28Item
                  12.
              Certain
                  Relationships and Related Transactions.
              29Item
                  13.
              Exhibits.
              30Item
                  14.
              Principal
                  Accountant Fees and Services.
              33Signatures.
              34


2




**ITEM
      1. - DESCRIPTION OF BUSINESS**





This
      Annual Report on Form 10-KSB (including the section regarding Management's
      Discussion and Analysis of Financial Condition and Results of Operations)
      contains forward-looking statements regarding our business, financial condition,
      results of operations and prospects. Words such as "expects," "anticipates,"
      "intends," "plans," "believes," "seeks," "estimates" and similar expressions
      or
      variations of such words are intended to identify forward-looking statements,
      but are not deemed to represent an all-inclusive means of identifying
      forward-looking statements as denoted in this Annual Report on Form 10-KSB.
      Additionally, statements concerning future matters are forward-looking
      statements.





Although
      forward-looking statements in this Annual Report on Form 10-KSB reflect the
      good
      faith judgment of our Management, such statements can only be based on facts
      and
      factors currently known by us. Consequently, forward-looking statements are
      inherently subject to risks and uncertainties and actual results and outcomes
      may differ materially from the results and outcomes discussed in or anticipated
      by the forward-looking statements. Factors that could cause or contribute to
      such differences in results and outcomes include, without limitation, those
      specifically addressed under the heading "Risks Related to Our Business" below,
      as well as those discussed elsewhere in this Annual Report on Form 10-KSB.
      Readers are urged not to place undue reliance on these forward-looking
      statements, which speak only as of the date of this Annual Report on Form
      10-KSB. We file reports with the Securities and Exchange Commission ("SEC").
      We
      make available on our website under "Investors/SEC Filings," free of charge,
      our
      annual reports on Form 10-KSB, quarterly reports on Form 10-QSB, current reports
      on Form 8-K and amendments to those reports as soon as reasonably practicable
      after we electronically file such materials with or furnish them to the SEC.
      Our
      website address is www.quintek.com. You can also read and copy any materials
      we
      file with the SEC at the SEC's Public Reference Room at 100 F Street, NE,
      Washington, DC 20549. You can obtain additional information about the operation
      of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition,
      the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy
      and information statements, and other information regarding issuers that file
      electronically with the SEC, including us.





We
      undertake no obligation to revise or update any forward-looking statements
      in
      order to reflect any event or circumstance that may arise after the date of
      this
      Annual Report on Form 10-KSB. Readers are urged to carefully review and consider
      the various disclosures made throughout the entirety of this annual Report,
      which attempt to advise interested parties of the risks and factors that may
      affect our business, financial condition, results of operations and
      prospects.





**Overview**





We
      are a
      California corporation. Our corporate headquarters are located at 17951 Lyons
      Circle, California, 92647. Quintek Electronics, Inc., our predecessor company
      was founded in July 1991. On January 14, 1999, Quintek Electronics, Inc. was
      acquired in a merger by Pacific Diagnostics Technologies, Inc. and the surviving
      entity's name was changed to Quintek Technologies, Inc. On February 24, 2000,
      we
      acquired all of the outstanding shares of common stock of Juniper Acquisition
      Corporation. Upon effectiveness of that acquisition, Quintek elected to become
      the successor issuer to Juniper for reporting purposes under the Securities
      Exchange Act of 1934.





We
      provide back office services and solutions to improve efficiencies within
      organizations. We accomplish this through out-sourcing/in-sourcing services,
      consulting services and solution sales. Through our wholly owned subsidiaries
      Quintek Services, Inc., or QSI, and Sapphire Consulting Services, Inc., we
      provide services to enable Fortune 500 and Global 2000 corporations to reduce
      costs and maximize revenues.




3




Our
      QSI
      business unit provides back-office services to reduce our customer’s costs by
      enabling them to focus on their core competencies. We reduce our customer’s
      costs by converting their mission critical documents from paper to electronic
      formats, making these documents readily organized and available and automating
      the routing and approval processes related to electronic documents via the
      internet. We believe that we deliver superior customer service, fast turnaround
      time and competitive prices.





**Market
      Overview**





The
      outsourcing of jobs that can be performed via the Internet has come to be called
      business process outsourcing or BPO. Forester Research, Inc estimates that
      the
      market for BPO services will grow from $19 billion in 2004 to $146 billion
      in
      2008. Additionally, in an August 2006 report from Business Insights, titled
      “ *The
      BPO Market Outlook”* they
      state that, “The BPO ** market
      is
      the single fastest growing area of the IT services sector. Growing at 8%
      annually it is expected to grow from $112.1 billion is 2005 to $144 billion
      in
      2008.” In a report dated June 26, 2006 from Forrester entitled, “ *Service
      Oriented Architecture Will Shape the Future of BPO*  *Delivery* ”
states
      that, “Labor arbitrage is the most straightforward element of BPO delivery.” We
      bridge the gap of getting information to the outsourced laborer and are a key
      enabler of SOA implementation.





We
      solve
      three major problems for the outsourcing market.





First,
      outsourced worker needs timely access to relevant information. The most
      efficient and effective way is to have data and or source documents converted
      to
      digital format. The information may then be easily shipped to the worker
      electronically or via digital media (Disk, Hard Drive, Mag Tape, etc). We solve
      this problem through our high speed- high volume scanning and data capture
      operations.





Second,
      closing a multi-year, multi-million dollar outsourcing deal requires specialized
      sales skill. Proposal drafting and presentation, project management, detailed
      costing are all needed to close and execute long term contracts for BPO
      customers. Barriers exist, such as language, time and distance, as BPO service
      providers are based in other countries. This creates challenges in discovery
      and
      proposal creation, closing the sale and management of the project. We solve
      this
      problem with a sales and management team that has over 85 years of experience
      in
      the sales and implementation technology services industry.





Lastly,
      there are system integration requirements that must be supported with a US
      presence. We bring a US presence with specialized systems integration experience
      to this growing market.





**Market
      Opportunity**





Our
      core
      competencies are converting mission critical documents from paper to electronic
      formats, making these documents readily organized and available and automating
      the routing and approval processes related to electronic documents via the
      internet. We market these core competencies in three document processing market
      segments: mortgages; healthcare and accounts payable and are widening our focus
      to include various the Small to Medium sized Business (SMB) market.





According
      to AMI-Partners the US
      SMB backup and recovery software spending will grow by 10% in 2007 to annual
      spend of $582K, indicative of the increased storage and backup requirements
      of
      SMBs. Apple’s new “Time Machine” allows SMBs to back up their PCs without the
      hassle of purchasing external hardware or software. US SMBs continue to utilize
      additional channels of communications (with lower cost) —. SMB LAN adoption is
      becoming pervasive. Over 50% of Small Businesses (SBs) and 98% of Medium
      Businesses (MB’) now have a LAN. AMI predicts that global SMB notebook shipments
      will grow by 20% in 2007 over 2006, outpacing desktop PC growth by five times.
      SMBs will increasingly depend upon mobility and convergence as the use of public
      wireless internet will grow by over 30%. We estimate that this will result
      in an
      increased demand from SMB’s for Document Management Services and Solutions.




4




**BPO
      Services Overview**





Most
      BPO
      processes start by capturing data and organizing it into digital formats. This
      has increased the need for service provider support. Companies wanting to bring
      unstructured data on line have been faced with the task of converting this
      information into electronic form. Unstructured data is considered any media
      in
      paper, film, fiche or other forms that are not readily available to the
      knowledge worker.





Companies
      electing to image capture their paper documents are turning to service providers
      as a source of digitizing this information. Outsourcing this business to service
      providers has proven less expensive than hiring permanent staff. Temporary
      employees have proven ineffective since conversions are not generally done
      all
      at once. Companies attempting to purchase equipment and train staff to do their
      work in-house cannot keep up with the changing technologies in hardware and
      software.





**Our
      Core Competencies**





*Mailroom
      Outsourcing*





The
      most
      efficient solution for a customer is for the customer to outsource the mail
      handling function. We physically retrieve the mail directly from the post office
      through a P.O. Box, sort, scan and capture key data fields from each document.
      The scanned images and corresponding data are uploaded directly to the
      customer’s Enterprise Content Management , or ECM, or one of our Application
      Service Provider partners’ systems for online viewing by the customer’s end
      user. This service is sold per piece of mail processed. Our mailroom outsourcing
      service is delivered from our Huntington Beach, California
      facility.





*High-Speed
      Scanning*





Fortune
      500 companies and other large organizations manage documents using ECM systems
      such as Xerox Docushare by Xerox Corporation, Documentum from EMC Corporation
      or
      FileNet P8 from Filenet Corporation. These are very large databases with web
      browser interfaces that allow people all over the world to access and interact
      with document-based content in an organized manner twenty-four hours a day/seven
      days a week.





The
      scope
      of work for a high speed scanning contract will usually include us receiving
      paper documents and delivering these documents directly into the customer’s ECM
      system. Scanning is the process of converting a paper document into a digital
      image saved in electronic format such as a TIFF or PDF file. High-end scanners
      are similar to high-end copiers with sheet feeders, but they output electronic
      files, not more paper. We provide the ground transportation and secure facility
      for processing the documents, trained staff for processing the documents,
      expertise to index, scan and categorize the documents, expertise to re-assemble
      the original documents in the format and order they were delivered and the
      expertise to upload the documents and the indexing into the customer’s ECM
      system. This often has to be done in less than 24 hours from receipt of the
      document.





In
      its
      current configuration, our Huntington Beach facility can convert 6,550,000
      images per month up from 2,400,000 per month last year. Running two shifts
      at
      full capacity, the facility could process 13,200,000 documents a month.




5




*Domestic/Offshore
      Data Capture, OCR, and Indexing*





We
      can
      use manual and OCR or Optical Character Recognition, technologies to create
      indexing for converted digital images. Indexing of documents facilitates a
      more
      efficient means of retrieving critical documents and information for future
      use.





We
      guarantee our customers a 99.5% accuracy rate. We ensure this by utilizing
      a
      double-blind data entry process, whereby two separate operators independently
      index the same document entering the same required information per image. Then,
      results are compared using an automated system. If the two separate operator
      versions are not identical, the batch is immediately routed to a review queue
      where a senior project manager confirms for accuracy and corrects.





We
      can
      perform this service in-house, on-site or offshore. Services are priced by
      the
      keystroke. A typical healthcare claim form may require between 400 and 1000
      keystrokes. With volumes in the millions, our customers may pay $0.01- $0.02
      per
      keystroke.





*ASP
      Hosting of Scanned Images*





Once
      images have been scanned, end-users need an ECM system. We will continue to
      provide clients with support for best of breed choice preferred by the customer
      such as Ascend Software from Ascend Software, Inc., Microsoft Sharepoint Server
      by Microsoft; Documentum, Captiva and Application Extender from EMC Corporation
      or Docushare by Xerox Corporation. For customers that do not want to install
      and
      maintain their own ECM system, we can resell web-based document hosting ASP
      services. This provides our clients the efficient and immediate capability
      of
      viewing business critical documents online. We charge by the Gigabyte by the
      month, and offer our customers their data, anytime anywhere via our secure
      web-based software tools.





*Workflow
      Automation*





We
      design
      and install software systems that automate the routing and approval of processes
      otherwise performed manually. This
      is
      accomplished by converting paper documents to electronic version and utilizing
      an automated workflow process via the internet or intranet. **** We
      provide all of the necessary components to accomplish this from discovery to
      solution to design to infrastructure to implementation to training to
      execution. ****





*Delivery
      of products or services*





Our
      high
      speed scanning, data capture, OCR & indexing and in-house imaging solutions
      services are performed either in our Huntington Beach, California facility
      or on
      client’s site. We currently service clients in California; Washington and
      Massachusetts.





*Direct
      Sales*





We
      currently have three full-time outside sales people and one inside sales person.
      We are growing this with one sales person to be located on the east coast.
      These
      senior salespeople are experienced and paid a semi monthly draw against monthly
      sales commissions. We provide an incentive stock option plan to attract top
      sales talent.





6


*Sales
      Incentives and Compensation*





Salespeople
      receive a stock option bonus for meeting specific revenue goals. Our sales
      people are compensated based on the gross profit of the sale. Sales people
      receive no commission for jobs sold at less than 10% gross profit.




**Business
      Records Storage and Management Consulting Services**




*Companies
      experience an average of 501 hours of network downtime every year, and the
      overall downtime costs an average of 3.6% of annual revenue.  (Source: The
      Costs of Enterprise Downtime, Infonetics Research)*




Research
      reveals that 6 out of 10 businesses will experience some type of major network
      or technology disaster that will cost them between $9,000 and $60,000 in repairs
      and restoration costs ** on
      average. These figures exclude lost productivity and sales.  The statistics
      delineate a compelling picture: 93% of companies that lost their data center
      for
      10 days or more due to a disaster filed for bankruptcy within one year of the
      disaster, and 50% filed for bankruptcy immediately *(Source: National Archives & Records Administration in Washington,
      D.C.)* .
      Every 5
      years, 20% of small to medium businesses will suffer a major network disaster
      causing loss of critical data *.
      (Source: Richmond House Group)* . 
      In 2007, 40% of small to medium businesses that manage their own network and
      use
      the Internet for more than email will have their network accessed by a hacker.
      More than 50% won’t even know they were attacked. *(Source: Gartner Group)* .
      Cyber-criminals stole an average of $900 from each of 3 million Americans in
      the
      past year, not including the hundreds of thousands of PCs rendered useless
      by
      spyware *(Source: Gartner Group).* We
      offer
      a wide variety of **** secure
      online data storage and compliance solutions for business needs. Storing records
      off-site will help reduce storage expenses, improve the security of records,
      and
      maximize new growth for personnel.




We
      offer
      software programs to ensure that records are safe, secure, and readily
      available. We also offer custom reporting for records information
      needs.




Our
      clients in manufacturing, healthcare, insurance, and government, legal and
      financial services enjoy the benefits of simple yet powerful integration to
      their existing systems. Our clients use these integration services to
      effectively bridge the gap between electronic and paper documents. Our services
      offer unlimited retrievals from an unlimited number of users from an unlimited
      number of locations worldwide.




As
      a
      summary of our services, we can:




·
            "SCAN"
                - we accept and scan electronic images  ·
            "UPLOAD"
              - document integrity is secured by digital signatures for every page.  ·
            "SEARCH" - searching easily for non-technical
              types.  ·
            "SECURE" - safeguarding documents is
              of
              highest priority.  ·
            "STORE” - architected to scale without limit
              and grow with clients business needs.  ·
            "RETRIEVE" - individualized rapid interface
              permits unlimited access from any location.  ·
            "REPORT" - maintains audit logs of
              access
              events from data.




**Disaster
      Recovery / Business Continuity Solutions; Rapid recovery of business data to
      ensure business continuity**




Recent
      legislation is requiring that organizations have the ability to recover data
      quickly and completely following a disaster and is vital to business
      continuity.  We offer a range of services to support disaster preparedness
      and response from the data center to the edge of the network, encompassing
      mainframes, servers, PCs, and physical records.




7




With
      the
      disaster recovery support services we provide, our customers can assess impact
      of various scenarios before disaster strikes or assist in rapid recovery if
      the
      worst does happen. We reduce the risk that vital data will be lost due to a
      disaster, ensure timely recovery of corporate data, including distributed data,
      provide cost effective email continuity for Microsoft Exchange Services,
      consistently implement the best practices for recovery across multiple locations
      and support compliance requirements for safeguarding sensitive
      data.




Our
      solutions will give local high availability and remote disaster recovery of
      Microsoft Exchange; enable companies to deploy comprehensive, cost effective
      email continuity by protecting mission -critical Microsoft Exchange
      Servers.




**Document
      Destruction Services**




Our
      records management will destroy all old and confidential records, while
      providing our customers with a "Certificate of Destruction" to guarantee that
      records were destroyed properly. The records destruction service we provide
      will
      ensure a strong sense of security in regard to the destruction of confidential
      records.




**Partnership
      Agreement with FedEx Kinko’s**





On
      June
      1, 2004, we signed a sales partner agreement with FedEx Kinko’s. With this
      relationship, FedEx Kinko’s can resell our BPO services. We have sold and
      delivered on several customer contracts under this agreement. Under this
      agreement, we executed and delivered on one long-term contract with a leading
      life sciences and biotechnology company. This contract was expanded from one
      customer site to four and revenues have increased incrementally. We are
      providing services in two California locations, one location in Washington
      and
      one in Massachusetts.





**COMPETITION**





Our
      document imaging and BPO services are a mix of existing microfilm conversion
      service providers, scanning service providers, document management system
      integrators, and offshore data entry organizations. There are only a few truly
      national providers of BPO and Document Imaging. Most often we will compete
      with
      Affiliated Computer Services (NYSE:ACS) of Dallas, Texas, Unisys
      Corp of
      Blue
      Bell, Pennsylvania (NYSE:UIS) and Electronic Data Systems Corp of Plano, Texas
      (NYSE:EDS).





ACS
      is a
      Fortune 500 company with reported annual revenues of over $5 billion and more
      than 58,000 employees supporting client operations in nearly 100 countries
      providing business process and information technology outsourcing solutions
      to
      businesses, government agencies and non-profit organizations. ACS is ranked
      at
      number 424 on the 2007 Fortune 500 list.





Unisys
      Corporation is a worldwide technology services and solutions company
      specializing in consulting, systems integration, outsourcing, infrastructure,
      and server technology with reported annual revenues of over $5 billion in more
      than a hundred countries. Services include systems integration and consulting,
      outsourcing, infrastructure services and core maintenance. Unisys serves
      worldwide and includes financial services, communications, transportation,
      commercial, and public sector, including the United States federal
      government.





8




EDS
      is a
      Fortune 500 company with reported annual revenues of approximately $21 billion
      that provides a broad portfolio of business and technology solutions to help
      its
      clients worldwide improve their business performance. The company’s core
      portfolio comprises information-technology, applications and business process
      services, as well as information-technology transformation
      services.





**CUSTOMERS**





We
      had
      three customers that individually represented more than 10% of our revenues
      for
      the fiscal year ended June 30, 2007; FedEx Kinko’s represented 29% of our
      revenue, Wave Imaging and Avail Medical Products each represented 11% of our
      revenue.





**EMPLOYEES**





As
      of
      October 12, 2007, we had 19 full time employees, of which seven are hourly
      employees and 12 are salaried. We consider our relations with our employees
      to
      be good.





**RISKS
      RELATED TO BUSINESS**





You
      should carefully consider the following risk factors and all other information
      contained herein as well as the information included in this Annual Report
      in
      evaluating our business and prospects. The risks and uncertainties described
      below are not the only ones we face. Additional risks and uncertainties, other
      than those we describe below, that are not presently known to us or that we
      currently believe are immaterial may also impair our business operations. If
      any
      of the following risks occur, our business and financial results could be
      harmed. You should refer to the other information contained in this Annual
      Report, including our consolidated financial statements and the related
      notes.





**We
      Have a History of Losses Which May Continue, Requiring Us to Seek Additional
      Sources of Capital Which May Not be Available, Requiring Us to Curtail or Cease
      Operations**





We
      had a
      net loss of $2,458,633 for the year ended June 30, 2007 compared to a net loss
      of $4,440,623 for the restated fiscal year ended June 30, 2006. We cannot assure
      you that we can achieve or sustain profitability on a quarterly or annual basis
      in the future. If revenues grow more slowly than we anticipate, or if operating
      expenses exceed our expectations or cannot be adjusted accordingly, we will
      continue to incur losses. We will continue to incur losses until we are able
      to
      establish significant sales of our software and hardware products and our
      business process outsourcing services. Our possible success is dependent upon
      the successful development and marketing of our services and products, as to
      which there is no assurance. Any future success that we might enjoy will depend
      upon many factors, including factors out of our control or which cannot be
      predicted at this time. These factors may include changes in or increased levels
      of competition, including the entry of additional competitors and increased
      success by existing competitors, changes in general economic conditions,
      increases in operating costs, including costs of supplies, personnel and
      equipment, reduced margins caused by competitive pressures and other factors.
      These conditions may have a materially adverse effect upon us or may force
      us to
      reduce or curtail operations. In addition, we will require additional funds
      to
      sustain and expand our sales and marketing activities, particularly if a
      well-financed competitor emerges. Based on our current funding arrangements,
      we
      anticipate that we will require additional funds to continue our operations
      for
      the next twelve months. There can be no assurance that financing will be
      available in amounts or on terms acceptable to us, if at all. The inability
      to
      obtain sufficient funds from operations or external sources would require us
      to
      curtail or cease operations.





9


**If
      We are Unable to Obtain Additional Funding Our Business Operations Will be
      Harmed and if We do Obtain Additional Financing Our then Existing Shareholders
      may Suffer Substantial Dilution**





Additional
      capital is required to effectively support the operations and to make strategic
      acquisitions. However, there can be no assurance that financing will be
      available when needed on terms that are acceptable to us. The inability to
      obtain additional capital will restrict our ability to grow and may reduce
      our
      ability to continue to conduct business operations. If we are unable to obtain
      additional financing, we will likely be required to curtail our marketing and
      development plans and possibly cease our operations. Any additional equity
      financing may involve substantial dilution to our then existing
      shareholders.





**Our
      Independent Registered Public Accounting Firm Has Expressed Substantial Doubt
      About Our Ability to Continue as a Going Concern, Which May Hinder Our Ability
      to Obtain Future Financing**





In
      their
      report dated October 10, 2007, our Independent Registered Public Accounting
      Firm
      stated that our financial statements for the year ended June 30, 2007 were
      prepared assuming that we would continue as a going concern. Our ability to
      continue as a going concern is an issue raised as a result of recurring losses
      from operations $2,690,488, including net losses of $2,458,633 and $4,440,623
      for the fiscal years ending June 30, 2007 and 2006, respectively. We continue
      to
      experience net losses. Our ability to continue as a going concern is subject
      to
      our ability to generate a profit and/or obtain necessary funding from outside
      sources, including obtaining additional funding from the sale of our securities,
      increasing sales or obtaining loans and grants from various financial
      institutions where possible. Our continued net losses and stockholders’ deficit
      increases the difficulty in meeting such goals and there can be no assurances
      that such methods will prove successful.





**Many
      of Our Competitors are Larger and Have Greater Financial and Other Resources
      than We do and Those Advantages Could Make it Difficult for Us to Compete With
      Them**





The
      general market for our products and services is extremely competitive and
      includes several companies which have achieved substantially greater market
      shares than we have, and have longer operating histories, have larger customer
      bases, have substantially greater financial, development and marketing resources
      than we do. If overall demand for our products should decrease it could have
      a
      materially adverse affect on our operating results.





**Our
      Products May Infringe Upon the Intellectual Property Rights of Others and
      Resulting Claims Against Us Could be Costly and Require Us to Enter Into
      Disadvantageous License or Royalty Arrangements**





The
      business process outsourcing industry is characterized by the existence of
      a
      large number of patents and frequent litigation based on allegations of patent
      infringement and the violation of intellectual property rights. Although we
      attempt to avoid infringing upon known proprietary rights of third parties,
      we
      may be subject to legal proceedings and claims for alleged infringement by
      us or
      our licensees of third-party proprietary rights, such as patents, trade secrets,
      trademarks or copyrights, from time to time in the ordinary course of business.
      Any claims relating to the infringement of third-party proprietary rights,
      even
      if not successful or meritorious, could result in costly litigation, divert
      resources and our attention or require us to enter into royalty or license
      agreements which are not advantageous to us. In addition, parties making these
      claims may be able to obtain injunctions, which could prevent us from selling
      our products. Furthermore, former employers of our employees may assert that
      these employees have improperly disclosed confidential or proprietary
      information to us. Any of these results could harm our business. We may be
      increasingly subject to infringement claims as the number of, and numbers of
      features of, our products grow.




10




**If
      We are Not Able to Manage Our Growth We May Never Achieve
      Profitability**





Our
      success will depend on our ability to expand and manage our operations and
      facilities. There can be no assurance that we will be able to manage our growth,
      meet the staffing requirements of manufacturing scale-up or for current or
      additional collaborative relationships or successfully assimilate and train
      our
      new employees. In addition, to manage our growth effectively, we will be
      required to expand our management base and enhance our operating and financial
      systems. If we continue to grow, there can be no assurance that the management
      skills and systems currently in place will be adequate or that we will be able
      to manage any additional growth effectively. Failure to achieve any of these
      goals could have a material adverse effect on our business, financial condition
      or results of operations.





**If
      We Are Unable to Retain the Services of Messrs. Kernan and Haag or If We Are
      Unable to Successfully Recruit Qualified Personnel, We May Not Be Able to
      Continue Our Operations.**





Our
      success depends to a significant extent upon the continued service of Mr. James
      Kernan, our Chief Executive Officer and Mr. Andrew Haag, our Chief Financial
      Officer. Loss of the services of Messrs. Kernan or Haag could have a material
      adverse effect on our growth, revenues, and prospective business. We do not
      maintain key-man insurance on the life of Messrs. Kernan or Haag. In addition,
      in order to successfully implement and manage our business plan, we will be
      dependent upon, among other things, successfully recruiting qualified personnel.
      Competition for qualified individuals is intense. There can be no assurance
      that
      we will be able to find, attract and retain existing employees or that we will
      be able to find, attract and retain qualified personnel on acceptable
      terms.





**Risks
      Relating to Our Current Financing Arrangement** **:**





**There
      Are a Large Number of Shares Underlying Our Secured Convertible Debentures
      and
      Warrants That May be Available for Future Sale and the Resale of These Shares
      May Depress the Market Price of Our Common Stock.**





As
      of
      October 12, 2007, we had 207,923,622 shares of common stock issued and
      outstanding, secured convertible debentures issued and outstanding that may
      be
      converted into 624,000,000 shares of common stock based on current market prices
      and outstanding warrants to purchase 56,397,000 shares of common stock.
      Additionally, the number of shares of common stock issuable upon conversion
      of
      the outstanding secured convertible debentures may increase if the market price
      of our stock declines. All of the shares, including all of the shares issuable
      upon conversion of the secured convertible debentures and upon exercise of
      the
      attached warrants, up to a limit of 45,700,000 may be sold without restriction
      due to the effectiveness of the registration statement registering their resale.
      The resale of these shares may adversely affect the market price of our common
      stock.





**The
      Continuously Adjustable Conversion Price Feature of Our Secured Convertible
      Debentures Could Require Us to Issue a Substantially Greater Number of Shares,
      Which Will Cause Dilution to Our Existing Stockholders.**





Our
      obligation to issue shares upon conversion of our secured convertible debentures
      is essentially limitless. The following is an example of the amount of shares
      of
      our common stock that are issuable, upon conversion of our secured convertible
      debentures (balance of convertible debenture excluding accrued interest), based
      on market prices 25%, 50% and 75% below the market price as of October 12,
      2007
      of $0.003 per share.




Number
              
              %
                  ofPrice
                  Per
              
              With
                  Discount
              
              of
                  Shares
              
              Outstanding%
                      Below Market
              
              Share
              
              at
                  5%
              
              Issuable
              
              Stock25%
              
              $
              0.00225
              
              $
              0.0021375
              
              
              720,935,673
              
              
              77.62
              %50%
              
              $
              0.0015
              
              $
              0.001425
              
              
              1,081,403,509
              
              
              83.87
              %75%
              
              $
              0.00075
              
              $
              0.0007125
              
              
              2,162,807,018
              
              
              91.23
              %




11




As
      illustrated, the number of shares of common stock issuable upon conversion
      of
      our secured convertible debentures will increase if the market price of our
      stock declines, which will cause dilution to our existing stockholders. The
      company currently has authorized 500,000,000 shares of common stock. In the
      event that the stock price remains at these levels or lower we will need to
      increase the amount of authorized common stock, restructure our capital
      structure or restructure the YA Global Investments financing. The Company is
      currently exploring options to refinance/restructure the YA Global Investments
      financing though it cannot be assured that it will be successful. In the event
      that it is unsuccessful, we will need to consider additional
      options.





**The
      Continuously Adjustable Conversion Price Feature of Our Secured Convertible
      Debentures May Encourage Investors to Make Short Sales in Our Common Stock,
      Which Could Have a Depressive Effect on the Price of Our Common Stock.**





The
      secured convertible debentures are convertible into shares of our common stock
      at a 5% discount to the trading price of the common stock prior to the
      conversion. The downward pressure on the price of the common stock as the
      investor converts and sells material amounts of common stock could encourage
      short sales by investors. This could place further downward pressure on the
      price of the common stock. The investors could sell common stock into the market
      in anticipation of covering the short sale by converting their securities,
      which
      could cause the further downward pressure on the stock price. In addition,
      not
      only the sale of shares issued upon conversion or exercise of the secured
      convertible debentures, but also the mere perception that these sales could
      occur, may adversely affect the market price of the common stock.





**The
      Issuance of Shares Upon Conversion of the Secured Convertible Debentures and
      Exercise of Outstanding Warrants May Cause Immediate and Substantial Dilution
      to
      Our Existing Stockholders.**





The
      issuance of shares upon conversion of the secured convertible debentures and
      exercise of warrants may result in substantial dilution to the interests of
      other stockholders since the investors may ultimately convert and sell the
      full
      amount issuable on conversion. Although the investor may not convert its secured
      convertible debentures and/or exercise its warrants if such conversion or
      exercise would cause it to own more than 4.99% of our outstanding common stock,
      this restriction does not prevent the investor from converting and/or exercising
      some of its holdings and then converting the rest of its holdings. In this
      way,
      the investor could sell more than this limit while never holding more than
      this
      limit. There is no upper limit on the number of shares that may be issued which
      will have the effect of further diluting the proportionate equity interest
      and
      voting power of holders of our common stock, including investors in this
      offering.





**In
      The Event That Our Stock Price Declines, The Shares Of Common Stock Allocated
      For Conversion Of The Secured Convertible Debentures to be Registered Pursuant
      To A Registration Statement May Not Be Adequate And We May Be Required to File
      A
      Subsequent Registration Statement Covering Additional Shares. If We Are Required
      To File An Additional Registration Statement, We May Incur Substantial Costs
      In
      Connection Therewith.**




12




Based
      on
      our current market price and the potential decrease in our market price as
      a
      result of the issuance of shares upon conversion of the secured convertible
      debentures, we have made a good faith estimate as to the amount of shares of
      common stock that we are required to register and allocate for conversion of
      the
      secured convertible notes. In the event that our stock price decreases, the
      shares of common stock we have allocated for conversion of the secured
      convertible debentures and plan to register may not be adequate. If the shares
      we allocate and register pursuant to the registration statement are not adequate
      and we are required to file an additional registration statement, we may incur
      substantial costs in connection with the preparation and filing of such
      registration statement. ****





**If
      We Are Required for any Reason to Repay Our Outstanding Convertible Debentures,
      We Would Be Required to Deplete Our Working Capital, If Available, Or Raise
      Additional Funds. Our Failure to Repay the Secured Convertible Debentures,
      If
      Required, Could Result in Legal Action Against Us, Which Could Require the
      Sale
      of Substantial Assets.**





In
      May
      2006, we entered into a Securities Purchase Agreement for the sale of $2,000,000
      principal amount of secured convertible debentures. The secured convertible
      debentures are due and payable, with 10% interest, three years from the date
      of
      issuance, unless sooner converted into shares of our common stock. As of October
      12, 2007, we had $1,541,000 of this secured convertible debentures outstanding.
      In addition, any event of default such as our failure to repay the principal
      or
      interest when due, our failure to issue shares of common stock upon conversion
      by the holder, our failure to timely file a registration statement or have
      such
      registration statement declared effective, breach of any covenant,
      representation or warranty in the Securities Purchase Agreements or related
      convertible debentures, the assignment or appointment of a receiver to control
      a
      substantial part of our property or business, the filing of a money judgment,
      writ or similar process against our company in excess of $50,000, the
      commencement of a bankruptcy, insolvency, reorganization or liquidation
      proceeding against our company and the delisting of our common stock could
      require the early repayment of the secured convertible debentures, including
      default interest rate on the outstanding principal balance of the secured
      convertible debentures if the default is not cured with the specified grace
      period. We anticipate that the full amount of the secured convertible debentures
      will be converted into shares of our common stock, in accordance with the terms
      of the secured convertible debentures. If we were required to repay the secured
      convertible debentures, we would be required to use our limited working capital
      and raise additional funds. If we were unable to repay the secured convertible
      debentures when required, the debenture holders could commence legal action
      against us and foreclose on all of our assets to recover the amounts due. Any
      such action would require us to curtail or cease operations.





**If
      an Event of Default Occurs Under the Securities Purchase Agreement, Secured
      Convertible Debentures or Security Agreement, the Investor Could Take Possession
      of all Our Goods, Inventory, Contractual Rights and General Intangibles,
      Receivables, Documents, Instruments, Chattel Paper, and Intellectual
      Property.**





In
      connection with the Securities Purchase Agreement, we executed a Security
      Agreement in favor of the investor granting them a first priority security
      interest in all of our goods, inventory, contractual rights and general
      intangibles, receivables, documents, instruments, chattel paper, and
      intellectual property. The Security Agreement states that if an event of default
      occurs under the Securities Purchase Agreement, Secured Convertible Debentures
      or Security Agreement, the Investor has the right to take possession of the
      collateral, to operate our business using the collateral, and have the right
      to
      assign, sell, lease or otherwise dispose of and deliver all or any part of
      the
      collateral, at public or private sale or otherwise to satisfy our obligations
      under these agreements.





13


**Risks
      Relating to Our Common Stock** **:**





**If
      We Fail to Remain Current in Our Reporting Requirements, We Could be Removed
      From the OTC Bulletin Board Which Would Limit the Ability of Broker-Dealers
      to
      Sell Our Securities and the Ability of Stockholders to Sell Their Securities
      in
      the Secondary Market.**





Companies
      trading on the OTC Bulletin Board, such as us, must be reporting issuers under
      Section 12 of the Securities Exchange Act of 1934, as amended, and must be
      current in their reports under Section 13, in order to maintain price quotation
      privileges on the OTC Bulletin Board. If we fail to remain current on our
      reporting requirements, we 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 Our Securities is Limited, Which Makes Transactions in Our Stock
      Cumbersome and May Reduce the Value of an Investment in Our Stock.**





The
      Securities and Exchange Commission has adopted Rule 15g-9 which establishes
      the
      definition of a "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 receives 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.




14




**ITEM
      2. DESCRIPTION OF PROPERTY.**





We
      lease
      7,062 square feet for our executive offices at 17951 Lyons Circle, Huntington
      Beach, California. The lease expires on June 30, 2008, with an option to extend
      at the end of the commencement year. The current monthly lease amount for this
      facility is $7,909.





We
      lease
      on a month-to-month basis, 580 square feet of office space at 720 N. 4th Street,
      Montpelier, Idaho, for our accounting and purchasing function. The current
      monthly rent is $675.





We
      believe that our current office space and facilities are sufficient to meet
      our
      present needs and do not anticipate any difficulty securing alternative or
      additional space, as needed, on terms acceptable to us.




**ITEM
      3. LEGAL PROCEEDINGS.** ****





From
      time
      to time, we may become involved in various lawsuits and legal proceedings which
      arise in the ordinary course of business. However, litigation is subject to
      inherent uncertainties, and an adverse result in these or other matters may
      arise from time to time that may harm our business. Except as disclosed below,
      we are currently not aware of any such legal proceedings or claims that we
      believe will have, individually or in the aggregate, a material adverse affect
      on our business, financial condition or operating results.





**Index
      Number: GIC872522**  **-
      Superior Court of California, County of San Diego**





We
      were
      served with a summons as a defendant in a case filed on September 15, 2006
      in
      Superior Court of California, County of San Diego. The complaint was filed
      by
      Golden Gate Investors for Breach of Contract relating to the financing
      agreements executed between us and Golden Gate Investors in August 2004. Golden
      Gate Investors is claiming damages in excess of $722,040 in relation to the
      case. We retained counsel to defend ourselves in this matter and we have filed
      a
      response and counter claim for undisclosed damages.    On August
      4, 2007, our counsel filed and was granted an order granting attorney’s motion
      to be relieved as counsel.  The answers filed and the cross complaint were
      stricken and the trial date of October 19, 2007 cancelled for failure to procure
      counsel to represent on September 21, 2007.  There are currently no dates
      on record. The next action is for the GGI counsel to set a prove-up hearing
      date.  We have recorded payables and an accrued legal expense totaling
      $722,040.





**Index
      Number: 06CC11306 - Superior Court of California, County of
      Orange**





We
      were
      served with a summons as a defendant in a case filed on October 24, 2006 in
      Superior Court of California, County of Orange by Single Source Partners for
      failure to pay commissions and installment payments. Single Source Partners
      is
      seeking judgment in the amount of $51,206. We retained counsel to defend
      ourselves in this matter and we have filed a response and counter claim for
      undisclosed damages. On August 7, 2007, our counsel filed and was granted an
      attorney’s motion to be relieved as counsel.  On September 11, 2007 a
      motion to strike defendant’s answer to the complaint, to dismiss defendant’s
      cross-complaint and to enter default was continued to October 9, 2007. The
      action has been assigned a trial date of October 24, 2007. We have recorded
      payables and an accrued partnership fee totaling $56,605.





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





None.


15


**PART
      II**





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





**PRICE
      RANGE OF COMMON STOCK**





Our
      common stock is quoted on the OTC Bulletin Board under the symbol “QTEK”.





For
      the
      periods indicated, the following table sets forth the high and low bid prices
      per share of common stock. These prices represent inter-dealer quotations
      without retail markup, markdown, or commission and may not necessarily represent
      actual transactions.





**Fiscal
                Year 2006****High**
            
            **Low**First
                Quarter
            
            $
            0.12
            
            $
            0.07Second
                Quarter
            
            $
            0.08
            
            $
            0.05Third
                Quarter
            
            $
            0.09
            
            $
            0.06Fourth
                Quarter
            
            $
            0.07
            
            $
            0.04





**Fiscal
                Year 2007****High**
            
            **Low**First
                Quarter
            
            $
            0.05
            
            $
            0.03Second
                Quarter
            
            $
            0.04
            
            $
            0.03Third
                Quarter
            
            $
            0.07
            
            $
            0.02Fourth
                Quarter
            
            $
            0.03
            
            $
            0.01





**Fiscal
                Year 2008****High**
            
            **Low**First
                Quarter
            
            $
            0.02
            
            $
            0.0036Second
                Quarter (1)
            
            $
            0.0045
            
            $
            0.0021Third
                Quarter
            
            
            xxx
            
            
            xxxFourth
                Quarter
            
            
            xxx
            
            
            xxx





(1)
            As
                of October 12, 2007.





**Holders**





As
      of
      October 12, 2007, we had approximately 503 holders of our common stock. The
      number of record holders was determined from the records of our transfer agent
      and does not include beneficial owners of common stock whose shares are held
      in
      the names of various security brokers, dealers, and registered clearing
      agencies. The transfer agent of our common stock is Interwest Transfer Co.,
      Inc., 1981 E. Murray Holladay Road, Suite 100, Salt Lake City Utah
      84117.





**Dividends**





We
      have
      never declared or paid any cash dividends on our common stock. We do not
      anticipate paying any cash dividends to stockholders in the foreseeable future.
      In addition, any future determination to pay cash dividends will be at the
      discretion of the Board of Directors and will be dependent upon our financial
      condition, results of operations, capital requirements, and such other factors
      as the Board of Directors deem relevant.





16





**Recent
      Sale of Unregistered Securities**





On
      February 14, 2007, April 2, 2007, April 17, 2007, April 23, 2007, May 9, 2007
      and June 19, 2007, we issued 11,590,365 shares of common stock to YA Global
      Investments (formerly, Cornell Capital Partners) upon conversion of outstanding
      debentures in the amount of $200,000.





Unless
      otherwise noted, the sales set forth above involved no underwriter's discounts
      or commissions and are claimed to be exempt from registration with the
      Securities and Exchange Commission pursuant to Section 4 (2) of the Securities
      Act of 1933, as amended, as transactions by an issuer not involving a public
      offering, the issuance and sale by us of shares of our common stock to
      financially sophisticated individuals who are fully aware of our activities,
      as
      well as our business and financial condition, and who acquired said securities
      for investment purposes and understood the ramifications of same.





17


**Item
      6**  **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations**





*This
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations includes a number of forward-looking statements that reflect
      Management's current views with respect to future events and financial
      performance. You can identify these statements by forward-looking words such
      as
“may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or
      similar words. Those statements include statements regarding the intent, belief
      or current expectations of us and members of its management team as well as
      the
      assumptions on which such statements are based. Prospective investors are
      cautioned that any such forward-looking statements are not guarantees of future
      performance and involve risk and uncertainties, and that actual results may
      differ materially from those contemplated by such forward-looking
      statements.*





*Readers
      are urged to carefully review and consider the various disclosures made by
      us in
      this report and in our other reports filed with the Securities and Exchange
      Commission. Important factors currently known to Management could cause actual
      results to differ materially from those in forward-looking statements. We
      undertake no obligation to update or revise forward-looking statements to
      reflect changed assumptions, the occurrence of unanticipated events or changes
      in the future operating results over time. We believe that our assumptions
      are
      based upon reasonable data derived from and known about our business and
      operations. No assurances are made that actual results of operations or the
      results of our future activities will not differ materially from its
      assumptions. Factors that could cause differences include, but are not limited
      to, expected market demand for our services, fluctuations in pricing for
      materials, and competition.*





**Results
      of Operations for the Fiscal Year ended June 30, 2007 Compared to Fiscal Year
      Ended June 30, 2006**





Our
      revenues totaled $2,121,609 and $2,307,402 for the years ended June 30, 2007
      and
      2006, respectively, a decrease of $185,793 (8%) in 2007 due to the loss of
      a
      material mortgage processing services customer with revenue receipts totaling
      $851,760 for the prior year ending 2006.





For
      the
      years ended June 30, 2007 and 2006, cost of revenue was $1,585,613 and
      $1,522,814, respectively, an increase of $62,799 (4%). Cost of revenue for
      both
      periods consisted mostly of labor and production costs. Cost of revenue
      increased in 2007 primarily due to increased temporary labor costs.





Total
      operating expenses were $3,226,485 for the year ended June 30, 2007 as compared
      to $5,344,899 for the same period in 2006. The decrease in operating expenses
      of
      $2,118,414 (39%) in 2007 as compared to 2006 was primarily due to fewer
      issuances of stock for consulting fees and lower financing expenses. Selling,
      general and administrative expenses in 2007 were $2,490,530 compared to
      $3,832,925, a decrease of $1,342,395 primarily due to decreased funding costs,
      legal fees, penalties and salary expenses.





Total
      non-operating income for the year ended June 30, 2007 was $232,655 compared
      to
      total non-operating income of $120,488 for the same period in 2006. During
      2007,
      we realized a loss on sale of investment of $120,040 and recorded a change
      in
      fair value of warrants of $945,491. We recorded a finance expense of $336,790
      and interest expense of $256,693. During 2006, we recorded a gain of $113,700
      on
      the sale of investment, finance expense of $110,924 and interest expense of
      $571,674. As a result, we incurred a reduction in net loss of $2,458,633 for
      the
      period ending June 30, 2007 compared to a net loss of $4,440,623 for the same
      period in 2006. This reduction in net loss is attributed to the decrease in
      interest expense and the non-operating income recorded pursuant to the change
      in
      the fair value of warrants.





18




At
      June
      30, 2007, our total assets were $811,944 compared to $1,195,643 as of June
      30,
      2006. The assets decreased by $383,699 (32%) primarily due to a reduction in
      cash and cash equivalents and the depreciation of property and equipment. Total
      current liabilities at June 30, 2007 were $3,860,271 compared to $4,164,052
      as
      of June 30, 2006. The current liabilities decreased by 303,781 (7%) primarily
      due to decrease in the warrant liability, payroll taxes payable and loans
      payable. The long term debt increased to $1,174,316 as of June 30, 2007 compared
      to $28,741 at June 30, 2006 due primarily to the expense incurred in regard
      to
      additional financing.





We
      are
      currently in default on two outstanding convertible bonds totaling $62,495.
      Interest continues to accrue against the principal. The notes are unsecured.
      The
      holders of the bonds that are in default have indicated that they do not want
      to
      convert their debt to stock and wish to be repaid in cash. At present, we do
      not
      have the funds to repay the indebtedness. It is not known whether we will be
      able to repay or renegotiate this debt. Additionally, our current liabilities
      exceeded our current assets by $3,449,358 at June 30, 2007. If we are unable
      to
      cure the default or renegotiate our debt, we may not be able to continue as
      a
      going concern.





We
      owe
      $66,529 in payroll withholding taxes that were assumed in a merger and are
      past
      due.





**Liquidity
      and Capital Resources**





Our
      principal capital requirements during the fiscal year 2008 are to fund the
      internal operations and acquisitions of profitable and growth-oriented
      businesses. We plan to raise necessary funds by selling our own common shares
      to
      selected investors and bringing in business partners whose contributions include
      the necessary cash. In view of low borrowing interest rates, we are actively
      pursuing additional credit facilities with financial institutions as a means
      to
      obtain new funding. We have historically financed operations from the sale
      of
      our common stock and the conversion of common stock warrants. At June 30, 2007,
      we had cash on hand of $92,062 as compared cash on hand of $410,007 at June
      30,
      2006.





Net
      cash
      used in operating activities for the year ended June 30, 2007 was $ 1,216,492 ,
      primarily attributable to the increase in accounts payable and accrued expenses
      of $848,748, an increase in accounts receivable of $119,279, and a decrease
      in
      deferred revenue of $3,381.





Net
      cash
      used in investing activities for the year ended June 30, 2007 was $16,477,
      due
      to the acquisition of equipment for $27,298 offset by the proceeds from the
      sale
      of marketable securities.





Net
      cash
      provided by financing activities for the year ended June 30, 2007 was $915,025.
      The increase was primarily attributable to net proceeds from issuance of
      debentures of $1,250,000, proceeds from a factor of $92,672, proceeds from
      issuance of common stock upon exercise of options of $2,504. We made lease
      payments of $139,962, payments on notes payable of $62,590, and payments on
      factoring payables of $97,549.





As
      a
      result of the above activities, we experienced a net decrease in cash and cash
      equivalents of $317, 945 as of June 30, 2007 as compared to a $397,338 net
      increase in cash as of June 30, 2006. Our ability to continue as a going concern
      is still dependent on our success in obtaining additional financing from
      institutional investors or by selling our common shares and fulfilling our
      business plan. Other than as described below, we do not have any commitments
      for
      capital and we cannot give any assurances that capital will be available on
      terms we deem favorable or at all.




19




**Subsequent
      Events**





On
        July
        23, August 6, August 21, September 13, October 3 and October 8, 2007,
        we issued 39,541,546 common shares pursuant to a debenture conversion valued
        at
        $234,000.


**Off-Balance
      Sheet Arrangements**





We
      have
      no off-balance sheet arrangements.





**Critical
      Accounting Policies**





*Revenue
      Recognition*





Revenue
      is recognized when earned. We recognize our revenue in accordance with the
      SEC
      Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements”
and The American Institute of Certified Public Accountants Statement of Position
      97-2, “Software Revenue Recognition,” as amended as amended by SOP 98-4 and SOP
      98-9.





*Stock-based
      Compensation*





We
      follow
      the prescribed accounting and reporting standards for all stock-based
      compensation plans, including employee stock options, restricted stock, employee
      stock purchase plans and stock appreciation rights in accordance with SFAS
      No.
      148 “Accounting for Stock-Based Compensation”. SFAS No. 148 provides alternative
      methods of transition for a voluntary change to the fair value based method
      of
      accounting for stock-based employee compensation. In addition, this Statement
      requires prominent disclosures in both annual and interim financial statements
      about the method of accounting for stock-based employee compensation and the
      effect of the method used, on reported results.





*Issuance
      of Shares for Services*





We
      account for the issuance of equity instruments to acquire goods and services
      based on the fair value of the goods and services or the fair value of the
      equity instrument at the time of issuance, whichever is more reliably
      measurable.





*Derivative
      Instruments*





In
      June
      1998, the Financial Accounting Standards Board issued SFAS No. 133, “Accounting
      for Derivative Instruments and Hedging Activities.” SFAS No. 133, as amended by
      SFAS No. 137, is effective for fiscal years beginning after June 15, 2000.
      SFAS
      No. 133 requires us to recognize all derivatives as either assets or liabilities
      and measure those instruments at fair value. It further provides criteria for
      derivative instruments to be designated as fair value, cash flow and foreign
      currency hedges and establishes respective accounting standards for reporting
      changes in the fair value of the derivative instruments. After adoption, we
      are
      required to adjust hedging instruments to fair value in the balance sheet and
      recognize the offsetting gains or losses as adjustments to be reported in net
      income or other comprehensive income, as appropriate.





**Recent
      Accounting Pronouncements**





In
      February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments”. SFAS No. 155 amends SFAS No 133, “Accounting for
      Derivative Instruments and Hedging Activities”, and SFAF No. 140, “Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities”. SFAS No. 155, permits fair value remeasurement for any hybrid
      financial instrument that contains an embedded derivative that otherwise would
      require bifurcation, clarifies which interest-only strips and principal-only
      strips are not subject to the requirements of SFAS No. 133, establishes a
      requirement to evaluate interest in securitized financial assets to identify
      interests that are freestanding derivatives or that are hybrid financial
      instruments that contain an embedded derivative requiring bifurcation, clarifies
      that concentrations of credit risk in the form of subordination are not embedded
      derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
      qualifying special-purpose entity from holding a derivative financial instrument
      that pertains to a beneficial interest other than another derivative financial
      instrument. This statement is effective for all financial instruments acquired
      or issued after the beginning of the Company’s first fiscal year that begins
      after September 15, 2006. The Company has not evaluated the impact of this
      pronouncement its financial statements.




20




In
      March
      2006 FASB issued SFAS 156 ‘Accounting for Servicing of Financial Assets’ this
      Statement 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. This Statement:




1.
            Requires
                an entity to recognize a servicing asset or servicing liability each
                time
                it undertakes an obligation to service a financial asset by entering
                into
                a servicing contract.




2.
            Requires
                all separately recognized servicing assets and servicing liabilities
                to be
                initially measured at fair value, if practicable.




3.
            Permits
                an entity to choose ‘Amortization method’ or  Fair value measurement
                method’ for each class of separately recognized servicing assets and
                servicing liabilities:




4.
            At
                its initial adoption, permits a one-time reclassification of
                available-for-sale securities to trading securities by entities with
                recognized servicing rights, without calling into question the treatment
                of other available-for-sale securities under Statement 115, provided
                that
                the available-for-sale securities are identified in some manner as
                offsetting the entity’s exposure to changes in fair value of servicing
                assets or servicing liabilities that a servicer elects to subsequently
                measure at fair value.




5.
            Requires
                separate presentation of servicing assets and servicing liabilities
                subsequently measured at fair value in the statement of financial
                position
                and additional disclosures for all separately recognized servicing
                assets
                and servicing liabilities.




This
      Statement is effective as of the beginning of the Company’s first fiscal year
      that begins after September 15, 2006. Management believes that this statement
      will not have a significant impact on the financial statements





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value
      Measurements.” This statement clarifies the definition of fair value,
      establishes a framework for measuring fair value and expands the disclosures
      on
      fair value measurements. SFAS No. 157 is effective for fiscal years
      beginning after November 15, 2007. Management has not determined the
      effect, if any; the adoption of this statement will have on the financial
      statements.





In
      September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit
      Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
      88, 106, and 132(R)’ This Statement improves financial reporting by requiring an
      employer to recognize the over-funded or under-funded 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. 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. An employer without publicly traded equity securities is
      required to 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 June 15, 2007. However, an employer without publicly traded equity
      securities is required to disclose the following information in the notes to
      financial statements for a fiscal year ending after December 15, 2006, but
      before June 16, 2007, unless it has applied the recognition provisions of this
      Statement in preparing those financial statements:





1.
            A
                brief description of the provisions of this Statement






21




2.
            The
                date that adoption is required


3.
            The
                date the employer plans to adopt the recognition provisions of this
                Statement, if earlier.





The
      requirement to measure plan assets and benefit obligations as of the date of
      the
      employer’s fiscal year-end statement of financial position is effective for
      fiscal years ending after December 15, 2008.





In
      February of 2007 the FASB issued SFAS 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities—Including an amendment of FASB Statement No.
      115.” The statement permits entities to choose to measure many financial
      instruments and certain other items at fair value. The objective is to improve
      financial reporting by providing entities with the opportunity to mitigate
      volatility in reported earnings caused by measuring related assets and
      liabilities differently without having to apply complex hedge accounting
      provisions. The statement is effective as of the beginning of an entity’s first
      fiscal year that begins after November 15, 2007.





22


**ITEM
      7. FINANCIAL STATEMENTS.**







QUINTEK
      TECHNOLOGIES, INC.





INDEX
      TO
      FINANCIAL STATEMENTS





PageReports
                of Independent Registered Public Accounting Firm
            
            
            F-2Consolidated
                Balance Sheet as of June 30, 2007
            
            
            F-3Consolidated
                Statements of Operations for the years endedJune
                30, 2007 and 2006
            
            
            F-4Consolidated
                Statement of Stockholders' Deficit for the years ended June 30, 2007
                and
                2006
            
            
            F-5Consolidated
                Statements of Cash Flows for the years endedJune
                30, 2007 and 2006
            
            
            F-6Notes
                to Consolidated Financial Statements
            
            
            F-7







F-1




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**







To
      the
      Stockholders and Board of Directors


Quintek
      Technologies, Inc.





We
      have
      audited the accompanying consolidated balance sheet of Quintek Technologies,
      Inc. and subsidiary as of June 30, 2007, and the related consolidated statements
      of operations, stockholders’ deficit and cash flows for each of the two years
      ended June 30, 2007 and 2006. These financial statements are the responsibility
      of the Company’s management. Our responsibility is to express an opinion on
      these consolidated financial statements based on our audits.





We
      conducted our audits of these statements 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 that
      our
      audits provide a reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Quintek Technologies, Inc.
      and subsidiary as of June 30, 2007 and the results of its operations and its
      cash flows for the years ended June 30, 2007 and 2006 in conformity with
      accounting principles generally accepted in the United States of
      America.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 19 to the
      consolidated financial statements, the Company's significant operating losses
      and insufficient capital raise substantial doubt about its ability to continue
      as a going concern. Management's plans regarding those matters also are
      described in Note 19. The consolidated financial statements do not include
      any
      adjustments that might result from the outcome of this uncertainty.








/s/
      Kabani & Company, Inc.


CERTIFIED
      PUBLIC ACCOUNTANTS





Los
      Angeles, California


October
      10, 2007





F-2




**QUINTEK
                TECHNOLOGIES, INC. AND SUBSIDIARY****CONSOLIDATED
                BALANCE SHEET****AS
                OF JUNE 30, 2007**




**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            92,062Accounts
                receivable, net of allowance for doubtful accounts of
                $11,719
            
            
            318,750Other
                current assets
            
            
            100Total
                current assets
            
            
            410,912Property
                and equipment, net
            
            
            297,235Other
                assets:Deposits
            
            
            102,914Other
                assets
            
            
            883Total
                other assets
            
            
            103,797$
            811,944**LIABILITIES
                AND STOCKHOLDERS' DEFICIT**Current
                liabilities:Accounts
                payable and accrued expenses
            
            $
            1,839,488Factoring
                payable
            
            
            136,722Payroll
                and payroll taxes payable
            
            
            83,306Payroll
                taxes assumed in merger
            
            
            66,529Advances
                from lenders
            
            
            36,736Loans
                payable
            
            
            186,719Convertible
                bonds
            
            
            62,495Convertible
                debentures
            
            
            210,674Convertible
                notes
            
            
            45,450Beneficial
                Conversion liability
            
            
            491,687Warrant
                Liability
            
            
            647,369Deferred
                revenue
            
            
            5,040Dividend
                payable
            
            
            48,057Total
                current liabilities
            
            
            3,860,271Long-term
                debt
            
            
            1,174,316Stockholders'
                deficit:Preferred
                stock, convertible, no par value, 50,000,000 shares
                authorized,4,154,750
                shares issued and outstanding
            
            
            1,281,605Common
                stock, $0.001 par value, 500,000,000 shares authorized,166,543,841
                shares issued and outstanding
            
            
            166,543Additional
                paid-in capital
            
            
            32,501,523Shares
                to be issued
            
            
            30,000Stock
                subscription receivable
            
            
            (776,250
            )Accumulated
                deficit
            
            
            (37,426,065
            )Total
                stockholders' deficit
            
            
            (4,222,644
            )Total
                liabilities and stockholders' deficit
            
            $
            811,944




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





F-3


**QUINTEK
                  TECHNOLOGIES, INC. AND SUBSIDIARY****CONSOLIDATED
                  STATEMENTS OF OPERATIONS**
  **For
                  the years ended June 30,****2007**
              
              **2006****Restated**Net
                  revenue
              
              $
              2,121,609
              
              $
              2,307,402Cost
                  of revenue
              
              
              1,585,613
              
              
              1,522,814Gross
                  margin
              
              
              535,996
              
              
              784,588Operating
                  expenses:Selling,
                  general and administrative
              
              
              2,490,530
              
              
              3,832,925Stock-based
                  compensation
              
              
              600,000
              
              
              485,456Stock-based
                  consulting fees
              
              
              135,955
              
              
              1,026,518Total
                  operating expenses
              
              
              3,226,485
              
              
              5,344,899Loss
                  from operations
              
              
              (2,690,488
              )
              
              (4,560,311
              )Non-operating
                  income (expense):Realized
                  gain (loss) on investment
              
              
              (120,040
              )
              
              113,700Other
                  income
              
              
              12,238
              
              
              15,810Uncollectible
                  from former officers
              
              
              (14,382
              )
              
              (10,989
              )Finance
                  expense
              
              
              (336,790
              )
              
              (110,924
              )Change
                  in Fair Value of Warrants
              
              
              945,491
              
              
              677,008Interest
                  Income
              
              
              2,831
              
              
              7,557Interest
                  expense
              
              
              (256,693
              )
              
              (571,674
              )Total
                  non-operating income
              
              
              232,655
              
              
              120,488Loss
                  before provision for income taxes
              
              
              (2,457,833
              )
              
              (4,439,823
              )Provision
                  for income taxes
              
              
              800
              
              
              800Net
                  loss
              
              
              (2,458,633
              )
              
              (4,440,623
              )Dividend
                  requirement for preferred stock
              
              
              15,424
              
              
              16,057Net
                  loss applicable to common shareholders
              
              
              (2,474,057
              )
              
              (4,456,680
              )Other
                  comprehensive (loss)/gain:Reclassification
                  adjustment
              
              
              120,151
              
              
              (4,080
              )Unrealized
                  gain for the period
              
              
              -
              
              
              9,317Comprehensive
                  loss
              
              $
              (2,353,906
              )
              $
              (4,451,443
              )Basic
                  and diluted net loss per share
              
              $
              (0.016
              )
              $
              (0.040
              )Basic
                  and diluted weighted averageshares
                  outstanding
              
              
              155,105,096
              
              
              125,051,937
  **The
                  accompanying notes are an integral part of these consolidated financial
                  statements**




F-4





**QUINTEK
                  TECHNOLOGIES, INC. AND SUBSIDIARY****STATEMENTS
                  OF STOCKHOLDERS' DEFICIT****FOR
                  THE YEARS ENDED JUNE 30, 2007 AND
                  2006**
  **Preferred
                    Stock**
                
                **Common
                    Stock**
                
                **Additional**
                
                **Shares**
                
                **Prepaid**
                
                
                
                
                
                
                
                **Other**
                
                **Total****Number**
                
                
                
                **Number**
                
                
                
                **Paid
                    in**
                
                **to
                    be**
                
                **Consulting**
                
                **Investment**
                
                **Stock**
                
                **Accumulated**
                
                **Comprehensive**
                
                **Stockholders'****of
                    Shares**
                
                **Amount**
                
                **of
                    Shares**
                
                **Amount**
                
                **Capital**
                
                **Issued**
                
                **Fees**
                
                **in
                    Escrow**
                
                **Subscription**
                
                **Deficit**
                
                **Loss**
                
                **Deficit****Balance
                    at June 30, 2005**
                
                
                3,436,750
                
                $
                752,005
                
                
                98,480,532
                
                $
                984,806
                
                $
                27,994,613
                
                $
                8,000
                
                $
                (3,120
                )
                $
                (126,567
                )
                $
                -
                
                $
                (30,495,328
                )
                $
                (8,374
                )
                $
                (893,965
                )Issuance
                    of shares for cash
                
                
                -
                
                
                -
                
                
                8,666,666
                
                
                86,667
                
                
                178,333
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                265,000Issuance
                    of shares for debt settlement
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Conversion
                    of preferred stocks
                
                
                (282,000
                )
                
                (70,400
                )
                
                410,000
                
                
                4,100
                
                
                66,300
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Issuance
                    of shares for services
                
                
                -
                
                
                -
                
                
                13,647,498
                
                
                136,475
                
                
                957,377
                
                
                -
                
                
                (110,335
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                983,517Issuance
                    of shares for conversion of debenture
                
                
                -
                
                
                -
                
                
                9,529,866
                
                
                95,299
                
                
                (49,408
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                45,891Issuance
                    of shares for purchase of investment
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Issuance
                    of shares before cash receipt
                
                
                -
                
                
                -
                
                
                16,500,000
                
                
                165,000
                
                
                611,250
                
                
                -
                
                
                -
                
                
                -
                
                
                (776,250
                )
                
                -
                
                
                -
                
                
                -Shares
                    to be issued for services
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (8,000
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (8,000
                )Shares
                    to be issued for conversion and sales
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                156,750
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                156,750Common
                    stock options granted to employees
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                485,456
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                485,456Warrants
                    granted for services
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                619,547
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                619,547Issuance
                    of shares upon exercise of warrants
                
                
                -
                
                
                -
                
                
                936,042
                
                
                9,360
                
                
                483,304
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                492,664Amortization
                    of warrants expense
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                3,045
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                3,045Investment
                    held in escrow
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                86,565
                
                
                -
                
                
                -
                
                
                -
                
                
                86,565Unrealized
                    loss on investment
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (82,485
                )
                
                (82,485
                )Beneficial
                    conversion feature
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Preferred
                    dividends
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (16,057
                )
                
                -
                
                
                (16,057
                )Value
                    of warrants transferred to liability (restated)
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (694,456
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (694,456
                )Net
                    loss for the year ended June 30, 2006 (restated)
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (4,440,623
                )
                
                -
                
                
                (4,440,623
                )**Balance
                    at June 30, 2006**
                
                
                3,154,750
                
                $
                681,605
                
                
                148,170,604
                
                $
                1,481,706
                
                $
                30,655,361
                
                $
                156,750
                
                $
                (113,455
                )
                $
                (40,002
                )
                $
                (776,250
                )
                
                (34,952,008
                )
                $
                (90,859
                )
                $
                (2,997,151
                )Issuance
                    of shares for debt settlement
                
                
                -
                
                
                -
                
                
                1,529,169
                
                
                15,292
                
                
                76,458
                
                
                (91,750
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Issuance
                    of preferred stock
                
                
                1,000,000
                
                
                600,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                600,000Issuance
                    of shares for services
                
                
                -
                
                
                -
                
                
                750,000
                
                
                7,500
                
                
                15,000
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                22,500Issuance
                    of shares for conversion of debenture
                
                
                -
                
                
                -
                
                
                11,590,365
                
                
                11,590
                
                
                188,410
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                200,000Shares
                    to be issued for conversion of debentures
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                25,000
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                25,000Common
                    stock options granted to employees
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                154,246
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                154,246Issuance
                    of shares upon exercise of warrants
                
                
                -
                
                
                -
                
                
                4,503,703
                
                
                22,504
                
                
                40,000
                
                
                (60,000
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                2,504Amortization
                    of consulting shares
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                113,455
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                113,455Sale
                    of Investment held in escrow
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                40,002
                
                
                -
                
                
                -
                
                
                -
                
                
                40,002Reclass
                    Unrealized loss on investment to Realized
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                90,859
                
                
                90,859Preferred
                    dividends
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (15,424
                )
                
                -
                
                
                (15,424
                )Reduction
                    in par value of common stock
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,372,048
                )
                
                1,372,048
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Net
                    loss for the year ended June 30, 2007
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,458,633
                )
                
                -
                
                
                (2,458,633
                )**Balance
                    at June 30, 2007**
                
                
                4,154,750
                
                $
                1,281,605
                
                
                166,543,841
                
                $
                166,543
                
                $
                32,501,523
                
                $
                30,000
                
                $
                -
                
                $
                -
                
                $
                (776,250
                )
                
                (37,426,065
                )
                $
                -
                
                $
                (4,222,644
                )
 **The
                  accompanying notes are an integral part of these consolidated financial
                  statements**






F-5




**QUINTEK
                  TECHNOLOGIES, INC. AND SUBSIDIARY****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS**
  **For
                      the years ended****June
                      30,****2007**
                  
                  **2006****Restated****OPERATING
                      ACTIVITIES**Net
                      loss
                  
                  $
                  (2,458,633
                  )
                  $
                  (4,440,623
                  )Adjustments
                      to reconcile net loss to net cash used in operations:Depreciation
                      and amortization
                  
                  
                  178,261
                  
                  
                  173,379Discount
                      on factor
                  
                  
                  4,877
                  
                  
                  12,091Expenses
                      paid by a note payable
                  
                  
                  -
                  
                  
                  13,564Issuance
                      of shares for consulting services
                  
                  
                  135,955
                  
                  
                  983,517Stock
                      based compensation
                  
                  
                  600,000
                  
                  
                  -Bad
                      Debts
                  
                  
                  28,150
                  
                  
                  370Uncollectible
                      from former officers
                  
                  
                  14,382
                  
                  
                  10,989Loss
                      (Gain) on the sale of the investment
                  
                  
                  120,040
                  
                  
                  (113,700
                  )Change
                      in Fair value of derivative
                  
                  
                  (945,491
                  )
                  
                  (677,008
                  )Beneficial
                      conversion feature expense
                  
                  
                  -
                  
                  
                  110,924Amortization
                      of the Unamortized discount
                  
                  
                  362,485
                  
                  
                  109,214Finance
                      Expense
                  
                  
                  -
                  
                  
                  1,185,904Stock
                      options granted
                  
                  
                  154,246
                  
                  
                  485,456Warrants
                      granted to consultant
                  
                  
                  -
                  
                  
                  619,547Note
                      Conversion Expense
                  
                  
                  -
                  
                  
                  104,674Gain
                      (loss) on legal settlement
                  
                  
                  -
                  
                  
                  (7,827
                  )Changes
                      in current assets and liabilities:(Increase)
                      decrease in accounts receivable
                  
                  
                  (119,279
                  )
                  
                  87,657(Increase)
                      decrease in other current assets
                  
                  
                  (14,482
                  )
                  
                  -(Increase)
                      decrease in prepaid expenses
                  
                  
                  -
                  
                  
                  5,562(Increase)
                      decrease in deposits
                  
                  
                  6,021
                  
                  
                  643Increase
                      in accounts payable
                  
                  
                  848,748
                  
                  
                  163,508Decrease
                      in payroll taxes payable
                  
                  
                  (128,391
                  )
                  
                  (20,090
                  )Decrease
                      in deferred revenue
                  
                  
                  (3,381
                  )
                  
                  (16,656
                  )Net
                      cash used in operating activities
                  
                  
                  (1,216,492
                  )
                  
                  (1,208,903
                  )**INVESTING
                      ACTIVITIES**Acquisition
                      of fixes assets
                  
                  
                  (27,298
                  )
                  
                  (36,146
                  )Increase
                      in restricted cash
                  
                  
                  -
                  
                  
                  260,087Proceeds
                      from sale of marketable securities
                  
                  
                  10,821
                  
                  
                  233,938Net
                      cash provided by (used in) investing activities
                  
                  
                  (16,477
                  )
                  
                  457,879**FINANCING
                      ACTIVITIES**Payments
                      on factoring payable
                  
                  
                  (97,549
                  )
                  
                  (466,160
                  )Proceeds
                      from factor
                  
                  
                  92,672
                  
                  
                  364,326Payments
                      on leases
                  
                  
                  (139,962
                  )
                  
                  (128,540
                  )Proceeds
                      from issuance of debentures
                  
                  
                  1,250,000
                  
                  
                  750,000Expenses
                      related to Issuance of Debenture
                  
                  
                  (125,000
                  )
                  
                  -Proceeds
                      from convertible notes
                  
                  
                  -
                  
                  
                  50,500Payments
                      on convertible notes payable
                  
                  
                  (5,050
                  )
                  
                  -Cash
                      received for shares to be issued
                  
                  
                  -
                  
                  
                  151,750Proceeds
                      from sale of stocks
                  
                  
                  -
                  
                  
                  265,000Proceeds
                      from exercise of options
                  
                  
                  2,504
                  
                  
                  125,000Proceeds
                      from issuance of common stock upon exercise of warrants
                  
                  
                  -
                  
                  
                  59,400Payments
                      of notes payable
                  
                  
                  (62,590
                  )
                  
                  (22,914
                  )Net
                      cash provided by financing activities
                  
                  
                  915,025
                  
                  
                  1,148,361**Net
                      increase (decrease) in cash and cash equivalents**
                  
                  
                  (317,945
                  )
                  
                  397,338**Cash
                      and cash equivalents, beginning balance**
                  
                  
                  410,007
                  
                  
                  12,669**Cash
                      and cash equivalents, ending balance**
                  
                  $
                  92,062
                  
                  $
                  410,007
  **The
                  accompanying notes are an integral part of these consolidated financial
                  statements**




F-6




****Quintek
      Technologies, Inc. and Subsidiary****


**Notes
        to Consolidated Financial Statements**


**1.
      DESCRIPTION OF BUSINESS**





The
      Company was originally incorporated under the laws of the State of California
      on
      April 16, 1993, as Quintek Electronics, Inc. On January 14, 1999, the Company
      merged with Pacific Diagnostic Technologies, Inc. in a business combination
      accounted for as a purchase. The acquisition took place under a plan of
      reorganization. Quintek Electronics, Inc. ("QEI") became public when it was
      acquired by Pacific Diagnostic Technologies, Inc. ("PDX") through a reverse
      merger and Chapter 11 Plan of Reorganization. Under the plan, all assets of
      QEI
      were sold to PDX, all PDX management resigned once the Plan was confirmed,
      and
      QEI's management and operating plan were adopted by the new operating entity.
      Shortly after the confirmation of the plan, the name of the reorganized debtor
      was changed to Quintek Technologies, Inc. ("QTI"). QTI assumed the assets,
      liabilities, technology and public position of both QEI and PDX.





On
      February 24, 2000, the Company acquired all of the outstanding common stock
      of
      Juniper Acquisition Corporation ("Juniper"). For accounting purposes, the
      acquisition was treated as a capitalization of the Company with the Company
      as
      the acquirer (reverse acquisition).





On
      May 5,
      2005, the Company formed Sapphire Consulting Services to focus its efforts
      on
      the Supply Chain Services market. Sapphire provides back office services and
      solutions to improve efficiencies within organizations. The Company accomplishes
      this through out-sourcing/in-sourcing services, consulting services and solution
      sales.





Quintek
      provides business process outsourcing services to Fortune 500, Russell 2000
      companies and public sector organizations. The Company’s business process
      includes outsourcing services range from consulting, digitizing, indexing,
      and
      uploading of source documents through simple customer-specific, rules-based
      decision making. .





Since
      1991, the Company’s primary business focus and source of revenue was sales of
      hardware, software and service related to a patented, chemical-free desktop
      microfilm printer used for printing aperture cards directly from electronic
      files used for document management and archival storage. The patents on this
      technology were set to begin expiring in 2007. In November of 2005, the Company
      entered into a purchase agreement wherein all rights, title, and interest in
      assets, equipment, and inventory relating to the chemical-free desktop microfilm
      printer for aperture cards were sold to an interested party. The Company’s
      continuing focus is on BPO document management services.





**2.** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF
      ASSETS**





**Use
      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.





**Cash
      and Cash Equivalents**




The
      Company considers all liquid investments with a maturity of three months or
      less
      from the date of purchase that are readily convertible into cash to be cash
      equivalents.





**Accounts
      Receivable**





The
      Company maintains reserves for potential credit losses on accounts receivable.
      Management reviews the composition of accounts receivable and analyzes
      historical bad debts, customer concentrations, customer credit worthiness,
      current economic trends and changes in customer payment patterns to evaluate
      the
      adequacy of these reserves. Reserves are recorded primarily on a specific
      identification basis. Allowance for doubtful debts amounted to $11,719 as at
      June 30, 2007.




F-7


****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


**Property
      & Equipment**





Property
      and equipment are stated at cost. Expenditures for maintenance and repairs
      are
      charged to earnings as incurred; additions, renewals and betterments are
      capitalized. When property and equipment are retired or otherwise disposed
      of,
      the related cost and accumulated depreciation are removed from the respective
      accounts, and any gain or loss is included in operations. Depreciation of
      property and equipment is provided using the straight-line over the estimated
      useful lives (3-7 years) of the assets.





**Intangible
      Assets**





Intangible
      assets consist of patents and purchased proprietary processes and are being
      amortized using straight-line method over their remaining useful lives of four
      years. The Company evaluates intangible assets for impairment, at least on
      an
      annual basis and whenever events or changes in circumstances indicate that
      the
      carrying value may not be recoverable from its estimated future cash flows.
      Recoverability of intangible assets, other long-lived assets and, goodwill
      is
      measured by comparing their net book value to the related projected undiscounted
      cash flows from these assets, considering a number of factors including past
      operating results, budgets, economic projections, market trends and product
      development cycles. If the net book value of the asset exceeds the related
      undiscounted cash flows, the asset is considered impaired, and a second test
      is
      performed to measure the amount of impairment loss. Potential impairment of
      goodwill after July 1, 2002 is being evaluated in accordance with SFAS No.
      142.
      The SFAS No. 142 is applicable to the financial statements of the Company
      beginning July 1, 2002.





**Long-lived
      Assets**





Effective
      January 1, 2002, the Company adopted Statement of Financial Accounting Standards
      No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
      144"), which addresses financial accounting and reporting for the impairment
      or
      disposal of long-lived assets and supersedes SFAS No. 121, "Accounting for
      the
      Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
      and the accounting and reporting provisions of APB Opinion No. 30, "Reporting
      the Results of Operations for a Disposal of a Segment of a Business." The
      Company periodically evaluates the carrying value of long-lived assets to be
      held and used in accordance with SFAS 144. SFAS 144 requires impairment losses
      to be recorded on long-lived assets used in operations when indicators of
      impairment are present and the undiscounted cash flows estimated to be generated
      by those assets are less than the assets' carrying amounts. In that event,
      a
      loss is recognized based on the amount by which the carrying amount exceeds
      the
      fair market value of the long-lived assets. Loss on long-lived assets to be
      disposed of is determined in a similar manner, except that fair market values
      are reduced for the cost of disposal.




F-8


****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


**Accounts
      Payable & Accrued Expenses**





Accounts
      payable and accrued expenses consist of the following as of June 30,
      2007:




Accounts
                  payable
              
              $
              670,712Accrued
                  interest
              
              
              537,835Accrued
                  legal fees
              
              
              50,250Accrued
                  legal settlement
              
              
              460,344Other
                  accrued expenses
              
              
              120,347$
              1,839,488




**Research
      and Development**




Expenditures
      for software development costs and research are expensed as incurred. The
      amounts charged to operations for the years ended June 30, 2007 and 2006 were
      $0
      for both years.





**Income
      Taxes**




The
      Company accounts for income taxes in accordance with SFAS No. 109, "Accounting
      for Income Taxes." Deferred taxes are provided for on a liability method for
      temporary differences between the financial reporting and tax basis of assets
      and liabilities that will result in taxable or deductible amounts in the future.
      Deferred tax assets and liabilities are adjusted for the effects of changes
      in
      tax laws and rates on the date of enactment. Deferred tax assets are reduced
      by
      a valuation allowance when, in the opinion of management, it is more likely
      than
      not that some portion or all of the deferred tax assets will be realized.
      Deferred tax assets and liabilities are adjusted for the effects of changes
      in
      tax laws and rates on the date of enactment.





**Stock
      Based Compensation**




The
      Company adopted SFAS No. 123 (Revised 2004), *Share
      Based Payment* (“SFAS
      No. 123R”), under the modified-prospective transition method on
      January 1, 2006. SFAS No. 123R requires companies to measure and
      recognize the cost of employee services received in exchange for an award of
      equity instruments based on the grant-date fair value. Share-based compensation
      recognized under the modified-prospective transition method of SFAS
      No. 123R includes share-based compensation based on the grant-date fair
      value determined in accordance with the original provisions of SFAS
      No. 123, *Accounting
      for Stock-Based Compensation,* for
      all
      share-based payments granted prior to and not yet vested as of January 1,
      2006 and share-based compensation based on the grant-date fair-value determined
      in accordance with SFAS No. 123R for all share-based payments granted after
      January 1, 2006. SFAS No. 123R eliminates the ability to account for
      the award of these instruments under the intrinsic value method prescribed
      by
      Accounting Principles Board (“APB”) Opinion No. 25, *Accounting
      for Stock Issued to Employees* ,
      and
      allowed under the original provisions of SFAS No. 123. Prior to the
      adoption of SFAS No. 123R, the Company accounted for our stock option plans
      using the intrinsic value method in accordance with the provisions of APB
      Opinion No. 25 and related interpretations.




As
      a
      result of adopting SFAS No. 123R, the Company recognized $154,246 and
      $485,456 in share-based compensation expense for the years ended June 30, 2007
      and 2006, respectively. The fair value of our stock options was estimated using
      the Black-Scholes option pricing model. The impact of this share-based
      compensation expense on the Company’s basic and diluted earnings per share was
      $0.00and $0.00 per share for the years ended June 30, 2007 and 2006,
      respectively.





**Fair
      Value of Financial Instruments**





Statement
      of financial accounting standard No. 107, Disclosures about fair value of
      financial instruments, requires that the Company disclose estimated fair values
      of financial instruments. The carrying amounts reported in the statements of
      financial position for assets and liabilities qualifying as financial
      instruments are a reasonable estimate of fair value.






F-9





****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


**Basic
      and Diluted Net Loss Per Share**





Net
      loss
      per share is calculated in accordance with the Statement of financial accounting
      standards No. 128 (SFAS No. 128), “Earnings per share. Basic net loss per share
      is based upon the weighted average number of common shares outstanding. Diluted
      net loss per share is based on the assumption that all dilutive convertible
      shares and stock options were converted or exercised. Dilution is computed
      by
      applying the treasury stock method. Under this method, options and warrants
      are
      assumed to be exercised at the beginning of the period (or at the time of
      issuance, if later), and as if funds obtained thereby were used to purchase
      common stock at the average market price during the period.




The
      weighted average number of shares used to compute basic and diluted loss per
      share is the same in these consolidated financial statements for the years
      ended
      June 30, 2007 and 2006 since the effect of dilutive securities is
      anti-dilutive.





**Revenue
      Recognition**





The
      Company recognizes its revenue in accordance with the Securities and Exchange
      Commissions (“SEC”) Staff Accounting Bulletin No. 104, “Revenue Recognition in
      Financial Statements” (“SAB 104”). Revenue from services renedered are
      recognized when a formal arrangement exists, the price is fixed or determinable,
      the services are rendered, no other significant obligations of the Company
      exist
      and collectibility is reasonably assured.





**Issuance
      of Shares for Services**




The
      Company accounts for the issuance of equity instruments to acquire goods and
      services based on the fair value of the goods and services or the fair value
      of
      the equity instrument at the time of issuance, whichever is more reliably
      measurable.





**Derivative
      Instruments**





In
      June
      1998, the Financial Accounting Standards Board issued SFAS No. 133, “Accounting
      for Derivative Instruments and Hedging Activities.” SFAS No. 133, as amended by
      SFAS No. 137, is effective for fiscal years beginning after June 15, 2000.
      SFAS
      No. 133 requires the Company to recognize all derivatives as either assets
      or
      liabilities and measure those instruments at fair value. It further provides
      criteria for derivative instruments to be designated as fair value, cash flow
      and foreign currency hedges and establishes respective accounting standards
      for
      reporting changes in the fair value of the derivative instruments. After
      adoption, the Company is required to adjust hedging instruments to fair value
      in
      the balance sheet and recognize the offsetting gains or losses as adjustments
      to
      be reported in net income or other comprehensive income, as appropriate.





**Reporting
      Segments**





Statement
      of financial accounting standards No. 131, Disclosures about segments of an
      enterprise and related information (SFAS No. 131), which superseded statement
      of
      financial accounting standards No. 14, Financial reporting for segments of
      a
      business enterprise, establishes standards for the way that public enterprises
      report information about operating segments in annual financial statements
      and
      requires reporting of selected information about operating segments in interim
      financial statements regarding products and services, geographic areas and
      major
      customers. SFAS No. 131 defines operating segments as components of an
      enterprise about which separate financial information is available that is
      evaluated regularly by the chief operating decision maker in deciding how to
      allocate resources and in assessing performances. Currently, SFAS 131 has no
      effect on the Company's consolidated financial statements as substantially
      all
      of the Company's operations are conducted in one industry segment.






F-10


****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


**Concentration
      of Credit Risk**





Financial
      instruments, which potentially subject the Company to concentrations of credit
      risk, consist of cash and cash equivalents and accounts receivables. The Company
      places its cash with high quality financial institutions and at times may exceed
      the FDIC $100,000 insurance limit. The Company monitors its exposure for credit
      losses and maintains allowances for anticipated losses, as
      required.





**Advertising
      and Marketing Costs**





The
      Company expenses the cost of advertising as incurred. Advertising costs for
      the
      years ended June 30, 2007 and 2006 were insignificant.





**Comprehensive
      Loss**





SFAS
      No.
      130, "Reporting Comprehensive Loss," establishes standards for the reporting
      and
      display of comprehensive income and its components in the financial statements.
      During the years ended June 30, 2007 and 2006, comprehensive income was $120,151
      and $5,237, respectively. Other comprehensive income, as presented on the
      accompanying consolidated balance sheet in the stockholders’ deficit amounted to
      $0 as of June 30, 2007.





**Reclassifications**





Certain
      comparative amounts have been reclassified to conform with the current year's
      presentation.





**Recent
      Pronouncements**





In
      February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments”. SFAS No. 155 amends SFAS No 133, “Accounting for
      Derivative Instruments and Hedging Activities”, and SFAF No. 140, “Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities”. SFAS No. 155, permits fair value remeasurement for any hybrid
      financial instrument that contains an embedded derivative that otherwise would
      require bifurcation, clarifies which interest-only strips and principal-only
      strips are not subject to the requirements of SFAS No. 133, establishes a
      requirement to evaluate interest in securitized financial assets to identify
      interests that are freestanding derivatives or that are hybrid financial
      instruments that contain an embedded derivative requiring bifurcation, clarifies
      that concentrations of credit risk in the form of subordination are not embedded
      derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
      qualifying special-purpose entity from holding a derivative financial instrument
      that pertains to a beneficial interest other than another derivative financial
      instrument. This statement is effective for all financial instruments acquired
      or issued after the beginning of the Company’s first fiscal year that begins
      after September 15, 2006. The Company has not evaluated the impact of this
      pronouncement its financial statements.




In
      March
      2006 FASB issued SFAS 156 ‘Accounting for Servicing of Financial Assets’ this
      Statement 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. This Statement:




1.
            Requires
                an entity to recognize a servicing asset or servicing liability each
                time
                it undertakes an obligation to service a financial asset by entering
                into
                a servicing contract.




2.
            Requires
                all separately recognized servicing assets and servicing liabilities
                to be
                initially measured at fair value, if practicable.




3.
            Permits
                an entity to choose ‘Amortization method’ or  Fair value measurement
                method’ for each class of separately recognized servicing assets and
                servicing liabilities:




4.
            At
                its initial adoption, permits a one-time reclassification of
                available-for-sale securities to trading securities by entities with
                recognized servicing rights, without calling into question the treatment
                of other available-for-sale securities under Statement 115, provided
                that
                the available-for-sale securities are identified in some manner as
                offsetting the entity’s exposure to changes in fair value of servicing
                assets or servicing liabilities that a servicer elects to subsequently
                measure at fair value.




F-11




****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**




5.
            Requires
                separate presentation of servicing assets and servicing liabilities
                subsequently measured at fair value in the statement of financial
                position
                and additional disclosures for all separately recognized servicing
                assets
                and servicing liabilities.




This
      Statement is effective as of the beginning of the Company’s first fiscal year
      that begins after September 15, 2006. Management
      believes that this statement will not have a significant impact on the financial
      statements





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value
      Measurements.” This statement clarifies the definition of fair value,
      establishes a framework for measuring fair value and expands the disclosures
      on
      fair value measurements. SFAS No. 157 is effective for fiscal years
      beginning after November 15, 2007. Management has not determined the
      effect, if any; the adoption of this statement will have on the financial
      statements.





In
      September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit
      Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
      88, 106, and 132(R)’ This Statement improves financial reporting by requiring an
      employer to recognize the over-funded or under-funded 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. 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. An employer without publicly traded equity securities is
      required to 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 June 15, 2007. However, an employer without publicly traded equity
      securities is required to disclose the following information in the notes to
      financial statements for a fiscal year ending after December 15, 2006, but
      before June 16, 2007, unless it has applied the recognition provisions of this
      Statement in preparing those financial statements:





1.
            A
                brief description of the provisions of this Statement


2.
            The
                date that adoption is required


3.
            The
                date the employer plans to adopt the recognition provisions of this
                Statement, if earlier.





The
      requirement to measure plan assets and benefit obligations as of the date of
      the
      employer’s fiscal year-end statement of financial position is effective for
      fiscal years ending after December 15, 2008.





In
      February of 2007 the FASB issued SFAS 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities—Including an amendment of FASB Statement No.
      115.” The statement permits entities to choose to measure many financial
      instruments and certain other items at fair value. The objective is to improve
      financial reporting by providing entities with the opportunity to mitigate
      volatility in reported earnings caused by measuring related assets and
      liabilities differently without having to apply complex hedge accounting
      provisions. The statement is effective as of the beginning of an entity’s first
      fiscal year that begins after November 15, 2007.





The
      management is currently evaluating the effect of this pronouncement on financial
      statements.





**3.** **PRINCIPLES
      OF CONSOLIDATION**





The
      accompanying consolidated financial statements for the year ended June 30,
      2007
      included the accounts of Quintek Technologies, Inc. and its wholly owned
      subsidiary Sapphire Consulting Services. The accompanying consolidated financial
      statements have been prepared in accordance with accounting principles generally
      accepted in the United States of America. All significant inter-company accounts
      and transactions have been eliminated in consolidation.




F-12


****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


**4.
      PROPERTY AND EQUIPMENT**





Property
      and equipment at June 30, 2007, consists of the following:


Computer
                  and office equipment
              
              $
              844,457Other
                  depreciable assets
              
              
              102,881Furniture
                  and fixture
              
              
              40,653987,991Accumulated
                  depreciation
              
              
              (690,756
              )$
              297,235




**5.
      OTHER ASSETS**





Other
      Assets comprise of the following as of June 30, 2007 :-


Subscription
                  Receivable
              
              $
              58,349Allowance
                  on Subscription Receivable
              
              
              (57,466
              )$
              883




**6.
      NOTE PAYABLE**




On
      April
      10, 2006, the Company executed a note payable to a third party for $62,590.
      The
      term of the note was for a period of six months bearing an annual interest
      at
      11.5%. The note carries a repayment provision wherein the Company will repay
      the
      third party from proceeds in the event of funding capital totaling a cumulative
      amount of one million dollars is received. The principal on the note was paid
      in
      full as of December 31, 2006. The interest accrual of $3,865 is recorded as
      an
      accrued expense in the accompanying financial statements as of June 30,
      2007.





**7.
      FACTORING PAYABLE**





A.
      The
      Company entered into an agreement with a factoring company ("the Factor") to
      factor purchase orders with recourse. The Factor funded 97% or 90% based upon
      the status of the purchase order. The Factor agreed to purchase up to $4,800,000
      of qualified purchase orders over the term of the agreement; however, the Factor
      did not have to purchase more than $200,000 in any given month. The term of
      the
      agreement term was from June 2, 2003 to June 2, 2005. The Company agreed to
      pay
      a late fee of 3% for payments not made within 30 days and 5% for those not
      made
      in 60 days. At the option of the Factor, the late fees may be paid with Company
      stock. If paid by Company stock, the stock bid price would be discounted 50%
      in
      computing the shares to be issued in payment of the late fee.





Pursuant
      to the terms of the factor agreement, the Factor is entitled to receive two
      (2)
      bonus warrants for each dollar of purchase orders purchased. The bonus warrants
      will be exercisable at the average closing price of the Company's common stock
      for the 90 days prior to the purchase order transactions they represent or
      a 50%
      discount to the closing price of the Company's stock at the time exercised
      at
      the option of the Factor. The warrants are exercisable over a five year period.
      The Company has not issued any bonus warrants during the twelve months ending
      June 30, 2007.





There
      were no purchases of purchase orders for this factor during the twelve months
      ended June 30, 2007. At June 30, 2007, the Company had a factoring payable
      balance of $116,722 associated with this factor. The Company has accrued
      $177,377 interest for late payments of this factor payable as of June 30,
      2007.




F-13


****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


B.
      At
      June 30, 2007, the Company had a factoring balance associated with two
      individual factors totaling $20,000. The Company has accrued $14,196 for
      interest of these factoring payables as of June 30, 2007.





The
      total
      factoring payable as of June 30, 2007 was $136,722.




**8.
      PAYROLL TAXES-ASSUMED IN MERGER**





The
      Company assumed $205,618 of payroll tax liabilities in the merger with Pacific
      Diagnostic Technologies, Inc. The balance was $66,529 at June 30, 2007. The
      Company is delinquent on payments of these payroll tax liabilities.





**9.
      LOANS PAYABLE**





A.
      Loan
      Payable as of June 30, 2007, consists of the following:


Capital
                  Leases payable, interest at 7.9% to 20%,
              
              $
              151,549due
                  various dates in 2005 to 2008 (Refer to Note 9.B. below)Lease
                  payable due in 2002
              
              
              2,028Note
                  payable, interest at 5.75%, due July 30, 2006
              
              
              6,080(the
                  company is in default and default interest is 12%)Notes
                  payable, interest at 8%, due 2006
              
              
              27,062(the
                  company is in default of these notes)186,719Less:
                  Current Portion
              
              
              186,719Long-term
                  debt
              
              $
              —




Principal
      payments on these leases payable are as follows:




Year
                ending June 30,2007
            
            $
            47,3932008
            
            
            139,326$
            186,719





B.
      Capital Lease Obligations:





The
      Company leases various equipments under capital leases expiring in various
      years
      through 2008. The assets and liabilities under capital leases are recorded
      at
      the lower of the present value of the minimum lease payments or the fair value
      of the asset. The assets are depreciated over the lesser of their related lease
      terms or their estimated productive lives and are secured by the assets
      themselves. Depreciation of assets under capital leases is included in
      depreciation expense for the twelve months ended June 30, 2007.





Aggregate
      minimum future lease payments under capital leases as of June 30, 2007 for
      each
      of the next five years are as follows: (2008: $151,549; and thereafter:
      none.)





F-14




****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


Capital
      lease obligations represent the following at June 30, 2007:





2007Total
                minimum lease payments
            
            $
            175,878Interest
                expense relating to future periods
            
            
            (24,329
            )Present
                value of the minimum lease payments
            
            
            151,549Less:
                current portion
            
            
            (151,549
            )Non-current
                portion
            
            $
            —





Following
      is a summary of fixed assets held under capital leases at June 30,
      2007





2007Computers
                and production equipment
            
            $
            381,843Less:
                accumulated depreciation
            
            
            (206,933
            )Net
            
            $
            174,910




**10.**  **ADVANCES
      FROM LENDER**





On
      August
      2, 2004 the Company signed a convertible debenture agreement with an accredited
      investor whereby the Company has received an advance totaling $905,000 for
      prepayment of warrants to be exercised. The agreement expired on August 2,
      2006.
      The accredited investor has exercised 868,264 warrants into common shares valued
      at $868,264 as of the twelve month period ended June 30, 2007. The remaining
      balance of $36,736 is recorded as advances from lender in the accompanying
      financial statements as of June 30, 2007.





**11.**  **CONVERTIBLE
      BONDS**


Bonds
                  payable with interest at 9%, due on October
                  2001convertibleto
                  shares of common stock in increments of $1,000 or more
              
              $
              21,354Bonds
                  payable with interest at 12%, due July 2001, convertible to
                  sharesof
                  common stock in increments of $500 or more.
              
              
              41,141$
              62,495




The
      above
      convertible bonds have matured as of July 2001 and October 2001. The holders
      of
      the matured bonds do not wish to renew the bonds and have asked for payment;
      however, the Company does not have the cash to repay these bonds. The Company
      has recorded the $62,495 convertible bonds as a current liability in the
      accompanying financial statements as of June 30, 2007. The Company has accrued
      $44,933 interest for these convertible bonds as of June 30, 2007.





**12.
      CONVERTIBLE DEBENTURES**





A. 
       The Company raised $300,000 through the issuance of convertible debentures
      as of June 30, 2005. The term of the convertible debentures are as follows:
      pursuant to the terms of conversion, debenture in the amount of $300,000 pays
      interest at 5 3⁄4% interest and includes 3,000,000 warrants to purchase common
      stock for a period of three years at the exercise price of $1.00. The
“Conversion Price shall be equal to the lesser of (i) $0.50, or (ii) 75% of
      the
      average of the 5 lowest Volume Weighted Average Prices during the 20 trading
      days prior to Holder’s election to convert, or (iii) 75% of the Volume Weighted
      Average Price on the trading day prior to the Holders election to convert market
      price of the Company’s common stock prior to conversion. Upon conversion of the
      debenture, the holder is obligated to simultaneously exercise the $1.00 warrants
      providing added funding to the Company. The warrant must be exercised
      concurrently with the conversion of this debenture in an amount equal to ten
      times the dollar amount of the Debenture conversion. Upon execution of the
      securities purchase agreement, $225,000 of the purchase price was due and paid
      to the Company. The remaining $75,000 was paid to the Company on February 7,
      2005 upon effectiveness of the Securities and Exchange Commission’s Registration
      Statement. As of June 30, 2007, the Holder of the debenture has converted
      $89,326 of the debenture amount into 14,555,964 common shares of the Company
      and
      exercised 893,264 warrants.




F-15


****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


The
      Company allocated the proceeds from the debenture between the warrant and the
      debt based on relative fair value of the warrant and the debt. The value of
      the
      warrant was calculated using the Black-Scholes model using the following
      assumptions: Discount rate of 3.4%, volatility of 100% and expected term of
      one
      year. The amount allocated to the warrant was amortized over the term of the
      debt. The Company calculated a beneficial conversion feature of $279, 652.
      The
      Company amortized the beneficial conversion feature in accordance with the
      conversion terms of the note. At June 30, 2007, the convertible debenture of
      $210,674 is presented in the accompanying financial statements as a current
      liability with the unamortized beneficial conversion feature and unamortized
      discount fully amortized.





Principal
      payments on these convertible debentures are as follows:





Year
                  ending June 30,2007
            
            $
            210,670








B.  
       On May 19, 2006, the Company entered into a Securities Purchase Agreement
      with YA Global Investments, L.P. (formerly, Cornell Capital Partners, L.P.)
      (“YA
      Global Investments”). The Company entered into a convertible debenture with a
      total commitment value of $2,000,000. The term of the convertible debenture
      is
      for 36 months from the date of issuance. The conversion price in effect on
      any
      Conversion Date shall be, at the sole option of the Holder, equal to either
      (a)
      $0.0662 (the “Fixed Conversion Price”) or (b) ninety five percent (95%) of
      the lowest Volume Weighted Average Price of the Common Stock during the thirty
      (30) trading days immediately preceding the Conversion Date as quoted by
      Bloomberg, LP (the “Market Conversion Price”). The Investor shall not be able to
      convert the debentures into an amount that would result in the Investor
      beneficially owning in excess of 4.99% of the outstanding shares of common
      stock
      of the Company. Pursuant to the terms of debenture, the debenture bears interest
      at 10% interest per year.





Upon
      execution of the securities purchase agreement, $750,000 of the purchase price
      was due and paid to the Company on May 17, 2006. On September 15, 2006, an
      additional $150,000 was paid to the Company upon the signing of the second
      debenture. On October 23, 2006, an additional $600,000 was disbursed to the
      Company prior to the filing of the Securities and Exchange Commission’s
      Registration Statement and the final $500,000 was disbursed on February 12,
      2007
      upon effectiveness of the Securities and Exchange Commission’s Registration
      Statement.





As
      part
      of the financing, the Company issued 17,857,000 warrants to purchase common
      stock at an exercise price of $0.05, 15,625,000 warrants to purchase common
      stock at an exercise price of $0.055, 12,500,000 warrants to purchase common
      stock at an exercise price of $0.065, and 10,416,666 warrants to purchase common
      stock at an exercise price of $0.08, all warrants are for a term of five years.
      The exercise of the attached warrants is at the sole option of the Holder.




During
      the period ending June 30, 2007 the Holder has converted $225,000 of the
      debenture amount into 11,590,365 common shares of the Company with 1,838,235
      common shares to be issued.




F-16


****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**




Per
      EITF
      00-19, paragraph 4, these convertible debentures do not meet the definition
      of a
“conventional convertible debt instrument” since the debt is not convertible
      into a fixed number of shares. The debt can be converted into common stock
      at a
      conversions price that is a percentage of the market price; therefore the number
      of shares that could be required to be delivered upon “net-share settlement” is
      essentially indeterminate. Therefore, the convertible debenture is considered
      “non-conventional,” which means that the conversion feature must be bifurcated
      from the debt and shown as a separate derivative liability. The derivative
      conversion liability is as follows :-





**Funding
                Dates**
            
            **Funding
                Amount**
            
            **Conversion**
              **Liability
                Amount**May
                17, 2006
            
            $
            750,000
            
            $
            -September
                15, 2006
            
            
            150,000
            
            
            22,790October
                23, 2006
            
            
            600,000
            
            
            23,683February
                12, 2007
            
            
            500,000
            
            
            70,436$
            **2,000,000**
            ****
            **$**
            **116,909**




In
      addition, since the convertible debenture is convertible into an indeterminate
      number of shares of common stock, it is assumed that the Company could never
      have enough authorized and unissued shares to settle the conversion of the
      warrants into common stock. Therefore, the warrants issued in connection with
      this transaction having a fair value of $1,935,904 at May 19, 2006 are shown
      as
      a portion of the warrant liability. The value of the warrant was calculated
      using the Black-Scholes model using the following assumptions: Discount rate
      of
      3.93%, volatility of 100% and expected term of five year. The fair value of
      the
      conversion liability and the warrant liability will be adjusted to fair value
      each balance sheet date with the change being shown as a component of net
      income.





The
      fair
      value of the derivative liability and the warrants at the inception of these
      convertible debentures were shown as a debt discount with any discount greater
      than the face amount of the debt being as financing costs in the year ended
      June
      30, 2006.





**Funding
                Date**
            
            **Amount
                of Debt**
            
            **Fair
                Value of Warrants**
            
            **Fair
                Value of Derivative Liability**
            
            **Amount
                Applied to Debt Discount**
            
            **Recorded
                as Financing Cost**May
                17, 2006
            
            $
            750,000
            
            $
            1,935,904
            
            $
            -
            
            $
            750,000
            
            $
            1,185,904September
                15, 2006
            
            
            150,000
            
            
            -
            
            
            22,790
            
            
            22,790
            
            
            -October
                23, 2006
            
            
            600,000
            
            
            -
            
            
            23,683
            
            
            23,683
            
            
            -February
                12, 2007
            
            
            500,000
            
            
            -
            
            
            70,436
            
            
            70,436
            
            
            -**$**
            **2,000,000**
            
            **$**
            **1,935,904**
            
            **$**
            **116,909**
            
            **$**
            **866,909**
            
            **$**
            **1,185,904**





At
      June
      30, 2007, the fair value of the warrant and conversion liabilities were $647,369
      and $491,687 respectively.  During the years ended June 30, 2007 and
      2006, the income due to change in fair value of derivative liabilities (warrant
      and conversion) was recorded as $945,491 and $677,008,
      respectively.




As
      of
      June 30, 2007, the convertible debenture is as follows :-





Face
                Value of the Convertible Debenture
            
            $
            2,00,000Less
                : Conversion in Common Stock during the year ended 2007
            
            
            (225,000
            )Balance
            
            
            1,775,000Less
                : Unamortized Discount
            
            
            (501,377
            )Less
                : Unamortized Debt raising expenses
            
            
            (99,305
            )Convertible
                Debenture, net
            
            
            1,174,318Less
                : Current portion
            
            
            -Long
                term Convertible Debenture
            
            $
            1,174,318








F-17




****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


Principal
      payments on the convertible debentures are as follows:





Year
                ending June 30,2008
            
            $
            -2009
            
            
            650,0002010
            
            
            1,125,000$
            1,775,000





**13.
      CONVERTIBLE NOTES**





The
      Company raised capital through the issuance of an interest bearing convertible
      note for $500,000 issued during the year ending June 30, 2004. The note was
      convertible to the Company Common Stocks and was fully converted on June 23,
      2006. The total accrued interest recorded in regard to this convertible note
      amounted to $61,258 as of June 30, 2007.





The
      Company raised capital through the issuance of a convertible note for $50,500
      issued on May 10, 2006. The note bears interest at the rate of 10% per annum
      compounded annually. All principal and interest was due and payable at the
      earlier of occurrence of Company’s first round of financing (whether debt or
      equity) after May 31, 2006 involving the receipts of at least $200,000 or more,
      or on November 10, 2006. The note holder would receive such number of fully
      paid
      and non assessable common stock as shall equal the outstanding amount of
      principal and interest due under this note being converted, divided by 80%
      of
      the price per share at which the Company next sells the shares of its common
      stock. The note holder has agreed to extend the note pursuant to being paid
      10%
      of the principal and accrued interest through November 10, 2006. On December
      27,
      2006, 10% of the principal and accrued interest was forwarded to the note
      holder. The remaining principal balance of the note of $45,450 is recorded
      in
      the accompanying financial statements as of June 30, 2007. The Company has
      accrued $2,864 interest for this note as of June 30, 2007.





**14.
      STOCKHOLDERS' DEFICIT**





*a.* *Common
      Stock and Warrants*





The
      Company increased its authorized common stock from 200 million shares to 500
      million shares and reduced the par value from $0.01 to $0.001 per share at
      the
      annual Stockholders Meeting held September 7, 2006. The Company received the
      acceptance from the State of California, for the reduction in the par value
      of
      shares, on October 19, 2006.





During
      the year ended June 30, 2007, the Company issued 2,000,000 common shares upon
      exercise of warrants from a prior year; 2,503,703 common shares upon cashless
      exercise of warrants by the officers of the Company in the current year; 750,000
      common shares to consultants for services valued at $22,500; 1,529,169 common
      shares pursuant to conversion of note from a prior year; 11,590,365 common
      shares pursuant to debenture conversion of $200,000.





*b.* *Common
      Stock Reserved*





At
      June
      30, 2007, common stock was reserved for the following reasons:




Outstanding
      convertible bonds   151,918
      shares








F-18


****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


*c. 
      Outstanding Warrants*





Weighted
            
            AggregateNumber
                of
            
            Average
            
            IntrinsicWarrants
            
            Exercise
                Price
            
            ValueOutstanding
                June 30, 2006
            
            
            80,110,137
            
            $
            0.0906
            
            $
            73,383Issued
                during the period
            
            
            —
            
            
            —Expired
            
            
            (442,857
            )
            $
            0.1684Exercised
            
            
            —
            
            
            —Outstanding
                June 30, 2007
            
            
            79,667,280
            
            $
            0.0901
            
            $
            —Warrants
                to be issued
            
            
            4,639,842Total
            
            
            84,307,122





Following
      is a summary of the status of warrants outstanding at June 30, 2007:





Range
                of Exercise Prices
            
            Total
                Warrants Outstanding
            
            Weighted
                Average Remaining Life (Years)
            
            Total
                Weighted Average Exercise Price
            
            Warrants
                Exercisable
            
            Weighted
                Average Exercise Price of Exercisable Warrants$0.01
                - $0.09
            
            
            70,352,142
            
            
            3.66
            
            $
            0.058
            
            
            70,352,142
            
            $
            0.058$0.10
                - $0.20
            
            
            7,208,402
            
            
            0.18
            
            
            0.014
            
            
            7,208,402
            
            
            0.014$0.21
                - $1.00
            
            
            2,106,736
            
            
            0.09
            
            
            1.000
            
            
            2,106,736
            
            
            1.00079,667,280
            
            
            4.93
            
            $
            1.200
            
            
            79,667,280
            
            $
            1.200





During
      the year ended June 30, 2007, the Company did not issue any warrants.





*d.
      Stock Option Agreements*





The
      Company granted 12,424,972 stock options to officers and employees exercisable
      as of June 30, 2007 valued at $154,246.





The
      number and weighted average exercise prices of options granted by the Company
      are as follows:




WeightedAverage
              
              AggregateOptions
              
              Exercise
              
              IntrinsicOutstanding
              
              Price
              
              ValueOutstanding
                  June 30, 2006
              
              
              16,303,943
              
              $
              0.042
              
              
              —Granted
                  during the year
              
              
              13,358,306Exercised
              
              
              (6,259,255
              )Expired/forfeited
              
              
              (250,000
              )Outstanding
                  June 30, 2007
              
              
              23,152,994
              
              $
              0.014
              
              $
              —




F-19




****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**




Following
      is a summary of the status of options outstanding at June 30, 2007:








Total
                Options Outstanding
            
            Weighted
                Average Remaining Life (Years)
            
            Total
                Weighted Average Exercise Price
            
            Options
                Exercisable
            
            Weighted
                Average Exercise Price$0.01
                - $0.09
            
            
            20,099,932
            
            
            3.68
            
            
            0.009
            
            
            18,699,932
            
            
            0.009$0.10
                - $0.20
            
            
            3,053,062
            
            
            1.03
            
            
            0.015
            
            
            3,053,062
            
            
            0.01523,152,994
            
            
            3.83
            
            
            0.024
            
            
            21,752,994
            
            
            0.024








2,596,666
      three year options calculated using the Black Scholes option pricing model
      using
      the following assumptions


Risk-free
                  interest rate
              
              
              3.40
              %Dividend
                  yield
              
              
              0
              %Volatility
              
              
              100
              %


19,310,994
      five year options calculated using the Black Scholes option pricing model using
      the following assumptions


Risk-free
                  interest rate
              
              
              3.40
              %Dividend
                  yield
              
              
              0
              %Volatility
              
              
              100
              %


312,000
      three year options calculated using the Black Scholes option pricing model
      using
      the following assumptions


Risk-free
                  interest rate
              
              
              3.93
              %Dividend
                  yield
              
              
              0
              %Volatility
              
              
              100
              %
  *e.
      Stock transactions approved by the shareholders*





At
      the
      annual meeting of the shareholders held September 7, 2006, the shareholders
      approved by a majority vote to increase the authorized share capital to
      500,000,000 shares and reduce the par value from $0.01 to $0.001 per share.





**Series
      A Preferred Stock**





The
      general terms of the Series A Preferred Stock is as follows: No par value;
      Liquidation Preference - $0.25 per share plus any unpaid accumulated dividends;
      Dividends - cumulative annual rate of $0.005 per share when and as declared
      by
      the Board of Directors; Conversion Rights - convertible to common stock at
      a 1:1
      ratio ; Redemption Rights - the Company has the right to redeem part or all
      of
      the stock upon 30 days written notice at a rate of $0.25 per share plus all
      accumulated and unpaid dividends thereon at the dividend rate of $0.005 annually
      per share; Voting Rights - one vote per share on all matters requiring
      shareholder vote. At June 30, 2007, the Company had 3,047,531 shares of Series
      A
      Preferred stock outstanding valued at $526,506. The Company has recorded a
      cumulative dividend of $47,803 for the Series A Preferred stockholders as of
      June 30, 2007 in the accompanying financial statements.





**Series
      B Preferred Stock**





The
      general terms of the Series B Preferred Stock is as follows: No par Value;
      Liquidation Preference - $0.25 per share plus any unpaid accumulated dividends;
      Dividends - cumulative annual rate of $0.0005 per share when and as declared
      by
      the Board of Directors; Conversion Rights - convertible to common stock at
      a 1:5
      ratio (i.e. 1 share of Series B Preferred stock is convertible into 5 shares
      of
      common stock); Redemption Rights - the Company has the right to redeem part
      or
      all of the stock upon 30 days written notice at a rate of $0.25 per share plus
      all accumulated and unpaid dividends thereon at the dividend rate of $0.0005
      annually per share; Voting Rights - one vote per share on all matters requiring
      shareholder vote. At June 30, 2007, the Company had 89,271 shares of Series
      B
      Preferred Stock outstanding valued at $86,888. The Company has recorded a
      cumulative dividend of $229 for the Series B Preferred Stockholders as of June
      30, 2007 in the accompanying financial statements.




F-20


****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


**Series
      C Preferred Stock**





The
      general terms of the Series C Preferred Stock is as follows: No par value;
      Liquidation Preference - $1.00 per share plus any unpaid accumulated dividends;
      Dividends - cumulative annual rate of $0.0005 per share when as declared by
      the
      Board of Directors; Conversion Rights - 1:20 ratio (i.e. 1 share of Preferred
      Series C stock is convertible into 20 shares of common stock); Redemption Rights
      - the Company has the right to redeem part or all of the stock upon 30 days
      written notice at the rate of $1.00 per share plus all accumulated and unpaid
      dividends thereon at the dividend rate of $0.0005 annually per share.; Voting
      Rights - one vote per share on all matters requiring shareholder vote. At June
      30, 2007, the Company had 17,948 shares of Series C Preferred Stock outstanding
      valued at $68,211. The Company has recorded a cumulative dividend of $25 for
      the
      Series C Preferred Stockholders as of June 30, 2007 in the accompanying
      financial statements.





**Series
      D Preferred Stock**





The
      general terms of the Series D Preferred Stock is as follows: No par value;
      Liquidation Preference - $0.10 per share plus any unpaid accumulated dividends;
      Dividends - if declared by the Board of Directors, holders shall be entitled
      to
      receive dividends as if they had converted such preferred stock into common
      stock as of the dividend date; Conversion Rights - 1:20 ratio (i.e. 1 share
      of
      Preferred Series D stock is convertible into 20 shares of common stock) so
      long
      as the closing bid price of our common stock is at least $0.10 on any date
      subsequent to issuance; Redemption Rights - none; Voting Rights - fifty votes
      per share on all matters requiring shareholder vote. At June 30, 2007, the
      Company had 1,000,000 shares of Series D Preferred Stock outstanding valued
      at
      $600,000.





The
      Company has recorded a cumulative dividend of $48,057 for the preferred
      stockholders as of June 30, 2007 in the accompanying financial statements.





**15.
      INCOME TAXES**





Income
      tax expense (benefit) for the years ended June 30, 2007 and 2006 is summarized
      as follows:





2007
            
            2006Current:Federal
            
            $
            (967,253
            )
            $
            (1,515,271
            )State
            
            
            (170,692
            )
            
            (267,401
            )Deferred
                taxes
            
            
            1,138,745
            
            
            1,783,472Income
                tax expense (benefit)
            
            $
            800
            
            $
            800







F-21


****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


The
      following is a reconciliation of the provision for income taxes at the U.S.
      federal income tax rate to the income taxes reflected in the Consolidated
      Statements of Operations at June 30, 2006 and 2005:





2007
            
            2006Tax
                expense (credit) at statutory rate-federal
            
            
            (34
            %)
            
            (34
            %)State
                tax expense net of federal tax
            
            
            (6
            %)
            
            (6
            %)Permanent
                differences
            
            
            -
            
            
            -Valuation
                allowance
            
            
            40
            %
            
            40
            %Tax
                expense at actual rate
            
            
            -
            
            
            -





The
      tax
      effects of temporary differences that gave rise to significant portions of
      deferred tax assets and liabilities at June 30, 2007 are as
      follows:





Deferred
                tax assets:Net
                operating loss carry forward
            
            $
            11,789,288Less
                valuation allowance
            
            
            (11,789,288
            )Net
                deferred tax assets
            
            $
            -





At
      June
      30, 2007, the Company had net operating loss carry forwards of approximately
      $29,473,219 for U.S. federal income tax purposes available to offset future
      taxable income expiring on various dates through 2026.





The
      net
      change in the valuation allowance during the year ended June 30, 2007 was a
      decrease of $307,591 and during the year ended June 30, 2006 was an increase
      of
      $979,265.





**16.
      SUPPLEMENTAL DISCLOSURE OF CASH FLOWS**




The
      Company prepares its statements of cash flows using the indirect method as
      defined under the Financial Accounting Standard No. 95.




The
      Company paid $33,704 and $53,414 interest during the years ended June 30, 2007
      and 2006, respectively. The Company did not pay any income taxes during the
      years ended June 30, 2007 and 2006.





The
      cash
      flow statement for the year ended June 30, 2007 does not include the following
      non-cash investing and financing transactions:





·
            11,590,365
                shares were issued for conversion of debenture of
                $200,000.


·
            1,838,235
                  shares to be issued for conversion of debenture of
                  $25,000





The
      cash
      flow statement for the year ended June 30, 2006 does not include the following
      non-cash investing and financing transactions;





·
            1,529,169
                shares were issued for conversion of note payable of
                $91,750.


·
            9,529,866
                shares were issued for conversion of debenture of
                $45,891.





F-22


****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


**17.
      MAJOR CUSTOMERS AND SUPPLIERS**





The
      Company had three customers that accounted for 11%, 11% and 29 % of revenue
      for
      the year ended June 30, 2007. Accounts receivable from these major customers
      were $7,740, $119,281 and $47,127 respectively at June 30, 2007. For the year
      ended June 30, 2006, the Company had two customers that accounted for 16% and
      37
      % of revenue. Accounts receivable from these major customers were $15,023 and
      $4,496 respectively at June 30, 2006.





**18.
      COMMITMENTS AND CONTINGENCIES**




*a)
      Operating Leases*





Effective
      July 1, 2004 the Company relocated their executive offices to Huntington Beach,
      California and entered into a four year lease agreement. The agreement contains
      a base rent escalation clause. The Company leases its Idaho office facility
      under a month-to-month rental agreement at $675 per month. For the years ended
      June 30, 2007 and 2006, rent expense for these operating leases totaled $107,689
      and $105,411, respectively.





The
      future minimum lease payments under non-cancelable leases are as
      follows:


2008
              
              
              94,913$
              94,913


*b)
      Litigation*





The
      Company was served with a summons as a defendant in a case filed on September
      15, 2006 in Superior Court of California, County of San Diego. The complaint
      was
      filed by Golden Gate Investors for Breach of Contract relating to the financing
      agreements executed between the Company and Golden Gate Investors in August
      2004. Golden Gate Investors is claiming damages in excess of $722,040 in
      relation to the case. The Company retained counsel to defend itself in this
      matter and filed a response and counter claim for undisclosed damages. On August
      4, 2007, the Company counsel filed and was granted an order granting attorney’s
      motion to be relieved as counsel.  The answers filed and the cross
      complaint were stricken and the trial date of October 19, 2007 cancelled for
      failure to procure counsel to represent on September 21, 2007.  There are
      currently no dates on record. The next action is for the GGI counsel to set
      a
      prove-up hearing date.  The Company has recorded payables and an accrued
      legal expense totaling $722,040.





The
      Company was served with a summons as a defendant in a case filed on October
      24,
      2006 in Superior Court of California, County of Orange by Single Source Partners
      for failure to pay commissions and installment payments. Single Source Partners
      is seeking judgment in the amount of $51,206. The Company retained counsel
      to
      defend itself in this matter and filed a response and counter claim for
      undisclosed damages. On August 7, 2007, the Company counsel filed and was
      granted an attorney’s motion to be relieved as counsel.  On September 11,
      2007 a motion to strike defendant’s answer to the complaint, to dismiss
      defendant’s cross-complaint and to enter default was continued to October 9,
      2007. The action has been assigned a trial date of October 24, 2007. The Company
      has recorded payables and an accrued partnership fee totaling $56,605.





**19.**  **GOING
      CONCERN**





The
      accompanying financial statements have been prepared in conformity with
      generally accepted accounting principles, which contemplate continuation of
      the
      Company as a going concern. This basis of accounting contemplates the recovery
      of the Company's assets and the satisfaction of its liabilities in the normal
      course of business. Through June 30, 2007, the Company had incurred cumulative
      losses of $37,426,065 including net losses of $2,458,633 and $4,440,623 for
      the
      fiscal years 2007 and 2006, respectively. In view of the matters described
      in
      the preceding paragraph, recoverability of a major portion of the recorded
      asset
      amounts shown in the accompanying balance sheet is dependent upon continued
      operations of the Company, which in turn is dependent upon the Company’s ability
      to raise additional capital, obtain financing and to succeed in its future
      operations. The financial statements do not include any adjustments relating
      to
      the recoverability and classification of recorded asset amounts or amounts
      and
      classification of liabilities that might be necessary should the Company be
      unable to continue as a going concern.




F-23


****Quintek
        Technologies, Inc. and Subsidiary****
 **Notes
          to Consolidated Financial Statements**


Management
      has taken the following steps to revise its operating and financial
      requirements, which it believes are sufficient to provide the Company with
      the
      ability to continue as a going concern. Management devoted considerable effort
      during the period ended June 30, 2007, towards (i) obtaining additional equity
      and debt financing and (ii) evaluation of its distribution and marketing
      methods.





**20.**  **SUBSEQUENT
      EVENTS**





On
      July
      23, August 6, August 21, September 13, October 3 and October 8, 2007,
      we issued 39,541,546 common shares pursuant to a debenture conversion valued
      at
      $234,000.




F-24




**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.**




There
      have been no disagreements between us and our accountants as to matters which
      require disclosure.




**ITEM
      8A - CONTROLS AND PROCEDURES**




*(a)
      Evaluation of disclosure controls and procedures.*




Our
      management, with the participation of our chief executive officer and chief
      financial officer, evaluated the effectiveness of our disclosure controls and
      procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934
      as
      of June 30, 2007. In designing and evaluating the disclosure controls and
      procedures, management recognizes that any controls and procedures, no matter
      how well designed and operated, can provide only reasonable assurance of
      achieving the desired control objectives. In addition, the design of disclosure
      controls and procedures must reflect the fact that there are resource
      constraints and that management is required to apply its judgment in evaluating
      the benefits of possible controls and procedures relative to their costs.




Based
      on our evaluation, our chief executive officer and chief financial officer
      concluded that our disclosure controls and procedures were designed at a
      reasonable assurance level and were effective as of June 30, 2007 to provide
      reasonable assurance that information required to be disclosed in reports filed
      or submitted under the Exchange Act was recorded, processed, summarized and
      reported within the time periods specified in Securities and Exchange Commission
      rules and forms, and that such information was accumulated and communicated
      to
      our management, including our chief executive officer and chief financial
      officer, as appropriate, to allow timely decisions regarding required
      disclosure.




*(b)
      Changes in internal control over financial reporting.*




We regularly
      review our system of internal control over financial reporting and make changes
      to our processes and systems to improve controls and increase efficiency, while
      ensuring that we maintain an effective internal control environment. Changes
      may
      include such activities as implementing new, more efficient systems,
      consolidating activities, and migrating processes.




There
      were no changes in our internal control over financial reporting that occurred
      during the period covered by this Annual Report on Form 10-KSB that have
      materially affected, or are reasonably likely to materially affect, our internal
      control over financial reporting.




**ITEM
      8B - OTHER INFORMATION**




None.




23





**PART
      III**




**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS.**




**DIRECTORS
      AND EXECUTIVE OFFICERS**


**Names:**
              
              **Ages**
              
              **Titles:**
              
              **Board
                  of  Directors**James
                  Kernan
              
              42
              
              Chief
                  Executive Officer
              
              DirectorAndrew
                  Haag
              
              39
              
              Chief
                  Financial Officer
              
              Director




Directors
      are elected to serve until the next annual meeting of stockholders and until
      their successors are elected and qualified. Currently there are three seats
      on
      our board of directors.





Currently,
      our Directors are not compensated for their services, although their expenses
      in
      attending meetings are reimbursed. Officers are elected by the Board of
      Directors and serve until their successors are appointed by the Board of
      Directors. Biographical resumes of each officer and director are set forth
      below.





**James
      Kernan, Chief Executive Officer and Director**





James
      Kernan has been our Chief Executive Officer, President, and Chairman of the
      Board of Directors since April 19, 2003. Since June 2006, Mr. Kernan has been
      the CEO of Kernan Consulting, Inc., a private consulting company. Between March
      2001 and June 2006, Mr. Kernan was the CEO of Networks Plus, a San Diego,
      California network security company. Mr. Kernan has also been the Vice President
      of Sales for Ecomm USA, PC Specialists (DBA Technology Integration Group or
      TIG)
      and Oberbyte Computers. Mr. Kernan received his Bachelor of Science degree
      in
      Business Administration from Nebraska Wesleyan University in 1987.





**Andrew
      Haag, Chief Financial Officer and Director**





Andrew
      Haag has been our Chief Financial Officer and a Director since January 31,
      2003.
      From December 2002, he was employed by the Camelot Group, Inc., an investment
      banking firm, to assist its corporate clients on capital structure, the
      structure of PIPE transactions and the preparation of offering documents. From
      May 2001, Mr. Haag was employed by Aquasearch, Inc., a publicly held company,
      where he raised significant funds from private sources, advised its CEO on
      strategic business development issues and successfully negotiated several
      contracts to benefit the company. Mr. Haag assisted in drafting corporate
      business plan, terms of investment, press releases and other corporate
      documents. From November 1998 through April 2001 he was employed by Nutmeg
      S
      ecurities, Ltd., where he advised institutional and individual clientele on
      corporate offerings and equity trading, and performed corporate advisory work
      for both public and private companies. From June 1998 through October 1998
      Mr.
      Haag was a Managing Director of Waldron & Co. Inc., an investment bank
      located in Irvine, CA.





From
      1992
      through 1998 he was employed by Auerbach, Pollak & Richardson, investment
      bankers, located in Stamford, CT and Beverly Hills, CA, rising to Managing
      Director, where he: assisted in the development of the firm, attracting and
      referring new hires and clients to all offices; developed a national and
      international client base for the firm that participated in a majority of the
      firm's corporate offerings; set up and managed road shows for firm's corporate
      clientele; attracted a wide variety of corporate clientele; assisted in the
      structuring and funding of offerings for corporate clientele; and increased
      visibility of the firm through networking of research and offerings. Mr. Haag
      attended the University of Maine and CUNY Hunter College.




24


**COMPLIANCE
      WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934**




Section
      16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires our
      directors and executive officers, and persons who own more than ten percent
      of a
      registered class of our equity securities, to file with the Commission initial
      reports of ownership and reports of changes in ownership of our Common Stock
      and
      other equity securities of ours. Officers, directors and greater than ten
      percent shareholders are required by the Commission's regulations to furnish
      us
      with copies of all Section 16(a) forms they filed.





We
      have
      been provided with copies of all forms (3, 4 and 5) filed by officers,
      directors, or ten percent shareholders within three days of such filings. Based
      on our review of such forms that we received, or written representations from
      reporting persons that no Forms 5s were required for such persons, we believe
      that, during fiscal 2007, except for one Form 3 and two Form 4’s that were
      delinquent, all Section 16(a) filing requirements have been satisfied on a
      timely basis for members of the Board of Directors and Executive
      Officers.





**Board
      Committees**





We
      have
      not established any compensation or executive committees. Currently, the board
      of directors serves as our audit committee. Because of our small size and the
      risk attendant to a small public company, we are currently unable to attract
      an
      independent audit committee financial expert to our Board of Directors.





**Code
      of Ethics**





On
      June
      10, 2003, our board of directors adopted a code of ethics that applies to our
      officers, directors and employees. A copy of the Code of Ethics is incorporated
      by reference as an exhibit.




**ITEM
      10. EXECUTIVE COMPENSATION.**




The
      following table sets forth the annual and long-term compensation paid to our
      Chief Executive Officer and the other executive officers who earned more than
      $100,000 per year at the end of the last completed fiscal year. We refer to
      all
      of these officers collectively as our "named executive officers."





**Summary
      Compensation Table**


Name
                  & Principal Position
              
              Year
              
              Salary
                  ($)
              
              Bonus
                  ($)
              
              Stock
                  Awards ($)
              
              Option
                  Awards ($)
              
              Non-Equity
                  Incentive Plan Compensation ($)
              
              Change
                  in Pension Value and Non-Qualified Deferred Compensation Earnings
                  ($)
              
              All
                  Other Compensation ($)
              
              Total
                  ($)James
                  Kernan, President and CEO
              
              
              2007
              
              $
              45,500
              (2)
              $
              0
              
              $
              0
              
              $
              76,846
              
              $
              0
              
              $
              0
              
              $
              1,000
              
              $
              123,346Andrew
                  Haag, CFO
              
              
              2007
              
              $
              121,000
              
              $
              0
              
              $
              0
              
              $
              76,846
              
              $
              0
              
              $
              0
              
              $
              6,000
              
              $
              203,846Robert
                  Steele, President and CEO
              
              
              2007
              
              $
              84,583
              (1)
              $
              17,500
              
              $
              0
              
              $
              0
              
              $
              0
              
              $
              0
              
              $
              5,000
              
              $
              107,083


1)
      Mr.
      Steele resigned on April 19, 2007 as CEO.




2)
      Includes compensation received by Mr. Kernan while serving as acting President
      from March 22, 2007 to April 19, 2007.




25


**Outstanding
      Equity Awards at Fiscal Year-End Table.**




Option
                  Awards
              
              Stock
                  AwardsName
              
              Number
                of
                Securities
                Underlying
                Unexercised
                Options
                (#)
                Exercisable
              
              Number
                of
                Securities
                Underlying
                Unexercised
                Options
                (#)
                Unexercisable
              
              Equity
                Incentive
                Plan
                Awards:
                Number
                of
                Securities
                  Underlying
                Unexercised
                Unearned
                Options
                (#)
              
              Option
                Exercise
                Price
                ($)
              
              Option
                Expiration
                Date
              
              Number
                of
                  Shares
                or
                  Units
                of
                  Stock
                That
                  Have
                Not
                Vested
                (#)
              
              Market
                Value
                  of
                Shares
                  or
                Units
                  of
                Stock
                That
                  Have
                Not
                Vested
                ($)
              
              Equity
                Incentive
                Plan
                  Awards:
                Number
                of
                Unearned
                Shares,
                Units
                  or
                Other
                  Rights
                That
                  Have
                Not
                Vested
                (#)
              
              Equity
                  Incentive
                Plan
                  Awards:
                Market
                  or Payout
                Value
                of
                Unearned
                Shares,
                Units
                  or
                Other
                Rights
                That
                  Have
                Not
                Vested
                  ($)James
                  Kernan, President and CEO
              
              
              2,000,000
              
              
              
              
              
              
              
              $
              0.020
              
              
              4/19/20123,979,153
              
              
              
              
              
              
              
              $
              0.066
              
              
              4/19/2012Andrew
                  Haag, CFO
              
              
              3,370,813
              
              
              
              
              
              
              
              $
              0.03,
              
              
              3/3/20112,000,000
              
              
              
              
              
              
              
              $
              0.02
              
              
              4/19/20123,979,153
              
              
              
              
              
              
              
              $
              0.066
              
              
              4/19/2012Robert
                  Steele, Former President and CEO
              
              
              3,370,813
              
              
              
              
              
              
              
              $
              0.03
              
              
              3/3/2011




**Employment
      Agreements with Executive Officers**





*Contract
      with James Kernan*





On
      April
      19 2007, we entered into a five-year employment contract with James Kernan,
      our
      Chief Executive Officer. The base salary under the agreement is $15,000 per
      month. Upon achieving gross revenue in a quarter equal to or exceeding $900,000,
      the base salary under the agreement is $18,000 per month. Upon achieving gross
      revenue in a quarter equal to or exceeding $1,200,000, the base salary under
      the
      agreement is $21,000 per month. If our quarterly gross revenues decrease, Mr.
      Kernan’s base salary will decrease accordingly, subject to the minimum base
      salary of $15,000 per month. In addition, Mr. Kernan is entitled to participate
      in any and all benefit plans, from time to time, in effect for our employees,
      along with vacation, sick and holiday pay in accordance with our policies
      established and in effect from time to time.




*Contract
      with Andrew Haag*





On
      April
      19 2007, we entered into a five-year employment contract with Andrew Haag,
      our
      Chief Financial Officer. The base salary under the agreement is $10,000 per
      month. Upon achieving gross revenue in a quarter equal to or exceeding $600,000,
      the base salary under the agreement is $12,000 per month. Upon achieving gross
      revenue in a quarter equal to or exceeding $900,000, the base salary under
      the
      agreement is $15,000 per month. Upon achieving gross revenue in a quarter equal
      to or exceeding $1,200,000, the base salary under the agreement is $18,000
      per
      month. If our quarterly gross revenues decrease, Mr. Haag’s base salary will
      decrease accordingly, subject to the minimum base salary of $10,000 per month.
      In addition, Mr. Haag is entitled to participate in any and all benefit plans,
      from time to time, in effect for our employees, along with vacation, sick and
      holiday pay in accordance with our policies established and in effect from
      time
      to time.





**Director
      Compensation**





Our
      Directors are elected by the vote of a majority in interest of the holders
      of
      our voting stock and hold office until the expiration of the term for which
      he
      or she was elected and until a successor has been elected and qualified.




26





A
      majority of the authorized number of directors constitutes a quorum of the
      Board
      for the transaction of business. The directors must be present at the meeting
      to
      constitute a quorum. However, any action required or permitted to be taken
      by
      the Board may be taken without a meeting if all members of the Board
      individually or collectively consent in writing to the action.




**Directors
      received compensation for their services for the fiscal year ended June 30,
      2007
      as set forth below:** ****





Directors
      did not receive any compensation for their services.




27




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




The
      following table sets forth certain information regarding beneficial ownership
      of
      each class of our stock as of October 12, 2007





·
            by
                each person who is known by us to beneficially own more than 5% of
                our
                common stock;




·
            by
                each of our officers and directors; and




·
            by
                all of our officers and directors as a group.




NAME
                AND ADDRESS OF OWNER
            
            TITLE
                OF CLASS
            
            NUMBER
                  OF
                  SHARES
                    OWNED (1)
            
            
            PERCENTAGE
                  OF
                  CLASS
                    OWNED (2)James
                Kernan
            
            Common
                Stock
            
            6,434,153
            (3)
            
            3.01
            %17951
                Lyons CircleHuntington
                Beach, CA 92647Andrew
                Haag
            
            Common
                Stock
            
            23,338,582
            (4)
            
            10.22
            %17951
                Lyons CircleHuntington
                Beach, CA 92647All
                Officers and Directors
            
            Common
                Stock
            
            29,772,735
            (5)
            
            12.71
            %As
                a Group (2 persons)Robert
                Steele
            
            Common
                Stock
            
            16,477,724
            (6)
            
            7.41
            %Robert
                Steele
            
            Series
                A Preferred Stock
            
            1,000,000
            
            
            32.81
            %Andrew
                Haag
            
            Series
                A Preferred Stock
            
            1,000,000
            
            
            32.81
            %Robert
                Steele
            
            Series
                D Preferred Stock
            
            500,000
            
            
            50.00
            %Andrew
                Haag
            
            Series
                D Preferred Stock
            
            500,000
            
            
            50.00
            %





(1)
      Beneficial Ownership is determined in accordance with the rules of the
      Securities and Exchange Commission and generally includes voting or investment
      power with respect to securities. Shares of common stock subject to options
      or
      warrants currently exercisable or convertible, or exercisable or convertible
      within 60 days of October 12, 2007 are deemed outstanding for computing the
      percentage of the person holding such option or warrant but are not deemed
      outstanding for computing the percentage of any other person.





(2)
      Based
      upon 207,923,622 shares issued and outstanding on October 12, 2007.





(3)
      Includes 5,979,153 shares of common stock underlying options that are currently
      exercisable or exercisable within 60 days.





(4)
      Includes 1,000,000 shares issuable upon conversion of Series A convertible
      preferred stock, 10,000,000 shares issuable upon conversion of Series D
      preferred stock and 9,349,966 shares of common stock underlying options that
      are
      currently exercisable or exercisable within 60 days.





(5)
      Includes 1,000,000 shares issuable upon conversion of Series A convertible
      preferred stock, 10,000,000 shares issuable upon conversion of Series D
      preferred stock and 15,329,119 shares of common stock underlying options that
      are currently exercisable or exercisable within 60 days.




28


(6)
      Includes 1,000,000 shares issuable upon conversion of Series A convertible
      preferred stock, 10,000,000 shares issuable upon conversion of Series D
      preferred stock and 3,370,813 shares of common stock underlying options that
      are
      currently exercisable or exercisable within 60 days.





**Stock
      Option Plans**





On
      June
      30, 2004, our stockholders approved our 2004 Stock Option Plan and authorized
      11,822,500 shares of common stock for issuance there under. As of October 12,
      2007, no options have been granted pursuant to the plan.





On
      September 7, 2006, our stockholders approved our 2006 Stock Option Plan and
      authorized 25,000,000 shares of common stock for issuance there under. As of
      October 12, 2007, 12,424,973 options have been granted pursuant to the
      plan.





**Option/SAR
      Grants in Last Fiscal Year**





None.





**Equity
      Compensation Plan Information**





The
      following table sets forth certain information about the common stock that
      may
      be issued upon the exercise of options, warrants and rights under all of the
      existing equity compensation plans as of October 12, 2007.




**Plan
                  Category**
              
              **Number
                              of Shares**
                            **to
                              be Issued**
                            **Upon
                              Exercise of**
                            **Outstanding**
                            **Options,**
                            **Warrants
                              and**
                            **Rights**
              
              **Weighted-Average**
                              **Exercise**
                              **Price
                                of**
                              **Outstanding**
                              **Options,**
                              **Warrants
                                and**
                              **Rights**
              
              **Number
                                    of Shares**
                                  **Remaining**
                                  **Available
                                    for**
                                  **Future
                                    Issuance**
                                  **Under
                                    Equity**
                                  **Compensation**
                                  **Plans
                                    (Excluding**
                                  **Shares
                                    Reflected**
                                  **in
                                    the First**
                                  **Column)**Equity
                  compensation plans approved by shareholders
              
              
              12,424,973
              
              
              —
              
              
              24,397,527Equity
                  compensation plans not approved by shareholders
              
              
              —
              
              
              —
              
              
              —Total
              
              
              —
              
              
              —
              
              
              24,397,527





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





During
      the last two years, there have been no transactions, or proposed transactions,
      which have materially affected or will materially affect us in which any
      director, executive officer or beneficial holder of more than 10% of the
      outstanding common stock, or any of their respective relatives, spouses,
      associates or affiliates, has had or will have any direct or material indirect
      interest. We have no policy regarding entering into transactions with affiliated
      parties.




29




**ITEM
      13. EXHIBITS.**


Exhibit
                No.
              
              Description2.1
              
              Agreement
                  and Plan of Reorganization between Quintek Technologies, Inc.,
                  and Juniper
                  Acquisition Corporation, filed as an exhibit to the current report
                  on Form
                  8-K filed with the Securities and Exchange Commission on February
                  25, 2000
                  and incorporated herein by reference.3.1
              
              Articles
                  of Incorporation, filed as an exhibit to the annual report on Form
                  10-KSB
                  filed with the Securities and Exchange Commission on October 16,
                  2000 and
                  incorporated herein by reference.3.2
              
              Bylaws
                  of the Company, filed as an exhibit to the annual report on Form
                  10-KSB
                  filed with the Securities and Exchange Commission on October 16,
                  2000 and
                  incorporated herein by reference.4.1
              
              Form
                  of Irrevocable Proxy Granted to Chief Executive Officer dated January
                  30
                  or 31, 2003, filed as an exhibit to the quarterly report on Form
                  10-QSB
                  filed with the Securities and Exchange Commission on February 14,
                  2003 and
                  incorporated herein by reference.4.2
              
              Securities
                  Purchase Agreement, dated May 17, 2006, by and betweenQuintek
                  Technologies, Inc. and Cornell Capital Partners L.P.,
                  filed as an exhibit to the Current Report on Form 8-K, filed with
                  the
                  Commission on May 24, 2006 and incorporated herein by
                  reference.4.3
              
              Secured
                  Convertible Debenture issued to Cornell Capital Partners LP, dated
                  May 17,
                  2006, filed as an exhibit to the Current Report on Form 8-K, filed
                  with
                  the Commission on May 24, 2006 and incorporated herein by
                  reference.4.4
              
              Warrant
                  to purchase 10,415,000 shares of Common Stock, dated May 17, 2006,
                  issued
                  to Cornell Capital Partners L.P.,
                  filed as an exhibit to the Current Report on Form 8-K, filed with
                  the
                  Commission on May 24, 2006 and incorporated herein by
                  reference.4.5
              
              Warrant
                  to purchase 12,500,000 shares of Common Stock, dated May 17, 2006,
                  issued
                  to Cornell Capital Partners L.P.,
                  filed as an exhibit to the Current Report on Form 8-K, filed with
                  the
                  Commission on May 24, 2006 and incorporated herein by
                  reference.4.6
              
              Warrant
                  to purchase 17,857,000 shares of Common Stock, dated May 17, 2006,
                  issued
                  to Cornell Capital Partners L.P.,
                  filed as an exhibit to the Current Report on Form 8-K, filed with
                  the
                  Commission on May 24, 2006 and incorporated herein by
                  reference.4.7
              
              Warrant
                  to purchase 15,625,000 shares of Common Stock, dated May 17, 2006,
                  issued
                  to Cornell Capital Partners L.P.,
                  filed as an exhibit to the Current Report on Form 8-K, filed with
                  the
                  Commission on May 24, 2006 and incorporated herein by
                  reference.4.8
              
              Registration
                  Rights Agreement, dated May 17, 2006, by and between Quintek Technologies
                  Inc. and Cornell CapitalPartners
                  L.P.,
                  filed as an exhibit to the Current Report on Form 8-K, filed with
                  the
                  Commission on May 24, 2006 and incorporated herein by
                  reference.4.9
              
              Security
                  Agreement, dated May 17, 2006, by and between Quintek Technologies
                  Inc.
                  and Cornell Capital Partners L.P.,
                  filed as an exhibit to the Current Report on Form 8-K, filed with
                  the
                  Commission on May 24, 2006 and incorporated herein by
                  reference.4.10
              
              Security
                  Agreement, dated May 17, 2006, by and between Quintek Services,
                  Inc. and
                  Cornell Capital Partners L.P.,
                  filed as an exhibit to the Current Report on Form 8-K, filed with
                  the
                  Commission on May 24, 2006 and incorporated herein by
                  reference.
  30
  4.11
              
              Security
                  Agreement, dated May 17, 2006, by and between Sapphire Consulting
                  Services
                  and Cornell Capital Partners L.P.,
                  filed as an exhibit to the Current Report on Form 8-K, filed with
                  the
                  Commission on May 24, 2006 and incorporated herein by
                  reference.4.12
              
              Amendment
                  No. 1 to Securities Purchase Agreement, dated May 17, 2006, by
                  and betweenQuintek
                  Technologies, Inc. and Cornell Capital Partners L.P.,
                  filed as an exhibit to the Registration Statement on Form SB-2,
                  filed with
                  the Commission on October 30, 2006 and incorporated herein by
                  reference.4.13
              
              Amendment
                  No. 1 to Registration Rights Agreement, dated May 17, 2006, by
                  and betweenQuintek
                  Technologies, Inc. and Cornell Capital Partners L.P.,
                  filed as an exhibit to the Registration Statement on Form SB-2,
                  filed with
                  the Commission on October 30, 2006 and incorporated herein by
                  reference.4.14
              
              Amendment
                  No. 1 toWarrant
                  to purchase 10,415,000 shares of Common Stock, dated May 17, 2006,
                  issued
                  to Cornell Capital Partners L.P.,
                  filed as an exhibit to the Registration Statement on Form SB-2,
                  filed with
                  the Commission on October 30, 2006 and incorporated herein by
                  reference.4.15
              
              Amendment
                  No. 1 toWarrant
                  to purchase 12,500,000 shares of Common Stock, dated May 17, 2006,
                  issued
                  to Cornell Capital Partners L.P.,
                  filed as an exhibit to the Registration Statement on Form SB-2,
                  filed with
                  the Commission on October 30, 2006 and incorporated herein by
                  reference.4.16
              
              Amendment
                  No. 1 toWarrant
                  to purchase 17,857,000 shares of Common Stock, dated May 17, 2006,
                  issued
                  to Cornell Capital Partners L.P.,
                  filed as an exhibit to the Registration Statement on Form SB-2,
                  filed with
                  the Commission on October 30, 2006 and incorporated herein by
                  reference.4.17
              
              Amendment
                  No. 1 toWarrant
                  to purchase 15,625,000 shares of Common Stock, dated May 17, 2006,
                  issued
                  to Cornell Capital Partners L.P.,
                  filed as an exhibit to the Registration Statement on Form SB-2,
                  filed with
                  the Commission on October 30, 2006 and incorporated herein by
                  reference.10.1
              
              Consulting
                  Agreement between Quintek Technologies, Inc. and Zubair Kazi dated
                  January
                  31, 2003, filed as an exhibit to the registration statement on
                  Form S-8
                  filed with the Securities and Exchange Commission on March 11,
                  2003 and
                  incorporated herein by reference.10.2
              
              Warrant
                  Agreement between Quintek Technologies, Inc. and Zubair Kazi dated
                  January
                  31, 2003, filed as an exhibit to the registration statement on
                  Form S-8
                  filed with the Securities and Exchange Commission on March 11,
                  2003 and
                  incorporated herein by reference.10.3
              
              Purchase
                  Order Financing Agreement dated June 2, 2003 between Kazi Management
                  VI,
                  LLC and Quintek Technologies, Inc., filed as an exhibit to the
                  registration statement on Form S-8 filed with the Securities and
                  Exchange
                  Commission on August 18, 2003 and incorporated herein by
                  reference.10.4
              
              Consulting
                  Agreement, dated April 19, 2007, by and between Quintek Technologies,
                  Inc.
                  and KernanConsulting,
                  Inc., filed as an exhibit to the current report on Form 8-K filed
                  with the
                  Securities and Exchange Commission on May 1, 2007 and incorporated
                  herein
                  by reference.10.5
              
              Employment
                  Agreement between Quintek Technologies, Inc. and Andrew Haag dated
                  April
                  19, 2007, filed as an exhibit to the current report on Form 8-K
                  filed with
                  the Securities and Exchange Commission on May 1, 2007 and incorporated
                  herein by reference.14.1
              
              Code
                  of Ethical Conduct adopted June 10, 2003, filed as an exhibit to
                  the
                  current report on Form 8-K filed with the Securities and Exchange
                  Commission on October 13, 2004 and incorporated herein by
                  reference.
  31
  14.2
              
              Audit
                  Committee Charter adopted June 11, 2003, filed as an exhibit to
                  the
                  current report on Form 8-K filed with the Securities and Exchange
                  Commission on October 13, 2004 and incorporated herein by
                  reference.31.1
              
              Certification
                  of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                  promulgated under the Securities and Exchange Act of 1934, as
                  amended31.2
              
              Certification
                  of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d
                  14(a),
                  promulgated under the Securities and Exchange Act of 1934, as
                  amended32.1
              
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002 (Chief Executive
                  Officer)32.2
              
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002 (Chief Financial
                  Officer)




32




**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.**





**Audit
      Fees**





The
      aggregate fees billed by our auditors for professional services rendered in
      connection with the audit of our annual consolidated financial statements for
      fiscal 2007 and 2006 and reviews of the consolidated financial statements
      included in our Forms 10-QSB were $49,000 for 2007 and $52,000 for 2006.





**Audit-Related
      Fees**





For
      fiscal 2007 and 2006, our auditors did not bill any fees for assurance and
      related services that are reasonably related to the performance of the audit
      or
      review of our financial statements and are not reported under "Audit Fees"
      above.





**Tax
      Fees**





No
      fees
      were billed by our auditors for professional services for tax compliance, tax
      advice, and tax planning for fiscal 2007 and 2006, respectively.





**All
      Other Fees**





No
      fees
      were billed by our auditors for all other non-audit services rendered to us,
      such as attending meetings and other miscellaneous financial consulting, in
      fiscal 2007 and 2006.





**Audit
      Committee**





The
      audit
      committee meets prior to filing of any Form 10-QSB or 10-KSB to approve those
      filings. In addition, the committee meets to discuss audit plans and anticipated
      fees for audit and tax work prior to the commencement of that work. All fees
      paid to our independent auditors for fiscal 2007 were pre-approved by the audit
      committee.




33




**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**QUINTEK
              TECHNOLOGIES, INC.**Date:
                October 15, 2007
            By:
            /s/ JAMES
              KERNANJames
                KernanChief
                Executive Officer (Principal Executive
                Officer) Date:
                October 15, 2007
            By:
            /s/ ANDREW
              HAAGAndrew
                HaagChief
                Financial Officer (Principal Financial Officer and
              Principal
                Accounting Officer)




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.


Name
              
              Position
              
              Date/s/
                  JAMES KERNAN
                James
                  Kernan
              
              Chief
                  Executive Officer (Principal Executive Officer) and
                  Director
              
              October
                  15, 2007/s/
                  ANDREW HAAG
                Andrew
                  Haag
              
              Chief
                  Financial Officer (Principal Financial Officer and Principal Accounting
                  Officer) and Director
              
              October
                  15, 2007




34