**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**Amendment
      No. 1**





**To**





**FORM
      10-KSB**





(Mark
      One)


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


**ACT
      OF 1934**





**For
      the Fiscal Year Ended June 30, 2006**





**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, 2006 were $2,307,402.





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 September 25, 2006,
      was $o.





As
      of
      September 25, 2006, there were 151,699,773 shares of issuer’s common stock
      outstanding.







EXPLANATORY
      NOTE





We
      have
      determined, after consultation with our independent registered public accounting
      firm, that a restatement of our financial statements for the period ended June
      30, 2006 was necessary due to inappropriate recording of warrant liability
      in connection with the private placement we conducted in May 2006.




For
      the
      convenience of the reader, this Form 10-KSB/A sets forth the original Form
      10-KSB in its entirety. However, this Form 10-KSB/A only amends our financial
      statements and the footnotes to our financial statements, along with the
      corresponding changes to our Management’s Discussion and Analysis and Risk
      Factors. We also corrected typographical errors and have revised our controls
      and procedures disclosure as a result of these restatements. No other
      information in the original Form 10-KSB is amended hereby. In addition, pursuant
      to the rules of the SEC, Item 13 of Part III to the Initial Filing has been
      amended to contain currently dated certifications from our Principal Executive
      Officer and Principal Financial Officer, as required by Sections 302 and 906
      of
      the Sarbanes-Oxley Act of 2002. The certifications of our Principal Executive
      Officer and Principal Financial Officer are attached to this Form 10KSB/A as
      Exhibits 31.1, 31.2


32.1,
      32.2, respectively.




2




**QUINTEK
      TECHNOLOGIES, INC.**


**FORM
      10-KSB**




**For
      the Fiscal Year Ended June 30, 2006**


Part
                  I
              
              
              PageItem
                  1.
              Description
                  of Business.
              
              4Item
                  2.
              Description
                  of Property.
              
              13Item
                  3.
              Legal
                  Proceedings.
              
              13Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders.
              
              14Part
                  ll
              
              
              PageItem
                  5.
              Market
                  for Common Equity and Related Stockholder Matters.
              
              15Item
                  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.
              
              22Item
                  8A.
              Controls
                  and Procedures.
              
              22Item
                  8B.
              Other
                  Information.
              
              23Part
                  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
              
              26Item
                  12.
              Certain
                  Relationships and Related Transactions.
              
              29Item
                  13.
              Exhibits.
              
              30Item
                  14.
              Principal
                  Accountant Fees and Services.
              
              33Signatures.
              
              34




3




**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 "Investor Relations/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.wpcs.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. provides
      services to enable Fortune 500 and Global 2000 corporations to reduce costs
      and
      maximize revenues.





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 deliver superior customer service, fast turnaround time and
      competitive prices.





4


**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 form Forrester entitled “ *Service
      Oriented Architecture Will Shape the Future of BPO*  *Delivery* ”
states
      that, “Labor arbitrage is the most straightforward element of BPO delivery.”
Quintek bridges the gap of getting information to the outsourced laborer and
      is
      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). Quintek
      solves this problem through its high speed- high volume scanning and data captue
      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. Quintek
      solves this problem with a management tea that has over 40 years of experience
      with sales and implementation technology services industry.





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





Recent
      activity in this space by large private equity groups further validates the
      growth in the industry and attractiveness to institutional investors. This
      past
      year ACS, a Fortune 500 company with reported annual revenues of over $4 billion
      and more than 40,000 employees, was courted for a buyout by major private equity
      firms including the Blackstone group. The company declined offers and proceeded
      to make a tender offer for a significant portion of their own stock.
      Additionally, SourceCorp, a business process outsourcing solutions to clients
      throughout the U.S, with reported annual revenues of approximately $415 million,
      was recently acquired by Apollo Management L.P., one of the most
      active and successful private investment firms in the United States.




**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.





According
      to the Mortgage Banking Association, there will be $1.8 trillion in mortgage
      originations in 2006, down from $1.96 Trillion in 2005. We calculate that this
      represents approximately 13 million loans to be processed. Our experience is
      that each loan yields an average of 200 documents and that the customer will
      pay
      approximately $0.10 per mortgage page. This yields an addressable market of
      $260
      million. According to Healthcare Informatics.com, there were 15 billion health
      claims filed in 2004. Our experience is that customers pay an average of $0.10
      per claim for processing. This yields an addressable market of $1.5 billion
      for
      healthcare claims processing service. In 2005, total revenues from the Fortune
      500 companies were $8.2 trillion. Our experience is that a company will spend
      0.025% of its revenue on accounts payable outsourcing. This yields an
      addressable market of $1.7 billion for A/P processing services.





5


**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 OnBase from Hyland Software Inc., 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. At a rate of $0.05
      an
      image this could result in approximately $300,000 a month in billings and a
      gross profit of $120,000. Running two shifts at full capacity, the facility
      could process 13,200,000 documents a month, this could result in approximately
      $660,000 a month in billings and a gross profit of $264,000. This would
      materially impact the financial status of the company.





*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 “Sigma Level 5,” a 99.5% accuracy rate. We ensure this
      by utilizing an “Enter - Enter - Compare” process, whereby two separate
      operators independently index the same document, then compare results using
      automated systems. If discrepancies are found between the two separate operator
      versions, the batch is immediately rejected and routed to a senior project
      manager for rework.




6




We
      can
      perform this service in-house 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 OnBase from Hyland Software Inc., Documentum and Application Extender
      from EMC Corporation or FileNet P8 from Filenet Corporation. For customers
      that
      do not want to install and maintain their own ECM system, we resell web-based
      document hosting ASP services from our partners such as Hyland Software’s
      OnBase. This provides our clients the efficient and immediate capability of
      viewing business critical documents online.





*Workflow
      Automation*





We
      design
      and install software systems for automating the routing and approval processes
      related to electronic documents via the internet. **** This
      is
      accomplished by converting paper documents to electronic version and utilizing
      an automated workflow process via the internet or intranet.





*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 Thousand Oaks, California; Los
      Angeles, California; San Francisco, California; Seattle, Washington and
      Cambridge, Massachusetts.





*Direct
      Sales*





We
      currently have one full-time outside sales person and two inside sales people.
      We hope to grow this to a national staff. These senior salespeople are
      experienced and paid a base salary and a sales commission commensurate with
      that
      experience and are expected to meet an annual sales quota. We provide an
      incentive stock option plan to attract top sales talent.





*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 20% gross profit.





**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. Our sales team has been
      working with FedEx Kinko’s sales representatives on selling our 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
      in
      the past year 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
      national providers of BPO and document imaging services, including Affiliated
      Computer Services (NYSE:ACS) of Dallas, Texas, SourceCorp of
      Dallas, Texas and Electronic Data Systems Corp of Plano, Texas
      (NYSE:EDS).




7




EDS
      is a
      Fortune 500 company with reported annual revenues of approximately $20 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.





ACS
      is a
      Fortune 500 company with reported annual revenues of over $4 billion more than
      40,000 employees supporting client operations in nearly 100 countries provides
      business process and information technology outsourcing solutions to world-class
      commercial and government clients. This past year, ACS was courted for a buyout
      by major private equity firms. The company declined offers and proceeded to
      make
      a tender offer for a significant portion of their own stock.





SourceCorp
      is a business process outsourcing solutions to clients throughout the U.S.
      SourceCorp reported annual revenues of approximately $415 million. This company
      focuses on business processes in information-intensive industries including
      healthcare, legal, financial services, government, transportation and logistics.
      This company has offices in 24 states and operates in approximately 40 states,
      Washington D.C., Mexico and both domestically and offshore through alliances.
      SourceCorp was recently acquired by Apollo Management L.P., one of the most
      active and successful private investment firms in the United
      States.





**CUSTOMERS**





We
      had
      two customers that individually represented more than 10% of our revenues for
      the fiscal year ended June 30, 2006; GMAC represented 37% of our revenue and
      FedEx Kinko’s represented 16% of its revenue. In June 2006, we ceased production
      for GMAC at their DiTech.com facility.





**EMPLOYEES**





As
      of
      September 25, 2006, we had 22 full time employees, of which 15 are hourly
      employees and seven 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 $4,440,623 for the year ended June 30, 2006 compared to a net loss
      of $7,417,687 for the fiscal year ended June 30, 2005. 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 not require additional funds to continue our operations
      for the next twelve months. In the event that we do not receive the remaining
      funds under our financing arrangement with Cornell Capital or if we need
      additional financing, 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.




8




**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 may be 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 September 15, 2006, our Independent Registered Public Accounting
      Firm stated that our financial statements for the year ended June 30, 2006
      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 ($4,560,311), including net losses of $4,440,623 and $7,417,687
      for the fiscal years ending June 30, 2006 and 2005, 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 number of
      features of, our products grows.





9




**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. Steele 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. Robert
      Steele, our Chief Executive Officer and Mr. Andrew Haag, our Chief Financial
      Officer. Loss of the services of Messrs. Steele 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. Steele 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
      September 25, 2006, we had 151,699,773 shares
      of common stock issued and outstanding, secured convertible debentures issued
      and outstanding that may be converted into 31,578,948 shares of common stock
      based on current market prices and outstanding warrants to purchase 56,397,000
      shares of common stock. In addition, we have an obligation pursuant to a
      securities purchase agreement we entered into in May 2006 to issue additional
      secured convertible debentures that may be converted into 38,596,492 shares
      of
      our common stock based on current market prices. 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 our warrants, may be sold
      without restriction upon 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 (excluding accrued interest), based on market prices 25%, 50% and
      75%
      below the market price as of September 25, 2006 of $0.03 per share.


Number
              
              %
                  of%
                  Below
              
              Price
                  Per
              
              With
                  Discount
              
              of
                  Shares
              
              OutstandingMarket
              
              Share
              
              at
                  5%
              
              Issuable
              
              Stock25%
              
              $
              0.0225
              
              $
              0.021375
              
              
              93,567,252
              
              
              38.15
              %50%
              
              $
              0.015
              
              $
              0.01425
              
              
              140,350,878
              
              
              48.06
              %75%
              
              $
              0.0075
              
              $
              0.007125
              
              
              380,701,755
              
              
              71.51
              %




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.




10




**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 The Shares
      We
      Have Allocated And Plan to Register Are Not Adequate And We Are Required To
      File
      An Additional Registration Statement, We May Incur Substantial Costs In
      Connection Therewith.**





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. Accordingly, we plan to allocate and register, upon
      obtaining an increase in the authorized number of shares of common stock, at
      least 150,000,000 shares to cover the conversion of the secured convertible
      debentures. 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. Although
      we
      currently have $900,000 secured convertible debentures outstanding, the
      investors are obligated to purchase additional secured convertible debentures
      in
      the aggregate of $1,100,000. 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.




11




**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.





**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 receive from the investor a written agreement to
                the
                transaction, setting forth the identity and quantity of the penny
                stock to
                be purchased.





In
      order
      to approve a person's account for transactions in penny stocks, the broker
      or
      dealer must:





·
            obtain financial information and investment experience
              objectives of the person; and  ·
            make
                a reasonable determination that the transactions in penny stocks
                are
                suitable for that person and the person has sufficient knowledge
                and
                experience in financial matters to be capable of evaluating the risks
                of
                transactions in penny stocks.




12




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.





**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 $7,768.





We
      lease
      on a month-to-month basis, 1,800 square feet of office and warehouse 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.





On
      April
      16, 2004, Decision One Corporation filed suit in the County of Bannock, Idaho
      against us for $22,661.56 for goods provided. Since 2000, Decision One (formerly
      Imation) has been both a vendor to us and a reseller of our Q4300 Printers.
      We
      filed a counterclaim on August 1, 2004. We assert that Decision One used its
      authority as a dealer of our product to disparage us, in violation of its dealer
      agreement with us, and we sought relief for the hundreds of thousands of dollars
      in business lost because of it. On January 11, 2005, the Court granted Judgment
      for the sum of $21,000 in favor of the Decision One Corporation. The Court
      has
      ruled that we would be allowed to file the counterclaim under this action,
      rather than a separate lawsuit. In March 2005, a stipulation settlement was
      accepted by Decision One where they agreed to accept $15,000 in full
      satisfaction of their debt. We agreed to pay $2,000 upon execution of the
      stipulation plus $1,000 for 13 months thereafter. In April 2006, we made a
      payment of $16,827 to satisfy our obligations pursuant to the terms of the
      judgment and a Satisfaction of Judgment was entered in the matter.





An
      action
      which was pending in the Superior Court of the State of California for Orange
      County against one of our competitors, a former employee and a former officer
      of
      ours, has been resolved by mutual agreement. The settlement includes an
      injunction which prevents the defendants from soliciting or initiating contact
      with 23 accounts until February 28, 2007. There was no admission or
      acknowledgment of any wrongdoing by the defendants in stipulating to the
      injunction. We, the plaintiff, and defendants Robert Brownell, Chris De Lapp
      and
      Document Imaging Technologies, Inc. entered into a stipulated injunction in
      the
      matter which provides, among other things, that Defendants and all of their
      respective officers, agents, representatives, directors, affiliates, employees,
      successors in interest, and all persons acting in concert or participating
      with
      them, are restrained and enjoined from soliciting or initiating contact with
      23
      clients listed in the injunction. Additionally, the Defendants shall not use,
      disclose, disseminate or publish in any manner our confidential business
      information and/or trade secrets including lists of clients, candidates,
      information regarding contracts or prospective Quintek contracts with clients
      and candidates, computer programs, business plans and strategies, prices, job
      descriptions, contracts, budgets, and similar confidential or proprietary
      materials or information respecting us or our clients' or candidates' business
      affairs, as well as confidential information of a personal nature of us and
      our
      employees, managers and officers, without our prior written consent. All other
      related claims and causes of action were dismissed with prejudice.




13




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





None.





14


**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 2005****High**
            
            **Low**First
                Quarter
            
            $
            0.21
            
            $
            0.14Second
                Quarter
            
            $
            0.26
            
            $
            0.16Third
                Quarter
            
            $
            0.20
            
            $
            0.10Fourth
                Quarter
            
            $
            0.18
            
            $
            0.10





**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 (1)
            
            $
            0.05
            
            $
            0.03Second
                Quarter
            
            
            xxx
            
            
            XxxThird
                Quarter
            
            
            xxx
            
            
            XxxFourth
                Quarter
            
            
            xxx
            
            
            Xxx





(1)
            As
                of September 25, 2006.





**Holders**





As
      of
      September 25, 2006, we had approximately 500 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.





**Recent
      Sale of Unregistered Securities**





On
      April
      12, 2006, we issued 1,183,184 shares of common stock upon conversion of $5,000
      of a previously issued convertible debenture.




15




On
      April
      12, 2006, we issued 50,000 shares of common stock valued at $50,000 upon
      exercise of outstanding warrants.





On
      June
      15, 2006, we issued 4,000,000 shares of common stock to a consultant valued
      at
      $160,000 pursuant to a fee agreement in regards to raising funding. The common
      shares were valued at the closing market price of the shares on the date of
      issuance.





On
      June
      15, 2006, we issued 1,370,286 common shares to a marketing partner for an
      engagement fee valued at $58,811. The common shares were valued at the closing
      market price of the shares on the date of issuance.





On
      June
      23, 2006, we issued 234,375 common shares to a consultant for settlement in
      full
      of agreement fees valued at $7,500. The common shares were valued at the closing
      market price of the shares on the date of issuance.





To
      obtain
      funding for our ongoing operations, we entered into a Securities Purchase
      Agreement with Cornell Capital Partners L.P., an accredited investor, on May
      17,
      2006, and amended on September 15, 2006, for the sale of $2,000,000 in secured
      convertible debentures and warrants. The investors are obligated to provide
      us
      with an aggregate of $2,000,000 as follows:





●
      $750,000 was disbursed on May 17, 2006;





●
      $150,000 was disbursed on September 15, 2006;





●
      $600,000 will be disbursed two business days prior to the date a registration
      statement registering for resale the shares of common stock underlying the
      secured convertible debentures and warrants is filed by us with the Securities
      and Exchange Commission; and





●
      $500,000 will be disbursed upon the effectiveness of the registration statement
      registering the shares of common stock underlying the secured convertible
      debentures and warrants.





Accordingly,
      we have received a total of $900,000 pursuant to the Securities Purchase
      Agreement.





The
      secured convertible debentures bear interest at 10%, mature three years from
      the
      date of issuance, and are convertible into our common stock, at the investor's
      option, at the lower of (i) $0.0662 or (ii) 95% of the lowest daily volume
      weighted average price of our common stock, as quoted by Bloomberg, LP, during
      the 30 trading days immediately preceding the date of conversion.





In
      connection with the securities purchase agreement, as amended, we agreed to
      issue Cornell warrants to purchase an aggregate of 56,397,000 shares of our
      common stock, exercisable for a period of five years; including warrants to
      purchase 17,857,000 shares at an exercise price of $0.05, warrants to purchase
      15,625,000 shares at an exercise price of $0.055, warrants to purchase
      12,500,000 shares at an exercise price of $0.065 and warrants to purchase
      10,415,000 shares at an exercise price of $0.08. All of the warrants were issued
      upon closing. We have the option to force the holder to exercise the warrants,
      as long as the shares underlying the warrants are registered pursuant to an
      effective registration statement, if the closing bid price of our common stock
      trades above certain levels. In the event that the closing bid price of our
      common stock is greater than or equal to $0.10 for a period of 20 consecutive
      days prior to the forced conversion, we can force the warrant holder to exercise
      the $0.05 warrants. In the event that the closing bid price of our common stock
      is greater than or equal to $0.11 for a period of 20 consecutive days prior
      to
      the forced conversion, we can force the warrant holder to exercise the $0.055
      warrants. In the event that the closing bid price of our common stock is greater
      than or equal to $0.13 for a period of 20 consecutive days prior to the forced
      conversion, we can force the warrant holder to exercise the $0.065 warrants.
      In
      the event that the closing bid price of our common stock is greater than or
      equal to $0.16 for a period of 20 consecutive days prior to the forced
      conversion, we can force the warrant holder to exercise the $0.08
      warrants.





The
      investor has contractually agreed to restrict its ability to convert the
      debentures or exercise the warrants and receive shares of our common stock
      such
      that the number of shares of common stock held by it and its affiliates after
      such conversion does not exceed 4.99% of the then issued and outstanding shares
      of common stock. ****





16





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, 2006 Compared to Fiscal Year
      Ended June 30, 2005**





Our
      revenues totaled $2,307,402 and $1,547,923 for the twelve months ended June
      30,
      2006 and 2005, respectively, an increase of $759,479 (149%) in 2006 was due
      to
      our investment in sales and marketing efforts and resultant increase in new
      sales contracts.





For
      the
      twelve months ended June 30, 2006 and 2005, cost of revenue was $1,522,814
      and
      $1,070,001 respectively, an increase of $452,813 (142%). Cost of revenue for
      both periods consisted mostly of labor and production costs. Cost of revenue
      increased in 2006 due to increase in revenues from increase in new sales
      contracts we received.





Total
      operating expenses were $5,344,899 for the twelve-month period ended June 30,
      2006 as compared to $5,982,314 for the same period in 2005. The decrease in
      operating expenses of $637,415 (12%) in 2006 as compared to 2005 resulted
      primarily due to a permanent decline in the market value of marketable
      securities we held as investment. Selling, general and administrative expenses
      in 2006 were $3,832,925 compared to $2,200,476, an increase of $1,631,449 (77%)
      primarily due to increased funding costs, legal fees, penalties and salary
      expenses.





Total
      non-operating income for the twelve months ended June 30, 2006 was $120,488
      compared to total non-operating expense of $1,912,495 for the same period in
      2005. During 2006, we realized a gain on sale of investment of $113,700 and
      recorded a change in fair value of warrants of $677,008. We recorded a
      beneficial conversion feature expense of $110,924 and interest expense of
      $571,674. During 2005, we recorded a loss of $594,892 due to conversion of
      debt,
      beneficial conversion feature expense of $317,021 and interest expense of
      $1,122,703. As a result, we incurred a reduction in net loss of $4,440,623
      for
      the period ending June 30, 2006 compared to a net loss of $7,417,687 for the
      same period in 2005. This reduction in net loss is attributed to the increase
      in
      net revenue, reduction in the permanent decline of marketable securities, and
      the non-operating income recorded pursuant to the change in the fair value
      of
      warrants.





In
      June
      2006, we ceased production of mortgage processing services for GMAC at their
      DiTech.com facility. This customer represented a material portion of our
      revenues over the past 12 months. We are focused on obtaining additional
      business to replace this contract and grow revenues. There can be no assurance
      that we will be able to obtain a significant amount of new business to replace
      these revenues.





At
      June
      30, 2006, our total assets were $1,195,643 compared to $1,402,264 as of June
      30,
      2005. The assets decreased by $206,621 (15%) primarily due to a reduction in
      accounts receivable and the depreciation of property and equipment. Total
      current liabilities at June 30, 2006 were $4,164,053 compared to $2,168,067
      as
      of June 30, 2005. The current liabilities increased by $1,995,986 (92%)
      primarily due to an increase in the warrant liability as a result of financing
      to grow the business. The long term debt decreased to $28,741 as of June 30,
      2006 compared to $128,162 at June 30, 2005.




18




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 $3,526,425 at June 30, 2006. 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
      $96,661 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 2007 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. Our management estimates that it currently has the funding
      facilities in place to operate for at least twelve months. We have historically
      financed operations from the sale of our common stock and the conversion of
      common stock warrants. At June 30, 2006, we had cash on hand of $410,007 as
      compared cash on hand of $12,669 at June 30, 2005.





Net
      cash
      used in operating activities for the year ended June 30, 2006 was $ 1,208,903 ,
      primarily attributable to the increase in accounts payable and accrued expenses
      of $163,508, decrease in accounts receivable of $87,657, decrease in prepaid
      expenses of $5,562, and a decrease in deferred revenue of $16,656.





Net
      cash
      provided by investing activities for the year ended June 30, 2006 was $457,879,
      primarily due to the proceeds from sale of marketable securities of $233,938
      and
      removal of restrictions on cash of $260,087. We used $36,146 of cash to acquire
      equipment during the year ended June 30, 2006.





Net
      cash
      provided by financing activities for the year ended June 30, 2006 was
      $1,148,361. The increase was primarily attributable to proceeds from issuance
      of
      debentures of $750,000, proceeds from issuance of convertible notes of $50,500,
      proceeds from sale of shares to be issued of $151,750, proceeds from sale of
      common shares of $265,000, proceeds from prepayments for warrants to be issued
      for note conversion of $125,000, proceeds from issuance of common stock upon
      exercise of warrants of $59,400. We made lease payments of $128,540, payments
      on
      notes payable of $22,914, and net payments on factoring payables of
      $101,834.





As
      a
      result of the above activities, we experienced a net increase in cash and cash
      equivalents of $397,338 as of June 30, 2006 as compared to $2,931 net decrease
      in cash as of June 30, 2005. 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.





To
      obtain
      funding for our ongoing operations, we entered into a Securities Purchase
      Agreement with Cornell Capital Partners L.P., an accredited investor, on May
      17,
      2006, and amended on September 15, 2006, for the sale of $2,000,000 in secured
      convertible debentures and warrants. The investors are obligated to provide
      us
      with an aggregate of $2,000,000 as follows:





●
      $750,000 was disbursed on May 17, 2006;





●
      $150,000 was disbursed on September 15, 2006;




19




●
      $600,000 will be disbursed two business days prior to the date a registration
      statement registering for resale the shares of common stock underlying the
      secured convertible debentures and warrants is filed by us with the Securities
      and Exchange Commission; and





●
      $500,000 will be disbursed upon the effectiveness of the registration statement
      registering the shares of common stock underlying the secured convertible
      debentures and warrants.





Accordingly,
      we have received a total of $900,000 pursuant to the Securities Purchase
      Agreement.





The
      secured convertible debentures bear interest at 10%, mature three years from
      the
      date of issuance, and are convertible into our common stock, at the investor's
      option, at the lower of (i) $0.0662 or (ii) 95% of the lowest daily volume
      weighted average price of our common stock, as quoted by Bloomberg, LP, during
      the 30 trading days immediately preceding the date of conversion.





In
      connection with the securities purchase agreement, as amended, we agreed to
      issue Cornell warrants to purchase an aggregate of 56,397,000 shares of our
      common stock, exercisable for a period of five years; including warrants to
      purchase 17,857,000 shares at an exercise price of $0.05, warrants to purchase
      15,625,000 shares at an exercise price of $0.055, warrants to purchase
      12,500,000 shares at an exercise price of $0.065 and warrants to purchase
      10,415,000 shares at an exercise price of $0.08. All of the warrants were issued
      upon closing. We have the option to force the holder to exercise the warrants,
      as long as the shares underlying the warrants are registered pursuant to an
      effective registration statement, if the closing bid price of our common stock
      trades above certain levels. In the event that the closing bid price of our
      common stock is greater than or equal to $0.10 for a period of 20 consecutive
      days prior to the forced conversion, we can force the warrant holder to exercise
      the $0.05 warrants. In the event that the closing bid price of our common stock
      is greater than or equal to $0.11 for a period of 20 consecutive days prior
      to
      the forced conversion, we can force the warrant holder to exercise the $0.055
      warrants. In the event that the closing bid price of our common stock is greater
      than or equal to $0.13 for a period of 20 consecutive days prior to the forced
      conversion, we can force the warrant holder to exercise the $0.065 warrants.
      In
      the event that the closing bid price of our common stock is greater than or
      equal to $0.16 for a period of 20 consecutive days prior to the forced
      conversion, we can force the warrant holder to exercise the $0.08
      warrants.





The
      investor has contractually agreed to restrict its ability to convert the
      debentures or exercise the warrants and receive shares of our common stock
      such
      that the number of shares of common stock held by it and its affiliates after
      such conversion does not exceed 4.99% of the then issued and outstanding shares
      of common stock. ****





**Subsequent
      Events**





On
      August
      3, 2006, we issued 3,529,169 common shares pursuant to a warrant conversion
      and
      convertible note valued at $151,750 reported as shares to be issued from the
      year ending June 30, 2006.





**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.





20




*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
      November 2004, the FASB issued SFAS No. 151, "Inventory Costs -- an amendment
      of
      ARB No. 43, Chapter 4. This statement clarifies the criteria of "abnormal
      amounts" of freight, handling costs, and spoilage that are required to be
      expensed as current period charges rather than deferred in inventory. In
      addition, this statement requires that allocation of fixed production overheads
      to the costs of conversion be based on the normal capacity of the production
      facilities. We do not expect the adoption of this statement will have any
      material impact on our results or financial position.





In
      December 2004, the FASB issued SFAS no. 153, *Exchanges
      of Nonmonetary Assets an amendment of APB Opinion No. 29.* This
      statement addresses the measurement of exchanges of nonmonetary assets. It
      eliminates the exception from fair value measurement for nonmonetary exchanges
      of similar productive assets in paragraph 21(b) of APB Opinion No. 29, *Accounting
      for Nonmonetary Transactions,* and
      replaces it with an exception for exchanges that do not have commercial
      substance. This statement specifies that a nonmonetary exchange has commercial
      substance if the future cash flows of the entity are expected to change
      significantly as a result of the exchange. We do not expect the adoption of
      this
      statement will have any material impact on our results or financial
      position.





SFAS
      No.
      154, *Accounting
      Changes and Error Corrections,* was
      issued in May 2005 and replaces APB Opinion No. 20 and SFAS No. 3. SFAS No.
      154
      requires retrospective application for voluntary changes in accounting principle
      in most instances and is required to be applied to all accounting changes made
      in fiscal years beginning after December 15, 2005. At such, we are required
      to
      adopt these provisions at the beginning of the fiscal year ending June 30,
      2007.
      We are currently evaluating the impact of SFAS 154 on our consolidated financial
      statements.





In
      February 2006, the FASB issued SFAS No. 155, “ *Accounting
      for Certain Hybrid Financial Instruments* ”,
      which
      amends SFAS No. 133, “Accounting for Derivatives Instruments and Hedging
      Activities” and SFAS No. 140, “ *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishment of
      Liabilities* ”.
      SFAS
      155 amends SFAS 133 to narrow the scope exception for interest-only and
      principal-only strips on debt instruments to include only such strips
      representing rights to receive a specified portion of the contractual interest
      or principle cash flows. SFAS 155 also amends SFAS 140 to allow qualifying
      special-purpose entities to hold a passive derivative financial instrument
      pertaining to beneficial interests that itself is a derivative instruments.
      We
      are currently evaluating the impact this new Standard, but believe that it
      will
      not have a material impact on our financial position.





21


**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, 2006 and June 30, 2005
            
            F-3Consolidated
                Statements of Operations for the years endedJune
                30, 2006 and 2005
            
            F-4Consolidated
                Statement of Stockholders' Equity for the years ended June 30, 2006
                and
                2005
            
            F-5Consolidated
                Statements of Cash Flows for the years endedJune
                30, 2006 and 2005
            
            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 (a California Corporation) as of June 30, 2006 and the
      related consolidated statements of operations, stockholders’ deficit and cash
      flows for each of the two years ended June 30, 2006 and 2005. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our 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 financial statements referred to above present fairly, in all
      material respects, the financial position of Quintek Technologies, Inc. and
      subsidiary as of June 30, 2006 and the results of its operations and its cash
      flows for the years ended June 30, 2006 and 2005 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 21 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 21. The consolidated financial statements do not include
      any
      adjustments that might result from the outcome of this uncertainty.





As
      discussed in Note 24, the financial statements for the year ended June 30,
      2006
      have been restated.




/s/
      KABANI & COMPANY, INC.





KABANI
      & COMPANY, INC.





Los
      Angeles, California


September
      15, 2006 except for note 6, 13, 16, 21 and 24 which are as of September 5,
      2007





F-2




**QUINTEK
                    TECHNOLOGIES, INC. AND SUBSIDIARIES****CONSOLIDATED
                    BALANCE SHEET****as
                    of June 30 2006****(Unaudited)**
  **ASSETS**Current
                    assets:Cash
                    and cash equivalents
                
                $
                410,007Accounts
                    receivable, net of allowance for doubtful accounts of $370
                
                
                227,621Total
                    current assets
                
                
                637,628Property
                    and equipment, net
                
                
                448,197Other
                    assets:Deposits
                
                
                108,935Other
                    assets (Restated)
                
                
                883Total
                    other assets
                
                
                109,818$
                1,195,643**LIABILITIES
                    AND STOCKHOLDERS' DEFICIT**Current
                    liabilities:Accounts
                    payable and accrued expenses
                
                $
                990,737Factoring
                    payable
                
                
                136,722Payroll
                    and payroll taxes payable
                
                
                181,565Payroll
                    taxes assumed in merger
                
                
                96,661Advances
                    from lenders
                
                
                36,736Loans
                    payable
                
                
                326,681Notes
                    payable
                
                
                62,590Convertible
                    bonds
                
                
                62,495Convertible
                    debentures
                
                
                210,674Convertible
                    notes
                
                
                50,500Warrant
                    Liability (Restated)
                
                
                1,967,637Deferred
                    revenue
                
                
                8,421Dividend
                    payable
                
                
                32,633Total
                    current liabilities
                
                
                4,164,052Long-term
                    debt
                
                
                28,741Stockholders'
                    deficit:Preferred
                    stock, convertible, no par value, 50,000,000 shares
                    authorized,3,154,750
                    shares issued and outstanding
                
                
                681,605Common
                    stock, $0.01 par value, 200,000,000 shares authorized,148,170,604
                    shares issued and outstanding
                
                
                1,481,706Additional
                    paid-in capital (Restated)
                
                
                30,655,361Shares
                    to be issued
                
                
                156,750Stock
                    subscription receivable
                
                
                (776,250
                )Prepaid
                    consulting
                
                
                (113,455
                )Unrealized
                    gain on marketable securities
                
                
                (90,859
                )Investments
                    held in escrow
                
                
                (40,002
                )Accumulated
                    deficit (Restated)
                
                
                (34,952,008
                )Total
                    stockholders' deficit
                
                
                (2,997,151
                )Total
                    liabilities and stockholders' deficit
                
                $
                1,195,643
  F-3
  **QUINTEK
                    TECHNOLOGIES, INC. AND SUBSIDIARIES****CONSOLIDATED
                    STATEMENTS OF OPERATIONS AND COMPREHENSIVE
                    LOSS**
  **For
                    the twelve month period ended June 30,****2006**
                
                **2005****Restated**Net
                    revenue
                
                $
                2,307,402
                
                $
                1,547,923Cost
                    of revenue
                
                
                1,522,814
                
                
                1,070,001Gross
                    margin
                
                
                784,588
                
                
                477,922Operating
                    expenses:Selling,
                    general and administrative
                
                
                3,832,925
                
                
                2,200,476Permanent
                    decline on value of marketable securities
                
                
                -
                
                
                2,338,321Stock-based
                    compensation
                
                
                485,456Stock-based
                    consulting fees
                
                
                1,026,518
                
                
                1,443,517Total
                    operating expenses
                
                
                5,344,899
                
                
                5,982,314Loss
                    from operations
                
                
                (4,560,311
                )
                
                (5,504,392
                )Non-operating
                    income (expense):Realized
                    gain on investment
                
                
                113,700
                
                
                -Other
                    income
                
                
                15,810
                
                
                6,961Loss
                    on conversion of debt
                
                
                -
                
                
                (594,892
                )Uncollectible
                    from former officers
                
                
                (10,989
                )
                
                104,051Beneficial
                    conversion feature
                
                
                (110,924
                )
                
                (317,021
                )Change
                    in Fair Value of Warrants
                
                
                677,008
                
                
                -Interest
                    Income
                
                
                7,557
                
                
                11,109.00Interest
                    expense
                
                
                (571,674
                )
                
                (1,122,703
                )Total
                    non-operating income (expense)
                
                
                120,488
                
                
                (1,912,495
                )Loss
                    before provision for income taxes
                
                
                (4,439,823
                )
                
                (7,416,887
                )Provision
                    for income taxes
                
                
                800
                
                
                800Net
                    loss
                
                
                (4,440,623
                )
                
                (7,417,687
                )Dividend
                    requirement for preferred stock
                
                
                16,057
                
                
                16,575Net
                    loss applicable to common shareholders
                
                
                (4,456,680
                )
                
                (7,434,262
                )Other
                    comprehensive (loss)/gain:Reclassification
                    adjustment
                
                
                (4,080
                )
                
                -Unrealized
                    gain for the period
                
                
                9,317
                
                
                -Comprehensive
                    loss
                
                $
                (4,451,443
                )
                $
                (7,434,262
                )Basic
                    and diluted net loss per share
                
                $
                (0.04
                )
                $
                (0.10
                )Basic
                    and diluted net loss per share for dividendfor
                    preferred stock
                
                $
                0.00
                
                $
                0.00Basic
                    and diluted net loss per share applicable tocommon
                    shareholders
                
                $
                (0.04
                )
                $
                (0.10
                )Basic
                    and diluted weighted averageshares
                    outstanding
                
                
                125,051,937
                
                
                77,455,774
  F-4
  **QUINTEK
                    TECHNOLOGIES, INC. AND SUBSIDIARY****STATEMENTS
                    OF STOCKHOLDERS' DEFICIT****FOR
                    THE YEARS ENDED JUNE 30, 2006 AND
                    2005**
  **Preferred
                    Stock**
                
                **Common
                    Stock****Number
                      of**
                    **Shares**
                
                **Amount**
                
                **Number**
                    **of**
                    **Shares**
                
                **Amount**
                
                **Additional**
                    **Paid
                      in Capital**
                
                **Shares**
                      **to
                        be Issued**
                
                **Prepaid**
                    **Consulting
                      Fees**
                
                **Investment**
                    **in
                      Escrow**
                
                **Stock**
                    **Subscription**
                
                **Accumulated**
                    **Deficit**
                
                **Other**
                      **Comprehensive**
                      **Loss**
                
                **Total**
                      **Stockholders'**
                      **Deficit****Balance
                    at June 30, 2004**
                
                
                -
                
                $
                -
                
                
                48,749,994
                
                $
                487,500
                
                $
                20,475,680
                
                $
                40,000
                
                $
                (35,798
                )
                $
                -
                
                
                
                
                $
                (23,061,065
                )
                $
                -
                
                $
                (2,093,683
                )Issuance
                    of shares for cash
                
                
                -
                
                
                -
                
                
                2,750,000
                
                
                27,500
                
                
                196,000
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                223,500Issuance
                    of shares for debt settlement
                
                
                1,027,602
                
                
                280,262
                
                
                12,132,736
                
                
                121,327
                
                
                578,679
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                980,268Conversion
                    of preferred stocks
                
                
                (1,345,184
                )
                
                (696,315
                )
                
                3,624,320
                
                
                36,243
                
                
                660,072
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                -Issuance
                    of shares for services
                
                
                2,342,000
                
                
                367,400
                
                
                3,894,560
                
                
                38,946
                
                
                510,731
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                917,077Issuance
                    of shares for conversion of bond
                
                
                1,372,332
                
                
                760,658
                
                
                7,426,098
                
                
                74,261
                
                
                225,239
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                1,060,158Issuance
                    of shares for purchase of investment
                
                
                -
                
                
                -
                
                
                14,000,000
                
                
                140,000
                
                
                2,520,000
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                2,660,000Shares
                    to be issued for services
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                8,000
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                8,000Shares
                    issued for services
                
                
                40,000
                
                
                40,000
                
                
                -
                
                
                -
                
                
                -
                
                
                (40,000
                )
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                -Common
                    stock options granted
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                1,676,375
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                1,676,375Issuance
                    of shares upon exercise of warrants
                
                
                -
                
                
                -
                
                
                5,902,824
                
                
                59,028
                
                
                720,940
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                779,968Amortization
                    of warrants granted
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                2,950
                
                
                -
                
                
                32,678
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                35,628Investment
                    held in escrow
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (126,567
                )
                
                
                
                
                -
                
                
                -
                
                
                (126,567
                )Unrealized
                    loss on investment
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                (8,374
                )
                
                (8,374
                )Beneficial
                    conversion feature
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                427,948
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                427,948Preferred
                    dividends
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                (16,576
                )
                
                -
                
                
                (16,576
                )Net
                    loss for the year ended June 30, 2005
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                (7,417,687
                )
                
                -
                
                
                (7,417,687
                )**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
                )
                $
                (893,967
                )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
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                485,456Common
                    stock options granted for services
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                619,547
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                619,547Issuance
                    of shares upon exercise of warrants
                
                
                -
                
                
                -
                
                
                936,042
                
                
                9,360
                
                
                483,304
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                492,664Amortization
                    of warrants granted
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                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
                )
  F-5
  **QUINTEK
                      TECHNOLOGIES, INC. AND SUBSIDIARIES****CONSOLIDATED
                      STATEMENT OF CASH FLOWS**
 **Twelve
                    months periods ended****June
                    30, 2006****2006**
                
                **2005****(Restated)****OPERATING
                    ACTIVITIES**Net
                    loss
                
                $
                (4,440,623
                )
                $
                (7,417,687
                )Adjustments
                    to reconcile net loss to net cash used in operations:Depreciation
                    and amortization
                
                
                173,379
                
                
                130,666Inventory
                    write-off
                
                
                -
                
                
                (6,758
                )Discount
                    on factor
                
                
                12,091
                
                
                -Expenses
                    paid by a note payable
                
                
                13,564
                
                
                -Issuance
                    of shares for consulting services
                
                
                983,517
                
                
                918,129Loss
                    on conversion of debt
                
                
                -
                
                
                594,892Shares
                    to be issued for compensation
                
                
                -
                
                
                8,000Permanent
                    decline on value of marketable securities
                
                
                -
                
                
                2,338,321Bad
                    Debts
                
                
                370
                
                
                -Uncollectible
                    from former officers
                
                
                10,989
                
                
                -Gain
                    on the sale of the investment
                
                
                (113,700
                )
                
                -Change
                    in Fair value of Warrants
                
                
                (677,008
                )
                
                -Beneficial
                    conversion feature expense
                
                
                110,924
                
                
                317,021Amortization
                    of the Unamortized discount
                
                
                109,214
                
                
                -Finance
                    Expense
                
                
                1,185,904
                
                
                -Stock
                    options granted
                
                
                485,456
                
                
                1,636,652Warrants
                    granted to consultant
                
                
                619,547
                
                
                -Commission
                    paid out of investments
                
                
                -
                
                
                66,500Note
                    Conversion Expense
                
                
                104,674
                
                
                -Gain
                    on legal settlement
                
                
                (7,827
                )
                
                -Changes
                    in current assets and liabilities:(Increase)
                    decrease in accounts receivable
                
                
                87,657
                
                
                (286,542
                )Decrease
                    in inventory
                
                
                -
                
                
                6,758Decrease
                    in other current assets
                
                
                -
                
                
                6(Increase)
                    decrease in prepaid expenses
                
                
                5,562
                
                
                (300
                )(Increase)
                    decrease in deposits
                
                
                643
                
                
                (101,162
                )Increase
                    in accounts payable
                
                
                163,508
                
                
                424,494Increase
                    (decrease) in payroll taxes payable
                
                
                (20,090
                )
                
                14,517(Decrease)
                    in deferred revenue
                
                
                (16,656
                )
                
                (61,963
                )Net
                    cash used in operating activities
                
                
                (1,208,903
                )
                
                (1,418,456
                )**INVESTING
                    ACTIVITIES**Acquisition
                    of equipment
                
                
                (36,146
                )
                
                (175,764
                )(Increase)
                    decrease in restricted cash
                
                
                260,087
                
                
                (252,625
                )Proceeds
                    from sale of marketable securities
                
                
                233,938
                
                
                -Net
                    cash provided by/ (used in) investing activies
                
                
                457,879
                
                
                (428,389
                )**FINANCING
                    ACTIVITIES**Payments
                    on factoring payable
                
                
                (466,160
                )
                
                (135,586
                )Proceeds
                    from factor
                
                
                364,326
                
                
                229,292Payments
                    on leases
                
                
                (128,540
                )
                
                (48,260
                )Proceeds
                    from issuance of debentures
                
                
                750,000
                
                
                300,000Proceeds
                    from convertible bonds
                
                
                -
                
                
                250,000Proceeds
                    from convertible notes
                
                
                50,500
                
                
                200,000Cash
                    received for shares to be issued
                
                
                151,750
                
                
                -Proceeds
                    from sale of stocks
                
                
                265,000
                
                
                -Prepayments
                    for warrants to be issued for note conversion
                
                
                125,000
                
                
                295,000Proceeds
                    from issuance of common stock upon exercise of warrants
                
                
                59,400
                
                
                1,003,468Payments
                    of notes payable
                
                
                (22,914
                )
                
                (250,000
                )Net
                    cash provided by financing activities
                
                
                1,148,361
                
                
                1,843,914**Net
                    increase (decrease) in cash and cash equivalents**
                
                
                397,338
                
                
                (2,931
                )**Cash
                    and cash equivalents, beginning balance**
                
                
                12,669
                
                
                15,600**Cash
                    and cash equivalents, ending balance**
                
                $
                410,007
                
                $
                12,669


F-6


**Quintek
        Technologies, Inc. and Subsidiaries**
 **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 cars 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 interest 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 $370 as at June
      30, 2006.





F-7




**Quintek
      Technologies, Inc. and Subsidiaries**


**Notes
      to Consolidated Financial Statements**




**Inventories**





Inventories
      are valued at the lower of cost (determined on FIFO, first-in, first-out) or
      market. The Management compares the cost of inventories with the market value
      and allowance is made for writing down the inventories to there market value,
      if
      lower.





**Equity
      Method of Accounting for Investments**





Investments
      in companies in which the Company has a 20% to 50% interest or has significant
      influence over the operating and financial policies of the investee, are carried
      at cost, adjusted for the Company's proportionate share of undistributed
      earnings or losses.





**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 Subsidiaries**
 **Notes
        to Consolidated Financial Statements**


**Accounts
      Payable & Accrued Expenses**





Accounts
      payable and accrued expenses consist of the following as of June 30,
      2006:


Accounts
                  payable
              
              $
              510,014Accrued
                  interest
              
              
              321,070Accrued
                  legal fees
              
              
              38,250Other
                  accrued expenses
              
              
              121,403$
              990,737


**Software
      Development Costs**





The
      Company has adopted Statement of Position 98-1 ("SOP 98-1") "Accounting for
      the
      Costs of Computer Software Developed or Obtained for Internal Use", as its
      accounting policy for internally developed computer software costs. Under SOP
      98-1, computer software costs incurred in the preliminary development stage
      are
      expensed as incurred. Computer software costs incurred during the application
      development stage are capitalized and amortized over the software's estimated
      useful life.





The
      Company makes on-going evaluations of the recoverability of its capitalized
      software by comparing the amount capitalized for each product to the estimated
      net realizable value of the product. If such evaluations indicate that the
      unamortized software development costs exceed the net realizable value, the
      Company writes off the amount which the unamortized software development costs
      exceed net realizable value.





**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, 2006 and 2005 were
      $0
      and $866, respectively.





**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. For the year ended June
      30,
      2006, such differences were insignificant.





**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.




F-9


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


As
      a
      result of adopting SFAS No. 123R, the Company recognized $485,456 in
      share-based compensation expense for the six months ended June 30, 2006. The
      fair value of our stock options was estimated using the Black-Scholes option
      pricing model.





**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.





**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”. SFAS No. 128 superseded
      Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for
      all
      periods presented has been restated to reflect the adoption of SFAS No. 128.
      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.





**Revenue
      Recognition**





Revenue
      is recognized when earned. 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”) and The American
      Institute of Certified Public Accountants (“AICPA”) Statement of Position
      (“SOP”) 97-2, “Software Revenue Recognition,” as amended as amended by SOP 98-4
      and SOP 98-9.





**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 Subsidiaries**
 **Notes
          to Consolidated Financial Statements**


**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.




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 is still in the process of
      determining the effect of the statements on the consolidated financial
      statements.




**3.**
            **RESTRICTED
                CASH**





The
      Company entered into a consulting agreement with General Motors Acceptance
      Corporation under which it is required to provide at its own cost a performance
      bond. Such bond shall be solely for the protection of its client GMAC. The
      initial bond was drafted in the amount of $250,000 and will cover a period
      of
      twelve (12) months starting October 1, 2004 and renews annually. On June 1,
      2006, GMAC issued a Performance Bond Release Letter releasing the Company from
      the requirement and obligation to maintain this performance bond.




F-11


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


The
      Company reclassified $260,087 of restricted cash as cash and cash equivalents
      in
      the accompanying balance sheet as of June 30, 2006.





**4.**
            **PROPERTY
                AND EQUIPMENT**





Property
      and equipment at June 30, 2006, consists of the following:


Computer
                  and office equipment
              
              $
              817,158Other
                  depreciable assets
              
              
              102,881Furniture
                  and fixture
              
              
              40,653960,692Accumulated
                  depreciation
              
              
              (512,495
              )$
              448,197


**5.**
            **EMPLOYEE
                RECEIVABLES**


Notes
                  receivable from employees, unsecured,due
                  on June 30, 2019, interest at 4% per annum
              
              $
              260,854Interest
                    receivable in connection with the aboveemployee
                    receivables
              
              
              38,592299,446Valuation
                  allowance
              
              
              (299,446
              )$
              -


**6.**
            **OTHER
                ASSETS**





Other
      Assets comprise of the following as of June 30, 2006 :-


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





**7.**
            **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.





F-12




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


**8.**
            **FACTORING
                PAYABLE**





The
      Company entered into an agreement with a factoring company ("the Factor") to
      factor purchase orders with recourse. The Factor funds 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
      does 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 will 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 recorded $70,259 as interest expense in regard to these bonus
      warrants for the twelve months ended June 30, 2006. The Company has not issued
      any bonus warrants during the twelve months ending June 30, 2006.





There
      were no purchases of purchase orders during the twelve months ended June 30,
      2006. At June 30, 2006, the Company had a factoring payable balance of $116,722
      associated with this factor. The Company has accrued $107,344 for interest
      for
      late payments of this factor payable as of June 30, 2006.





During
      the twelve months ended June 30, 2006, the Company entered into an agreement
      to
      factor $465,945 of qualified invoices for a cash remittance of $364,326. As
      of
      June 30, 2006, the Company had no payable associated with this factor. The
      Company recorded $12,091 as interest expense in regard to this factor in the
      accompanying financial statements as of June 30, 2006.





At
      June
      30, 2006, the Company had a factoring balance associated with two individual
      factors of $20,000. The Company has accrued $11,803 for interest of these
      factoring payables as of June 30, 2006.




**9.**
            **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 $96,661 at June 30, 2006. The
      Company is delinquent on payments of these payroll tax liabilities.





**10.**
            **LOANS
                PAYABLE**


Leases
                  payable, interest at 7.9% to 20%, due various dates
              
              $
              268,972in
                  2005 to 2008 ( the company is in default for these loans)Lease
                  payable, interest at 17.8%, due in 2007
              
              
              17,083Note
                  payable, interest at 5.75%, due July 30, 2006
              
              
              13,564(the
                  company is in default and default interest is 12%)Notes
                  payable, interest at 8%, due 2006
              
              
              27,061(the
                  company is in default of these notes)$
              326,681
  F-13




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


**11.**
            **ADVANCES
                FROM LENDER**





On
      August
      2, 2004 the Company signed a convertible debenture agreement with an accredited
      investor whereby the Company received an advance of $905,000 for prepayment
      of
      warrants to be exercised. The agreement expires 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, 2006. The remaining
      $36,736 is recorded as an advance from lender in the accompanying financial
      statements as of June 30, 2006.





**12.**
            **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 as convertible bonds as a current liability in the
      accompanying financial statements as of June 30, 2006.





**13.**
            **CONVERTIBLE
                DEBENTURES**





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, 2006, the Holder of the debenture converted $89,326 of the debenture amount
      into 14,555,964 common shares of the Company and exercised 893,264
      warrants.





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 is being 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, 2006, the convertible debenture of
      $210,674 is presented in the accompanying financial statements with the
      unamortized beneficial conversion feature and unamortized discount fully
      amortized.





On
      May
      19, 2006, the Company entered into a Securities Purchase Agreement with Cornell
      Capital Partners, LP (“Cornell”). The Company entered into a convertible
      debenture with a total commitment value of $2,000,000 of which $750,000 was
      raised during the year ended June 30, 2006. 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 and includes 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. Upon execution of the securities purchase agreement, $750,000 of
      the
      purchase price was due and paid to the Company on May 19, 2006. An additional
      $750,000 will be disbursed to the Company immediately prior to the filing of
      the
      Securities and Exchange Commission’s Registration Statement and the final
      $500,000 will be disbursed upon effectiveness of the Securities and Exchange
      Commission’s Registration Statement. As of June 30, 2006, convertible debenture
      of $28,741, net of unamortized discount, is presented in the accompanying
      financial statements.




F-14


**Quintek
          Technologies, Inc. and Subsidiaries**
 **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. This beneficial
      conversion liability has been calculated to be NIL at June 30, 2006.





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 have a fair value of $1,935,904 at May 19, 2006 are shown
      as a
      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 beneficial conversion feature
      and the warrant liability has been adjusted to fair value each balance sheet
      date with the change being shown as a component of net income.





The
      fair
      value of the beneficial conversion feature and the warrants at the inception
      of
      these convertible debentures were $NIL and $1,935,904, respectively. $750,000
      of
      the discounts has been recorded as a discount to the convertible debentures
      which will be amortized over the term of the debentures and the excess of
      $1,185,904 has been shown as financing costs in the accompanying statement
      of
      operations.





At
      June
      30, 2006, the fair value of the warrant and derivative liabilities were
      $1,967,638 and $NIL, respectively.  During the year ended June, 30,
      2006, the Company took a charge to earnings of $677,008 as a result of adjusting
      the warrant and derivative liabilities to fair value.




**14.**
            **CONVERTIBLE
                NOTES**





The
      Company raised capital through the issuance of a convertible note for $500,000
      issued during the year ending June 30, 2004. The note plus any accrued interest
      is convertible to the Company Common Stocks at $0.06 but limited to 10% of
      the
      outstanding shares at the time of conversion. Additionally, the holder will
      receive one bonus warrant for each conversion share. Each bonus warrant will
      be
      exercisable for a period of 5 years from the date of issuance into one share
      of
      Common Stock at a price of $0.03 per share. During the year ended June 30,
      2005,
      the Company became obligated to issue 6,804,164 bonus warrants to the debt
      holders upon conversion of $408,250 of the note. The Company recorded additional
      interest of $938,431 representing the fair value of warrants issued at the
      year
      ending June 30, 2005. During the year ended June 30, 2006, the Company became
      obligated to issue 1,529,169 bonus warrants to the debt holder upon conversion
      of the balance of the note of $91,750 on June 23, 2006. The Company recorded
      additional expense of $61,912 for issuance these warrants for the twelve months
      ended June 30, 2006.





The
      fair
      value of the warrants was calculated using the Black- Scholes model using the
      following assumptions:





Volatility
      of 100%, discount rate of 3.93% and estimated life of 5 years.




F-15


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


The
      total
      accrued interest recorded on this convertible note as of June 30, 2006 amounted
      to $61,258.





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 shall be 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 will 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.





**15.**
            **STOCKHOLDERS'
                DEFICIT**





*a.*
            *Common
                Stock and Warrants*





The
      Company has authorized 200 million shares of common stock with a par value
      of
      $0.01 per share. Each share entitles the holder to one vote. There are no
      dividend or liquidation preferences, participation rights, call prices or rates,
      sinking fund requirements, or unusual voting rights associated with these
      shares.





During
      the year ended June 30, 2006, the Company issued 477,778 common shares upon
      exercise of warrants and received cash amounting to $34,400; 11,597,498 common
      shares to consultants for services to be rendered valued at $945,852 recorded
      as
      unamortized consulting of which $832,397 of the unamortized consulting had
      been
      amortized and recognized as an expense; 50,000 common shares to a consultant
      for
      services rendered valued at $8,000 previously recorded as shares to be issued
      in
      June 30, 2005; 8,666,666 common shares to accredited investors for a stock
      sales
      and collected $265,000 in cash; 16,500,000 common shares issued to an accredited
      investor for sale of stock valued at $776,250 pending receipt of cash recorded
      as stock subscription receivable; 9,529,866 common shares pursuant to conversion
      of debentures and exercise of warrants to the escrow agent; $45,826 of
      debentures were converted into 9,529,866 common shares and exercises of warrants
      to purchase 458,264 common shares at an exercise price of $1 per share; 250,000
      common shares for conversion of Series A Preferred stock valued at $40,000;
      160,000 common shares for conversion of Series B Preferred stock valued at
      $30,400; 2,000,000 common shares valued at $140,000 pursuant to an exchange
      agreement for investor to remit free trading shares to a corporate consultant,
      and the issuance of 20,000 warrants to third parties for services rendered
      valued at $870. The Company granted 2,000,000 warrants valued at $88,604, to
      a
      note holder in lieu of penalty for non payment of the note payable balance
      amounting to $200,000





During
      the year ended June 30, 2006, the Company issued 1,292,180 warrants in
      connection with an investment banking agreement and recorded $106,672 as expense
      for the cost of the issuance of such warrants, 850,000 warrants to an accredited
      investor in lieu of invoice factoring valued at $25,775, 1,500,000 warrants
      pursuant to terms of a financing agreement valued at $66,634, and 3,000,000
      warrants pursuant to a warrant exercise agreement valued at $132,819. An
      additional expense of $58,790 was recorded during the above period for 630,733
      warrants to be issued pursuant to the terms of the investment banking agreement
      referenced above and an additional expense of $7,453 was recorded for the above
      period for 200,000 warrants to be issued pursuant to invoice factoring
      agreements. The fair value of the warrants is estimated on the grant date using
      the Black-Scholes Model. The following assumptions were made in estimating
      fair
      value


Annual
                  rate of quarterly dividends
              0.00%Discount
                  rate - Bond Equivalent Yield
              3.93%Expected
                  life
              3
                  yearsExpected
                  volatility
              100%





F-16


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


As
      a
      result of the issuance of the convertible debenture to Cornell Capital (See
      Note
      13) the fair value of all warrants issued to non-employees have been removed
      from stockholders’ equity and shown as a liability. On May 19, 2006, the fair
      value of such warrants was $694,456. The fair value of these warrants and those
      issued to Cornell Capital will be adjusted to fair value at each balance sheet
      date.





*b.
      Common Stock Reserved*





At
      June
      30, 2006, common stock was reserved for the following reasons:




Outstanding
      convertible bonds 151,918 shares


Outstanding
        Warrants:


NumberofWarrantsOutstanding
                  June 30, 2005
              
              
              15,206,857Issued
                  during the period
              
              
              70,394,322Expired
              
              
              (2,555,000
              )Exercised
              
              
              (2,936,042
              )Outstanding
                  June 30, 2006
              
              
              80,110,137Warrants
                  to be issued
              
              
              4,639,842Total
              
              
              84,749,979





During
      the year ended June 30, 2006, the Company issued 2,870,000 three-year warrants
      to two investors at an exercise price of $0.07 with the fair value of the
      warrants of $115,249 calculated using the Black Scholes option pricing model
      using the following assumptions: risk free interest rate of 3.4%, volatility
      of
      100%, and dividend yield of 0%, the fair value was accounted for as interest
      expense and additional paid in capital.





1,500,000
      three-year warrants to one investor at an exercise price of $0.033 with the
      fair
      value of the warrants of $64,409 calculated using the Black Scholes option
      pricing model using the following assumptions: risk free interest rate of 3.93%,
      volatility of 100%, and dividend yield of 0%, with the fair value accounted
      for
      as interest expense and additional paid in capital.





8,333,333
      five-year warrants to one investor at an exercise price of $0.03 with the fair
      value of the warrants of $1,014,495 calculated using the Black Scholes option
      pricing model using the following assumptions: risk free interest rate of 3.4%
      & 3.93%, volatility of 100%, and dividend yield of 0%, with the fair value
      accounted for as interest expense and additional paid in capital.





1,292,180
      five-year warrants to one investment banking company at exercise prices of
      $0.105 and $0.18 with the fair value of the warrants of $128,179 calculated
      using the Black Scholes option pricing model using the following assumptions:
      risk free interest rate of 3.4%, volatility of 100%, and dividend yield of
      0%
      with the fair value accounted for as stock-based compensation and additional
      paid in capital.





56,398,809
      five-year warrants to one investment banking company at exercise prices of
      $0.05, $0.055, $0.065 and $0.08 with the fair value of the warrants of
      $1,935,904 calculated using the Black Scholes option pricing model using the
      following assumptions: risk free interest rate of 3.93%, volatility of 100%,
      and
      dividend yield of 0% with the fair value accounted for as finance expense,
      unamortized discount and warrant liability.





*c.
      Stock Option Agreements*





The
      Company granted 16,303,943 stock options to officers and employees exercisable
      as of June 30, 2006 valued at $485,456.





F-17


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


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


Options
                Outstanding
              
              Weighted
                  Average Exercise Price
              
              Aggregate
                  Intrinsic Value .Outstanding
                  June 30, 2005
              
              
              9,470,317
              
              $
              0.93
              
              $
              26,611Granted
                  during the year
              
              
              7,233,626Exercised
              
              
              -Expired/forfeited
              
              
              (400,000
              )Outstanding
                  June 30, 2006
              
              
              16,303,943
              
              $
              0.045
              
              $
              -





Following
      is a summary of the status of options outstanding at June 30, 2006:





Range
                of Exercise Prices
            
            Total
                Options Outstanding
            
            Weighted
                Average Remaining Life (Years)
            
            Total
                Weighted Average Exercise Price
            
            Options
                Exercisable
            
            Weighted
                Average Exercise Price$0.01
                - $0.09
            
            
            13,000,881
            
            
            3.35
            
            
            0.024
            
            
            13,000,881
            
            
            0.024$0.10
                - $0.20
            
            
            3,303,062
            
            
            0.48
            
            
            0.021
            
            
            3,303,062
            
            
            0.02116,303,943
            
            
            3.83
            
            
            0.045
            
            
            16,303,943
            
            
            0.045





2,380,000
      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
              %




13,611,943
      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
                %


For
      periods presented prior to the adoption of SFAS No. 123R, pro forma
      information regarding net income and earnings per share as required by SFAS
      No. 123R has been determined as if we had accounted for our employee stock
      options under the original provisions of SFAS No. 123. The fair value of
      these options was estimated using the Black-Scholes option pricing model. The
      pro forma expense to recognize during the six months ended December 31, 2005
      (prior to the adoption of SFAS 123R) and for the year ended June 30, 2005 is
      as
      follows: ($ in thousands, except per share amounts)




**2006**
            
            **2005**Net
                loss attributed to common stockholders:As
                reported
            
            $
            (2,946
            )
            $
            (7,418
            )Compensation
                recognized under APB 25
            
            
            —
            
            
            40Compensation
                recognized under SFAS 123
            
            
            —
            
            
            (1,718
            )Pro
                forma
            
            $
            (2,946
            )
            $
            (9,096
            )Basic
                and diluted loss per common share:As
                reported
            
            $
            (0.02
            )
            $
            (0.10
            )Pro
                forma
            
            $
            (0.02
            )
            $
            (0.12
            )




F-18


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


The
      fair
      value for these options was estimated at the date of grant using a Black-Scholes
      option pricing model with the following weighted-average assumptions
      for options issued during the year ended June 30, 2006: risk-free interest
      rate of 3.7%; dividend yields of 0%; volatility factors of the expected market
      price of the Company’s common shares of 100%; and a weighted average expected
      life of the option of 3 years.





*d.
      Stock transactions approved by the shareholders*





At
      the
      annual meeting of the shareholders held June 30, 2004, the shareholders approved
      by a majority vote to increase to 200,000,000 shares, $0.01 par value common
      stock, and 50,000,000 shares no par value preferred stock. The board of
      directors are authorized to divide the preferred stock into any number of
      classes or series, fix the designation and number of shares of each such series
      or class and alter or determine the rights, preferences, privileges and
      restrictions of each or series of preferred stock





**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, 2006, 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 $32,440 for the Series A Preferred stockholders as of
      June 30, 2006 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, 2006, the Company had 89,271 shares of Series
      B
      Preferred Stock outstanding valued at $86,888. The Company has recorded a
      cumulative dividend of $176 for the Series B Preferred Stockholders as of June
      30, 2006 in the accompanying financial statements.




F-19


**Quintek
          Technologies, Inc. and Subsidiaries**
 **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, 2006, the Company had 17,948 shares of Series C Preferred Stock outstanding
      valued at $68,211. The Company has recorded a cumulative dividend of $16 for
      the
      Series C Preferred Stockholders as of June 30, 2006 in the accompanying
      financial statements.





The
      Company has recorded a dividend for preferred shareholders amounting to $16,057
      for the twelve month period ended June 30, 2006, and a cumulative dividend
      of
      $32,633 for the preferred stockholders as of June 30,, 2006 in the accompanying
      financial statements. The Company has entered into agreements with various
      vendors and employees to convert their liabilities into the preferred series
      of
      stock.





**16.**
            **INCOME
                TAXES**





Income
      tax expense (benefit) for the years ended June 30, 2006 and 2005 is summarized
      as follows:





2006
            
            2005Current:Federal
            
            $
            (1,515,271
            )
            $
            (2,527,649
            )State
            
            
            (267,401
            )
            
            (446,056
            )Deferred
                taxes
            
            
            1,783,472
            
            
            2,974,505Income
                tax expense (benefit)
            
            $
            800
            
            $
            800





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:





2006
            
            2005Tax
                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, 2006 are as
      follows:





Deferred
                tax assets:Net
                operating loss carry forward
            
            $
            12,096,879Less
                valuation allowance
            
            
            (12,096,879
            )Net
                deferred tax assets
            
            $
            -




F-20


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


At
      June
      30, 2006, the Company had net operating loss carry forwards of approximately
      $30,242,198 for U.S. federal income tax purposes available to offset future
      taxable income expiring on various dates through 2020.





The
      net
      change in the valuation allowance during the year ended June 30, 2006 and 2005
      was an increase of $1,782,672 and $2,973,705, respectively.





**17.**
            **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 $0 and $4,800 for income tax during the years ended June 30, 2006
      and 2005. The Company paid $53,414 and $58,970 interest during the years ended
      June 30, 2006 and 2005, respectively.





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.





**18.**
            **MAJOR
                CUSTOMERS AND SUPPLIERS**





The
      Company had two customers that accounted for 16-37 % of revenue for the year
      ended June 30, 2006. Accounts receivable from these major customers were $15,023
      and $4,496.03 respectively at June 30, 2006. For the year ended June 30, 2005,
      the Company had two customers that accounted for 20-45 % of revenue. Accounts
      receivable from these major customers were $245,615 and $604,208 respectively-
      at June 30, 2005.





**19.**
            **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, 2006 and 2005, rent expense for these operating leases totaled $105,411
      and $89,829, respectively.





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


2007
              
              $
              93,2182008
              
              
              94,913$
              188,131





*b)
      Litigation*





On
      April
      16, 2004, Decision One Corporation filed suit in the County of Bannock, Idaho
      against Quintek for $22,662. for goods provided. Since 2000, Decision One
      (formerly Imation) has been both a vendor to Quintek and a reseller of Quintek's
      Q4300 Printers. Quintek filed a counterclaim on August 1, 2004. Quintek asserts
      that Decision One used its authority as a dealer of our product to disparage
      us,
      in violation of its dealer agreement with us, and we seek relief for the
      hundreds of thousands of dollars in business lost because of it. On January
      11,
      2005, the Court granted Judgment for the sum of $21,000 in favor of the Decision
      One Corporation. The Court has ruled that Quintek would be allowed to file
      the
      counterclaim under this action, rather than a separate lawsuit. The Company
      can
      appeal the Court’s decision and would have until February 18, 2005 to file the
      Notice of Appeal. In March 2005, a stipulation settlement was accepted by the
      Creditor where they agreed to accept $15,000 in full satisfaction of their
      debt.
      The Company agreed to pay $2,000 upon execution of the stipulation plus $1,000
      for 13 months thereafter. Upon receipt of the final payment, a Satisfaction
      of
      Judgment will be entered in the matter. If the Company fails to meet the payment
      schedule, the Creditor, after giving credit for payments received, shall be
      allowed to proceed with the full judgment of $21,000 plus accumulated interest
      and costs. The Company has recorded the full amount of judgment of $21,000
      and
      accrued interest in the accompanying financial statements as of June 30, 2006.
      In April 2006, the Company made a payment of $16,827 to satisfy its obligations
      pursuant to the terms of the judgment.




F-21





**Quintek
      Technologies, Inc. and Subsidiaries**


**Notes
      to Consolidated Financial Statements**




An
      action
      which was pending in the Superior Court of the State of California for Orange
      County against one of the Company's competitors, a former employee and a former
      officer of the Company, has been resolved by mutual agreement. The settlement
      includes an injunction which prevents the defendants from soliciting or
      initiating contact with 23 accounts until February 28, 2007. There was no
      admission or acknowledgment of any wrongdoing by the defendants in stipulating
      to the injunction. The plaintiff, Quintek Technologies, Inc., and defendants
      Robert Brownell, Chris De Lapp and Document Imaging Technologies, Inc. entered
      into a stipulated injunction in the matter which provides, among other things,
      that Defendants and all of their respective officers, agents, representatives,
      directors, affiliates, employees, successors in interest, and all persons acting
      in concert or participating with them, are restrained and enjoined from
      soliciting or initiating contact with 23 clients listed in the injunction.
      Additionally, the Defendants shall not use, disclose, disseminate or publish
      in
      any manner Quintek's confidential business information and/or trade secrets
      including lists of clients, candidates, information regarding contracts or
      prospective Quintek contracts with clients and candidates, computer programs,
      business plans and strategies, prices, job descriptions, contracts, budgets,
      and
      similar confidential or proprietary materials or information respecting
      Quintek's or its clients' or candidates' business affairs, as well as
      confidential information of a personal nature of Quintek's and its employees,
      managers and officers, without the prior written consent of Quintek.





**20.
      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.





Weighted
      average number of shares used to compute basic and diluted loss per share for
      the years ended June 30, 2006 and 2005 are the same since the effect of dilutive
      securities is anti-dilutive.





**21.**  **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, 2006, the Company had incurred cumulative
      losses of $34,952,008 including net losses of $4,440,623 and $7,417,687 for
      the
      fiscal years 2006 and 2005, 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-22




**Quintek
        Technologies, Inc. and Subsidiaries**
 **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, 2006, towards (i) obtaining additional equity
      and debt financing and (ii) evaluation of its distribution and marketing
      methods.





**22.**  **RELATED
      PARTY TRANSACTIONS**




On
      January 6, 2006, the Company issued a warrant to purchase 20,000 common shares
      bearing an exercise price of $0.07 and a three year term to a relative of the
      CFO pursuant to a short term loan agreement of $20,000.





On
      May
      16, 2006, the Company paid to a relative of the CFO $4,500 in regard to a
      finder’s fee for financial funding received by the Company.




**23.**  **SUBSEQUENT
      EVENTS**





On
      July
      25, 2006, the Company created and established 1,000,000 shares of Series D
      Convertible Preferred Stock with a par value of $0.001 per share.  This
      designation was endorsed and filed in the office of the Secretary of State
      of
      the state of California on July 27, 2006.  On July 27, 2006, the Company
      issued 500,000 shares of Series D Preferred Stock of the Corporation to each
      of
      Robert Steele and Andrew Haag for securing the recent financing with Cornell
      Capital Partners and their time and dedication to the Corporation.





On
      August
      3, 2006, the Company issued 3,529,169 common shares pursuant to a warrant
      conversion and convertible note valued at $151,750 reported as shares to be
      issued from the year ending June 30, 2006.





On
      September 15, 2006 the company executed an amendment to its agreement with
      Cornell Capital Partners.  The Company would receive One Hundred Fifty
      Thousand Dollars ($150,000) funding upon the Company increasing its authorized
      shares of Common Stock to at least five hundred million (500,000,000) shares
      of
      Common Stock.  In consideration the company issued a note paying 10% annual
      interest for ths principal sum of One Hundred Fifty Thousand Dollars ($150,000)
      together with accrued but unpaid interest due on or before September 15, 2009
      (the “Maturity Date”).  The company also agreed to amend  warrants to
      purchase Fifty Six Million Three Hundred Ninety Seven Thousand (56,397,000)
      shares of the Company’s Common Stock for a period of five (5) years as
      follows: 1) a warrant to purchase 17,857,000 shares of the Company’s Common
      Stock which shall have an exercise price of $0.05 per share, 2) a warrant to
      purchase 15,625,000 shares of the Company’s Common Stock shall have an exercise
      price of $0.055 per share, 3) a warrant to purchase 12,500,000 shares of the
      Company’s Common Stock which shall have an exercise price of $0.065 per share,
      and 4) a warrant to purchase 10,415,000 shares of the Company’s Common Stock
      which shall have an exercise price of $0.08 per share (collectively referred
      to
      as the “Warrants”).





**24.**  **RESTATEMENT**





Subsequent
      to the issuance of the Company's financial statements for the year ended June
      30, 2006, the Company determined that certain transactions and presentation
      in
      the financial statements had not been accounted for properly in the Company's
      financial statements. Specifically, the amount of derivative liability arising
      from the issuance of convertible debentures was not correctly recorded; as
      a
      result, the change in the fair value of derivatives was not properly
      recorded.




The
      Company has restated its financial statements for these adjustments as of June
      30, 2006.




F-23


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





The
      effect of the restatement is as follows:





Balance
      Sheet for the fiscal year ended June 30, 2006


**Previously**
                  **Reported**
              
              **Increase**
                  **(Decrease)**
              
              **Restated****LIABILITIES
                  AND STOCKHOLDERS' DEFICIT****Current
                  liabilities**:Warrant
                  Liability
              
              
              —
              
              
              1,967,637
              
              
              1,967,637**Stockholders'
                  deficit:**Additional
                  paid-in capital
              
              
              31,349,818
              
              
              (694,457
              )
              
              30,655,361Accumulated
                  deficit
              
              
              (33,457,095
              )
              
              (1,494,913
              )
              
              (34,952,008
              )
  **Statement
          of Operations for the fiscal year ended June 30,
          2006**
  **Previously**
                  **Reported**
              
              
              **Increase**
                  **(Decrease)**
              
              
              **Restated**Change
                  in fair value of warrants
              
              
              2,171,921
              
              
              (1,494,913
              )
              
              677,008
  **Statement
          of Cash flows for the fiscal year ended June 30, 2006**
 **Previously**
                  **Reported**
              
              
              **Increase**
                  **(Decrease)**
              
              
              **Restated**Change
                  in Fair value of Warrants
              
              
              (2,171,921
              )
              
              1,494,913
              
              
              (677,008
              )





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, 2006. 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, 2006 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.





On August
      8, 2007, we determined, after consultation with our independent registered
      public accounting firm, that a restatement of our financial statements for
      the
      year ended June 30, 2006 filed on Form 10-KSB (the "Report"), was
      necessary due to the accounting for warrants (the "Warrants") issued in
      connection with a private placement conducted in May 2006.




In
      particular, we have restated our financial statements contained in
      the Report to reflect a liability in connection with issuance of the
      Warrants that contained an embedded derivative and conversion privileges, as
      of June 30, 2006 as follows:




1.
      The
      accounting for the embedded derivative within the Warrants was determined under
      the guidance of SFAS 133 and EITF No. 00-19. The embedded derivative is
      classified as a current liability in accordance with SFAS 133, and is
      recorded at fair value.




2.
      In
      reporting periods subsequent to the issuance of the Warrants, the embedded
      derivative has been revalued with the change to fair value recorded as
      income/(expense).




*(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.




As
      described below, we made 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. As a result
      of
      the needed restatements described above, we will be engaging the services of
      a
      PCOAB auditor to prepare our financial statements. We believe that this will
      avoid the reoccurrence of our material weaknesses and will strengthen our
      internal controls related to the financial closing, review, and analysis process
      so that our controls and procedures are effective in future periods.




22


**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**Robert
                Steele
            
            39
            
            Chief
                Executive Officer
            
            DirectorAndrew
                Haag
            
            38
            
            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.





**Robert
      Steele, Chief Executive Officer and Director**





Robert
      Steele has been our Chief Executive Officer, President, and Chairman of the
      Board of Directors since January 30, 2003. In 1999, Mr. Steele founded iBrite,
      a
      wireless information software company in Reston, Virginia, and from May 1999
      through June 2001 served as its Chief Executive Office. The company established
      contractual partnerships with AOL and Global Knowledge. From 1988 through 1998,
      Mr. Steele served as Corporate Vice President & Chief Technology Officer for
      CADD Microsystems, Inc. (CMI), currently the leading provider of Autodesk
      Computer Aided Design software, consulting, training and integration services
      in
      the Washington, DC Metropolitan Area. During his time at CMI, the company grew
      from $50,000 in annual sales to more than $3,000,000. Mr. Steele sold and
      supervised significant systems integration contracts with clients such as Lucent
      Technologies, Long Airdox Mining (Division of the Fortune 500 Marmon Group),
      ABB, GSA (General Services Administration), FAA (Federal Aviation
      Administration) and NRO (National Reconnaissance Office). Mr. Steele received
      a
      Bachelor of Science in Electronic and Computer Engineering from George Mason
      University in 1988.





**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 2006, except for two Form 3’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 tables set forth certain information regarding our CEO and each of
      our
      most highly-compensated executive officers whose total annual salary and bonus
      for the fiscal years ending June 30, 2006, 2005 and 2004 exceeded $100,000:




**SUMMARY
        COMPENSATION TABLE**


Long-Term
                  CompensationAnnual
                  Compensation
              
              Awards
              
              PayoutsName
                  and
                Principal
                Position
              
              Fiscal
                Year
              
              Annual
                Salary
              
              Annual
                Bonus
              
              Other
                Annual
                Compensation
              
              Restricted
                Stock
                Awards
              
              Securities
                Underlying
                Options/SARs
              
              LTIP
                Payouts
              
              All
                  Other
                Compensation($)
              
              ($)
              
              ($)
                  (1)
              
              ($)
              
              (#)
              
              ($)
              
              ($)Robert
                  Steele,
              
              
              2005
              
              
              141,364
              
              
              0
              
              
              6,000
              
              
              0
              
              
              3,370,813
              
              
              0
              
              
              0Chairman
                  and
              
              
              2005
              
              
              85,500
              
              
              0
              
              
              15,438
              
              
              1,000,000
              
              
              4,267,276
              
              
              0
              
              
              0CEO
              
              
              2004
              
              
              72,000
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Andrew
                  Haag,
              
              
              2005
              
              
              141,339
              
              
              0
              
              
              6,000
              
              
              0
              
              
              3,370,813
              
              
              0
              
              
              0CFO
              
              
              2005
              
              
              85,500
              
              
              0
              
              
              15,433
              
              
              1,000,000
              
              
              4,267,276
              
              
              0
              
              
              02004
              
              
              72,000
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Robert
              
              
              2005
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Brownell,
              
              
              2004
              
              
              119,000
              (2)
              
              0
              
              
              0
              
              
              250,000
              
              
              611,062
              
              
              0
              
              
              0President
              
              
              2003
              
              
              37,500
              (3)
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0




1)
            These
                amounts represent our payments to provide an automobile and health
                insurance for Mr. Steele and Mr.
                Haag.




2)
            Mr.
                Brownell resigned on March 31,
                2005.




3)
            Represents
                compensation received by Brownell while serving as our President
                from
                March 12, 2004 to June 30, 2004.





25


**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 September 25, 2006





·
            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)Robert
                Steele17951
                Lyons CircleHuntington
                Beach, CA 92647
            
            
            Common
                  Stock
            
            
            9,038,089
            
            (3)
            
            5.64
            %Andrew
                Haag17951
                Lyons CircleHuntington
                Beach, CA 92647
            
            
            Common
                  Stock
            
            
            8,554,616
            
            (4)
            
            5.41
            %All
                Officers and DirectorsAs
                a Group (2 persons)
            
            
            Common
                Stock
            
            
            17,592,705
            
            (5)
            
            10.55
            %Zubair
                Kazi
            
            
            Common
                Stock
            
            
            9,720,536
            
            (6)
            
            6.35
            %Langley
                Park Investments PLC
            
            
            Common
                Stock
            
            
            14,000,000
            
            (7)
            
            8.45
            %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
            
            
            1,000,000
            
            
            
            50.00
            %Andrew
                Haag
            
            
            Series
                D Preferred Stock
            
            
            1,000,000
            
            
            
            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 September 25, 2006 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 151,699,773 shares issued and outstanding on September 25,
      2006.





(3)
      Includes 1,000,000 shares issuable upon conversion of Series A convertible
      preferred stock and 7,638,089 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 and 5,362,792 shares of common stock underlying options that
      are
      currently exercisable or exercisable within 60 days.




26




(5)
      Includes 2,000,000 shares issuable upon conversion of Series A convertible
      preferred stock and 13,000,881 shares of common stock underlying options that
      are currently exercisable or exercisable within 60 days.




(6)
      Includes 1,500,000 shares of common stock underlying warrants that are currently
      exercisable or exercisable within 60 days.





(7)
      Shares are issued but not outstanding and are held in escrow until fulfillment
      of conditions by Langley Park Investment pursuant to a July 29, 2004 agreement
      with us.





**Remuneration
      of Directors**





None.





**Employment
      Agreements**





*Contract
      with Robert Steele*





On
      January 30, 2003, we entered into a five-year employment contract with Robert
      Steele, our Chief Executive Officer. The base salary under the agreement is
      $6,000 per month. Upon achieving gross revenue in a quarter of $300,000, the
      base salary under the agreement is $9,000 per month. Upon achieving gross
      revenue in a quarter of $600,000, the base salary under the agreement is $12,000
      per month. Upon achieving gross revenue in a quarter of $900,000, the base
      salary under the agreement is $15,000 per month. If our quarterly gross revenues
      decrease, Mr. Steele’s base salary will decrease accordingly, subject to the
      minimum base salary of $6,000 per month. In addition, Mr. Steele 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
      January 31, 2003, we entered into a five-year employment contract with Andrew
      Haag, our Chief Financial Officer. The base salary under the agreement is $6,000
      per month. Upon achieving gross revenue in a quarter of $300,000, the base
      salary under the agreement is $9,000 per month. Upon achieving gross revenue
      in
      a quarter of $600,000, the base salary under the agreement is $12,000 per month.
      Upon achieving gross revenue in a quarter of $900,000, the base salary under
      the
      agreement is $15,000 per month. If our quarterly gross revenues decrease, Mr.
      Haag’s base salary will decrease accordingly, subject to the minimum base salary
      of $6,000 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.





**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 September
      25,
      2006, 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
      September 25, 2006, no options have been granted pursuant to the
      plan.





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





None.





27


**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 September 25, 2006.





**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
            
            
            —
            
            
            —
            
            
            36,822,500Equity
                compensation plans not approved by shareholders
            
            
            —
            
            
            —
            
            
            —Total
            
            
            —
            
            
            —
            
            
            36,822,500





28




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





Other
      than as disclosed below, 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.





On
      December 22, 2004, we issued 1,967,824 shares of common stock to Andrew Haag,
      an
      officer and director, pursuant to an exercise of a warrant on a cashless
      basis.





On
      January 6, 2006, we issued a warrant to purchase 20,000 common shares bearing
      an
      exercise price of $0.07 and a three year term to an investor related to Andrew
      Haag, an officer and director, pursuant to a short term loan agreement of
      $20,000.





On
      May
      16, 2006, we paid to a party related to Andrew Haag, an officer and director,
      $4,500 in regard to a finder’s fee for financial funding we received.





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 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.4.3
              
              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 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.4.9
              
              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 between
                  Quintek Technologies, Inc. and Cornell Capital Partners L.P. (filed
                  herewith).4.13
              
              Amendment
                  No. 1 to Registration Rights Agreement, dated May 17, 2006, by
                  and between
                  Quintek Technologies, Inc. and Cornell Capital Partners L.P. (filed
                  herewith).4.14
              
              Amendment
                  No. 1 to Warrant to purchase 10,415,000 shares of Common Stock,
                  dated May
                  17, 2006, issued to Cornell Capital Partners L.P. (filed
                  herewith).4.15
              
              Amendment
                  No. 1 to Warrant to purchase 12,500,000 shares of Common Stock,
                  dated May
                  17, 2006, issued to Cornell Capital Partners L.P. (filed
                  herewith).4.16
              
              Amendment
                  No. 1 to Warrant to purchase 17,857,000 shares of Common Stock,
                  dated May
                  17, 2006, issued to Cornell Capital Partners L.P. (filed
                  herewith).4.17
              
              Amendment
                  No. 1 to Warrant to purchase 15,625,000 shares of Common Stock,
                  dated May
                  17, 2006, issued to Cornell Capital Partners L.P. (filed
                  herewith).10.1
              
              Consulting
                  Agreement between Quintek Technologies, Inc. and Robert Steele
                  dated
                  December 16, 2002, 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
              
              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.10.3
              
              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.10.4
              
              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.10.5
              
              Employment
                  Agreement between Quintek Technologies, Inc. and Robert Steele
                  dated
                  January 31, 2003, filed as an exhibit to the annual report on Form
                  10-KSB
                  filed with the Securities and Exchange Commission on October 14,
                  2003 and
                  incorporated herein by reference.10.6
              
              Employment
                  Agreement between Quintek Technologies, Inc. and Andrew Haag dated
                  January
                  31, 2003, filed as an exhibit to the annual report on Form 10-KSB
                  filed
                  with the Securities and Exchange Commission on October 14, 2003
                  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.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
  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 2006 and 2005 and reviews of the consolidated financial statements
      included in our Forms 10-QSB were $52,000 for 2006 and $41,000 for 2005.





**Audit-Related
      Fees**





For
      fiscal 2006 and 2005, 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 2006 and 2005, 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 2006 and 2005.





**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 2006 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 3, 2007
            By:
            /s/ JAMES
              KERNANJames
                KernanChief
                Executive Officer (Principal Executive
                Officer)


Date:
                October 3, 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
            
            Chief
                Executive Officer (Principal Executive Officer)
            
            October
                3, 2007James
                Kernan
            
            and Director/s/
                ANDREW HAAG
            
            Chief
                Financial Officer (Principal Financial Officer
            
            October
                3, 2007Andrew
                Haag
            
            and Principal
              Accounting Officer) and Director




34