FULLER, TUBB, POMEROY & STOKES
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
201 ROBERT S. KERR AVENUE, SUITE 1000
OKLAHOMA CITY, OK 73102
G. M. FULLER (1920-1999) TELEPHONE 405-235-2575
JERRY TUBB FACSIMILE 405-232-8384
DAVID POMEROY
TERRY STOKES
-----
OF COUNSEL:
MICHAEL A. BICKFORD
THOMAS J. KENAN
ROLAND TAGUE
May 31, 2000
Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, DC 20549
Re: Form S-4 registration statement
filed by Starfest, Inc., Commission
File No. 000-29913
Gentlemen:
In accordance with the provisions of Regulation S-T, the undersigned, as
counsel to Starfest, Inc., the issuer, files the issuer's Form S-4 registration
statement.
We are sending, by FedEx, three courtesy copies for your use.
Please contact the undersigned regarding any questions concerning the
above. You are requested to communicate with me either by telephone
(405-235-2575) or, in the instance of written communications, by fax
(405-232-8384) followed by a mailed copy of the faxed transmissions, or by
e-mail ([email protected]).
Sincerely,
/s/ Thomas J. Kenan
---------------------------------------
Thomas J. Kenan
e-mail: [email protected]
/sa
Enclosure
cc: Michael Huemmer
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Commission File No. 000-29913
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Starfest, Inc.
(Exact name of registrant as specified in its charter)
California 7372 95-4442384
-------------- ---------------------------- -------------
(state of (Primary Standard Industrial (IRS Employer
incorporation) Classification Code Number) I.D. Number)
9494 East Redfield Road, #1136
Scottsdale, AZ 85260
480-551-8280
---------------------------------------------
(Address and telephone number of registrant's
principal executive offices)
Michael Huemmer
9494 East Redfield Road, #1136
Scottsdale, AZ 85260
480-551-8280
---------------------------------------------------------
(Name, address and telephone number of agent for service)
Copies to:
Thomas J. Kenan, Esq.
201 Robert S. Kerr Avenue, Suite 1000
Oklahoma City, OK 73102
Approximate date of proposed sale to the public: As soon as practicable
after the Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
<PAGE>
Calculation of Registration Fee
<TABLE>
<CAPTION>
Title of Proposed Proposed
each class maximum maximum
of securities Amount offering aggregate Amount of
to be to be price offering registration
registered registered per unit price fee
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 96,957,713 $0.001 $32,320 $8.54(1)
================================================================================
</TABLE>
(1) These 96,957,713 shares are to be offered in exchange for all the issued
and outstanding shares of capital stock of Concierge, Inc. in a proposed
merger. Concierge, Inc. has an accumulated capital deficit. The
registration fee is based upon one-third of the par value (96,957,713
shares times $0.001 par value divided by one-third) of the securities to
be received in the merger transaction.
Regulation 230.457(f)(2).
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a)
may determine.
2
<PAGE>
PROSPECTUS-PROXY STATEMENT
Starfest, Inc.
96,957,713 Shares of Common Stock
Starfest, Inc. offers these shares of common stock only to the stockholders of
Concierge, Inc. We propose that Concierge merge into our company.
-------------------
Our common stock trades on the OTC Bulletin Board. Its symbol is "SFST."
-------------------
The approval of the merger of Neither the Securities and Exchange
Concierge into our company is Commission nor any state securities
equivalent to a purchase of our commission has approved or
securities. This involves a high disapproved these securities or
degree of risk. See "Risk Factors," determined if this prospectus-
beginning on page 2. proxy statement is truthful or
complete. Any representation to
the contrary is a criminal offsense.
Starfest, Inc.
9494 East Redfield Road, #1136
Scottsdale, AZ 85260
Telephone 480-551-8280
May __, 2000
<PAGE>
TABLE OF CONTENTS
Page
----
Summary of Proposed Transaction............................................. 1
Risk Factors ............................................... 2
1. If you approve the merger, you will suffer
an immediate 19.2 percent dilution in
your percentage ownership and
book value of Concierge .............................. 2
2. Concierge lacks an operating history.
Should Concierge not achieve profitable
operations, any perceived benefits of
being a public company may never
materialize .......................................... 3
3. It is likely that trading in our stock will be
volatile and limited ................................. 3
4. Post-merger operations may require additional
funds that we do not have ............................ 3
5. Our success depends on our ability to retain
Allen E. Kahn and other key personnel ................ 3
6. Should a change in management seem necessary,
it will be difficult for the non-
management stockholders to do this ................... 3
7. Starfest will lose most of the income tax benefits
of its net operating
loss carryforward .................................... 3
Terms of the Transaction.................................................... 4
Terms of the Merger................................................. 5
Reasons for the Merger ............................................. 5
Description of Securities........................................... 5
Common Stock................................................. 5
Voting Rights......................................... 5
Dividend Rights....................................... 5
Liquidation Rights.................................... 5
Preemptive Rights..................................... 5
Registrar and Transfer Agent.......................... 5
Dissenters' Rights.................................... 5
Change in Control .................................... 6
Preferred Stock.............................................. 6
Differences Between Rights of Stockholders of
Starfest and of Concierge ................................... 6
Accounting Treatment of Proposed Merger ............................ 6
Federal Income Tax Consequences............................................. 6
The Merger ............................................... 6
Stockholders of Concierge.................................... 6
Agreement of Merger ................................................ 6
Pro Forma Financial Information and Dilution........................ 7
Material Contacts Among the Companies....................................... 9
Interests of Named Experts and Counsel ..................................... 9
ii
<PAGE>
Indemnification ............................................................ 9
Penny Stock Regulations .................................................... 10
Information About Starfest.................................................. 12
Business Development ............................................... 12
Business of Starfest ............................................... 12
Description of Property ............................................ 13
Legal Proceedings................................................... 13
Market for Starfest's Common Stock and Related
Stockholder Matters.......................................... 13
Rule 144 and Rule 145 Restrictions on Trading....................... 14
Dividends ............................................... 15
Reports to Stockholders ..................................... 15
Registration Statement ...................................... 15
Stock Certificates .......................................... 16
Financial Statements................................................ 16
Management's Plan of Operation ..................................... 16
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures ........................ 16
Information About Concierge................................................. 16
Overview ........................................................... 16
Concierge's Plan of Operations...................................... 17
Description of the PCA ............................................. 17
The Market ......................................................... 17
Distribution Methods ............................................... 17
Production Costs ................................................... 17
Government Approval of Principal Products .......................... 17
Government Regulations ............................................. 18
Properties ......................................................... 18
Dependence on Major Customers and Suppliers ........................ 18
Seasonality ........................................................ 18
Research and Development ........................................... 18
Environmental Controls ............................................. 18
Year 2000 Computer Problem ......................................... 18
Number of Employees ................................................ 18
Venue of Sales ..................................................... 18
Patents, Trademarks, Copyrights and Intellectual Property .......... 18
Legal Proceedings .................................................. 18
Concierge Management's Plan of Operation ........................... 19
Liquidity .......................................................... 20
Product Research and Development ................................... 20
Other Expected Developments ........................................ 20
Market for Common Equity and
Related Stockholder Matters ................................. 20
Market Information ................................................. 20
Holders ............................................................ 20
Dividends .......................................................... 20
Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures ................................... 20
Financial Statements................................................ 20
Voting and Management Information........................................... 21
Date, Time and Place Information ................................... 21
iii
<PAGE>
Starfest ............................................... 21
Concierge ............................................... 21
Voting Procedure............................................. 21
Revocability of Proxy............................................... 21
Effect of the Merger ............................................... 21
Dissenters' Rights of Appraisal..................................... 22
Persons Making the Solicitation..................................... 22
Interest of Certain Persons in the Proposed Merger ................. 22
Voting Securities and Principal Holders Thereof..................... 22
Security Ownership of Certain Beneficial Owners and
Management................................................... 24
Directors, Executive Officers and Significant Employees............. 27
Executive Compensation ............................................. 29
Other Arrangements .......................................... 29
Stock Options ............................................... 29
Certain Relationships and Related Transactions...................... 30
Transactions with Insiders and Promoters..................... 30
Financial Statements Index ................................................. 32
Appendix A - Agreement of Merger............................................A-1
iv
<PAGE>
SUMMARY OF PROPOSED TRANSACTION
Our company, Starfest, Inc., proposes to merge with another company,
Concierge, Inc. The merger will occur only if the holders of a majority of the
outstanding shares of common stock of each company approve it. A vote to approve
or reject the merger will be taken soon at special stockholders' meetings of
each company.
Starfest recently sold all its assets and today has no business.
Concierge was organized in 1996, has not yet received any revenue from its
business, and is a development stage company. Starfest's stock has traded on the
OTC Bulletin Board since 1996, when it was in the business of producing
country-western theme events. Concierge's stock does not trade.
Concierge has developed computer software, called the "Personal
Communications AttendantTM," that responds to the user's spoken commands to
read, verbalize and manage e-mail traffic stored on the user's personal
computer. The spoken commands can be made from a remote telephone. Concierge
commenced marketing this software in April 2000.
Should the stockholders of Starfest and Concierge approve the merger
between the two companies, Starfest will be the surviving entity but its
business and management will be that of Concierge. Starfest will change its name
to "Concierge Technologies, Inc."
Should each company approve the merger, each Concierge stockholder will
receive 70.444 shares of Starfest common stock for each share owned of
Concierge's common stock. This amounts to 96,957,713 shares of Starfest stock
and would represent 80.8 percent of the outstanding stock after the merger. The
Starfest stockholders will retain their shares of stock in Starfest, without
increase or decrease. Their 23,000,000 shares of Starfest common stock will
represent 19.2 percent of the outstanding stock after the merger.
Starfest's address and telephone number is on the cover page of this
Prospectus. The address and telephone number of Concierge is as follows:
Concierge, Inc.
6033 West Century Boulevard, Suite 1278
Los Angeles, CA 90045
Telephone 310-216-6334
As of January 14, 2000, the last trading date preceding the public
announcement of the proposed merger, the market value of the common stock of
Starfest and the book value of the common stock of Concierge were as follows:
Starfest Concierge
-------- ---------
$0.29 ($24,010) (capital deficit)
A majority vote of all outstanding shares by each company is required
for approval of the proposed merger. The percentage of
1
<PAGE>
outstanding shares of each company that its directors, executive officers and
their affiliates are entitled to vote are as follows:
Starfest Concierge
-------- ---------
3.7% 66.5%
There are no federal or state regulatory requirements that must be
complied with or approval obtained in connection with the proposed merger.
Dissenters' rights of appraisal exist for the stockholders of each
of the two companies. See "Voting and Management Information -
Dissenters' Rights of Appraisal."
In our opinion, the merger will qualify as a tax-free reorganization
under Section 368 of the Internal Revenue Code and, accordingly, there are no
adverse federal income tax consequences to stockholders of either company should
the merger be approved.
RISK FACTORS
The stockholders of Starfest have little risk in approving the proposed
merger. Starfest's business has failed, and it has insufficient assets to
commence a new business. A merger with any company with a business - even one,
such as Concierge, which is only now bringing its unified messaging product to
market, represents an improvement over Starfest's existing state. Accordingly,
the following risk factors are primarily directed at the stockholders of
Concierge. Nevertheless, should the merger between Starfest and Concierge be
approved, the Starfest stockholders will be exposed to many of the risks set
forth below.
The stockholders of Concierge are making an investment decision that
involves a high degree of risk. You should carefully consider the following risk
factors as well as the terms of the merger in determining whether to approve the
merger:
1. If You Approve the Merger, You Will Suffer an Immediate 19.2
Percent Dilution in Your Percentage Ownership and Book Value of
Concierge.
This dilution will be solely for obtaining the possibility, but
not the certainty, of obtaining the following benefits:
o the common stock of our combined company will trade in the
stock market;
o you can sell your shares of stock in the stock market, if you
wish, or buy more;
o our combined company can try to buy other companies with our
tradeable stock rather than with money; and
2
<PAGE>
o our combined, public company should be better able to raise new
capital through the sale of stock than Concierge now can.
2. Concierge Lacks an Operating History. Should Concierge Not
Achieve Profitable Operations, Any Perceived Benefits of Being a Public
Company May Never Materialize.
Concierge has only now commenced operations and has not yet
achieved profitable operations. There is no assurance that profitable operations
can be obtained or maintained. Should you approve the merger and our combined
company continues to operate at a loss, the perceived benefits of the stock
market may also be lost.
3. It is Likely That Trading in Our Stock Will be Volatile and Limited.
4. Post-Merger Operations May Require Additional Funds That We Do
Not Have.
Should the proposed merger be approved, the post-merger company
may need additional funding to achieve its plan of operations. If so, we have
not identified the source for this funding. We give no assurance that the needed
funds can be obtained.
5. Our Success Depends on Our Ability to Retain Allen E. Kahn and
Other Key Personnel.
Should the merger occur, the post-merger company will be reliant
on the continued services of several key personnel. The loss of any of them
could adversely affect future operations. These persons are Allen E. Kahn, chief
executive officer of Concierge; F. Patrick Flaherty, executive vice president;
and Donald V. Fluken, vice president for finance and chief financial officer.
6. Should a Change in Management Seem Necessary, It Will be
Difficult for the Non-Management Stockholders to Do This.
Should the proposed merger be approved, the company's officers
and directors and their affiliates will own approximately 65.9 percent of the
common stock of the company. This amount may enable them to determine the
outcome of any vote affecting the control of the company.
7. Starfest Will Lose Most of the Income Tax Benefits of Its Net
Operating Loss Carryforward.
Starfest had a net operating loss carryforward of $2,656,857 at
December 31, 1999. This may be used to offset otherwise taxable income for
several years in the future. However, under present tax laws if the ownership of
more than 50 percent in value of the stock of Starfest changes during a
three-year period, this limits severely the amount of taxable income of any
"post-change year" that may be offset using "pre-change losses." The merger with
Concierge will effect an immediate 80.8 percent change in such ownership and
will of itself trigger such a restriction.
3
<PAGE>
TERMS OF THE TRANSACTION
Starfest and Concierge have entered into an agreement of merger between
Starfest and Concierge. For the merger to occur, each of the following must
occur:
o Registration statements must be filed with and become effective
at the Securities and Exchange Commission and appropriate state
securities regulatory agencies. This has occurred. The
registration statements cover the following:
o the 96,957,713 merger shares - the shares Starfest offers
to the stockholders of Concierge.
o The stockholders of each of Starfest and of Concierge must, by a
majority vote of the shares outstanding, approve the merger.
Terms of the Merger.
-------------------
The terms of the proposed merger are as follows:
1. Concierge shall merge into Starfest.
2. All outstanding shares of common stock of Concierge shall be
converted into 96,957,713 shares of common stock of Starfest on a pro-rata
basis.
3. There shall be no fractional shares issued. Otherwise fractional
shares shall be rounded up or down - .01 to 4.99, down and 5 to 9.9, up.
4. The present business of Concierge shall be conducted after the merger
by Starfest, into which Concierge shall have merged. However, Concierge's
management and directors shall become the management and directors of the
combined company.
5. The articles of incorporation of Starfest will be amended to provide
the following:
o Its name will be changed to "Concierge Technologies, Inc."
o Its authorized capital will be increased from 65 million
shares of Common Stock, no par value, to 190 million
shares of Common Stock, $0.001 par value, and 10 million
shares of Preferred Stock, $0.001 par value.
6. The Bylaws of the post-merger company will be the Bylaws of
Concierge.
7. Should the stockholders of Concierge not approve the merger, neither
of Starfest or Concierge shall be liable to the other.
4
<PAGE>
Reasons for the Merger.
----------------------
The Starfest stockholders will benefit by becoming, once again, an
operating company with a business. Concierge's stockholders will benefit from
converting their present stock in a closely-held corporation to stock of a
corporation for which there is a public market for their stock. The management
of both Starfest and Concierge believe that the existence of such a public
market will facilitate the raising of expansion funds for the post-merger
company. We give no assurance that such will occur.
Effectively, the stockholders of Concierge will suffer a 19.2 percent
dilution in their equity in Concierge solely for the perceived, but not assured,
benefits of having a public market for their securities.
Description of Securities.
-------------------------
Common Stock. Starfest is a California corporation, and Concierge is a
Nevada corporation. Starfest is authorized to issue 65 million shares of common
stock. It has 23 million shares of common stock now issued and outstanding.
Concierge is authorized to issue 10 million shares of common stock. It has
1,376,380 shares of its common stock now issued and outstanding. There are no
material differences in the common stock of our two companies.
Voting rights. Stockholders have one vote a share on all matters
submitted to a vote of the stockholders. Shares of common stock do not have
cumulative voting rights. This means that the holders of a majority of the
shares voting for the election of the board of directors can elect all members
of the board of directors.
Dividend rights. Stockholders receive dividends when and if
declared by the board of directors out of funds of the corporation legally
available therefor.
Liquidation rights. Upon any liquidation, dissolution or winding
up, stockholders receive pro rata all of the assets of the corporation available
for distribution to stockholders, subject to the prior satisfaction of the
liquidation rights of the holders of outstanding shares of preferred stock.
Preemptive rights. Stockholders do not have preemptive rights to
subscribe for or purchase any stock, obligations or other securities of the
corporation.
Registrar and transfer agent. Nevada Agency and Trust
Company, 50 West Liberty Street, Suite 880, Reno, Nevada 89501, is the
transfer agent and registrar of the common stock of Starfest. Concierge
serves as its own registrar and transfer agent.
Dissenters' rights. A stockholder has "dissenters' rights" which,
if properly exercised, may require the corporation to repurchase its shares.
Dissenters' rights commonly arise in extraordinary transactions such as mergers,
consolidations, reorganizations,
5
<PAGE>
substantial asset sales, liquidating distributions, and certain amendments to
the corporation's certificate of incorporation.
Change in Control. There are no provisions in the articles of
incorporation or bylaws that would delay, defer or prevent a change in control
of either Starfest or Concierge.
Preferred Stock. The post-merger company will be authorized to issue 10
million shares of preferred stock. The preferred stock may be issued from time
to time by the directors as shares of one or more series. The description of
shares of each series of preferred stock, including any preferences, conversion
and other rights, voting powers, and conditions of redemption must be set forth
in resolutions adopted by the directors.
There are no presently outstanding shares of preferred stock of
Starfest.
Differences Between Rights of Stockholders of Starfest and of Concierge.
-----------------------------------------------------------------------
There are no material differences between the rights of holders of the
common stock of Starfest and of Concierge.
Accounting Treatment of Proposed Merger.
---------------------------------------
The transaction will be accounted for as a recapitalization of
Concierge.
Federal Income Tax Consequences of the Transaction.
--------------------------------------------------
The Merger. The merger should qualify as a type "A" tax free
reorganization for both corporations under Section 368(a)(1) of the Internal
Revenue Code.
Stockholders of Concierge. There should be no recognition of
taxable gain or loss to the stockholders of Concierge by reason of the merger.
Each stockholder of Concierge would have a carryover tax basis and a tacked
holding period for the Starfest securities received in the merger.
Concierge itself would not recognize any taxable gain or loss,
because its liabilities are not in excess of the tax basis of its assets.
The above discussion is not based upon an advance ruling by the
Treasury Department but upon an opinion of Thomas J. Kenan, esquire, in his
capacity as tax counsel to Starfest (which tax opinion is one of the exhibits to
the registration statement of which this Prospectus- Proxy Statement is a part).
Agreement of Merger.
-------------------
The Agreement of Merger between Starfest and Concierge appears herein as
"Appendix A - Agreement of Merger."
6
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following sets forth certain pro forma financial information giving
effect to the merger:
PRO FORMA STATEMENT OF FINANCIAL CONDITION
December 31, 1999
<TABLE>
<CAPTION>
Starfest Concierge
Inc. Inc. Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined
------------ ------------ ----------- ---------
ASSETS
<S> <C> <C> <C> <C>
Current assets $ 481 $ 77,183 $ - $ 77,664
Property and equipment - 4,612 - 4,612
------- -------- ------ -------
TOTAL ASSETS $ 481 $ 81,795 $ - $ 82,276
======== ======== ====== =======
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities $ 17,687 $ 105,805 $ - $123,492
Long term liabilities - - - -
------- -------- ------ -------
Total liabilities $ 17,687 105,805 - $123,492
------- -------- ------ -------
Stockholders' equity:
Common stock 2,639,651 10,800 - 2,650,451
Additional paid-in capital - 491,508 - 491,508
Retained earning (deficit) (2,656,857) (526,318) - (3,183,175)
--------- ------- ----- ---------
Total stockholders' equity (17,206) (24,010) - (41,216)
--------- ------- ----- ---------
TOTAL LIABILITIES AND $ 481 $ 81,795 $ - $ 82,276
======== ======== ===== =======
STOCKHOLDERS' EQUITY
Pro forma book value per share $(0.0003)
=======
</TABLE>
NOTE: Pro forma book value per share is calculated by dividing Total
stockholders' Equity - $(41,216) - by the total number of shares that
would have been outstanding on December 31, 1999 (119,957,712), giving
effect to the proposed merger.
7
<PAGE>
PRO FORMA STATEMENT OF INCOME
Fiscal Year Ended December 31, 1999
<TABLE>
<CAPTION>
Starfest Concierge
Inc. Inc. Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined
------------ ------------ ----------- ---------
<S> <C> <C> <C> <C>
Sales $ - $ - $ - $ -
Cost of Sales - - - -
------- ------- -------- ------
Gross profit - - - -
Operating expenses 518,606 54,775 - 573,381
------- ------- -------- -------
Loss from operations (518,606) (54,775) - (573,381)
Income (loss) before taxes (518,606) (54,775) - (573,381)
--------- ------- ------- -------
Provision for taxes - 800 - 800
--------- ------- ------- -------
NET INCOME (LOSS) $(518,606) (55,575) - (574,181)
======== ======= ======= =======
EARNINGS PER SHARE
Net income (loss) $(518,606) $ (55,575) $ - $ (574,181)
Weighted-average number of
shares outstanding 21,697,999 1,076,575 - 22,774,574
(Loss) per share $(0.02) $(0.05) - $(0.03)
</TABLE>
NOTES:
(1) Earnings per share data shown above are applicable for both primary and
fully diluted.
(2) Weighted-average number of shares outstanding for the combined entity
includes all shares issued as of December 31, 1999 as if outstanding as
of the beginning of the period.
8
<PAGE>
MATERIAL CONTACTS BETWEEN STARFEST AND CONCIERGE
There are no past, present, or proposed material contracts,
arrangements, undertakings, relationships, negotiations or transactions during
the periods for which financial statements are presented between Concierge or
its affiliates and Starfest or its affiliates other than the provision in the
agreement of merger that Starfest can designate one member of the board of
directors of the company to serve immediately after the merger until the next
annual meeting of the stockholders.
Such designee is John Conners.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Thomas J. Kenan, Esquire, counsel to Starfest, is named in this
Prospectus-Proxy Statement as having given an opinion on legal matters
concerning the registration or offering of the securities described herein. From
February 17, 1999 until April 6, 1999, Mr. Kenan was the sole officer and
director of Starfest. Mr. Kenan's spouse, Marilyn C. Kenan, is the trustee and
sole beneficiary of the Marilyn C. Kenan Trust, a testamentary trust that
presently owns 760,000 shares of common stock of Starfest. Mr. Kenan disclaims
any beneficial ownership in the securities beneficially owned by his spouse's
trust. Mr. Kenan owns, in his own name, 600,000 shares of common stock of
Starfest and 2,840 shares of common stock of Concierge which shares of Concierge
he received as compensation for his legal services and counsel in connection
with the negotiation and preparation of the agreement of merger, his legal
services in the negotiation and drafting of a Stock Purchase Agreement dated
March 6, 2000 with the controlling shareholder of MAS Acquisition XX Corp. and
Mr. Kenan's subsequent drafting of a Form 8-K12G3 filed with the Commission on
March 10, 2000, his drafting of Starfest's annual Form 10-KSB, and the drafting
of the registration statement of which this Prospectus-Proxy Statement is a
part.
INDEMNIFICATION
Under California and Nevada corporation law, a corporation is authorized
to indemnify officers, directors, employees and agents who are parties or
threatened to be made parties to any civil, criminal, administrative or
investigative suit or proceeding by reason of the fact that they are or were a
director, officer, employee or agent of the corporation or are or were acting in
the same capacity for another entity at the request of the corporation. Such
indemnification includes reasonable expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement if they acted in good faith and
in a manner reasonably believed to be in or not opposed to the best interests of
the corporation.
With respect to any criminal action or proceeding, these same
indemnification authorizations apply if these persons had no reasonable cause to
believe their conduct was unlawful.
In the case of any action by the corporation against such persons, the
corporation is authorized to provide similar indemnification, but if any such
persons should be adjudged to be liable for negligence or misconduct in the
performance of duties to the corporation, the court
9
<PAGE>
conducting the proceeding must determine that such persons are nevertheless
fairly and reasonably entitled to indemnification.
To the extent any such persons are successful on the merits in defense
of any such action, suit or proceeding, California and Nevada law provide that
they shall be indemnified against reasonable expenses, including attorney fees.
A corporation is authorized to advance anticipated expenses for such suits or
proceedings upon an undertaking by the person to whom such advance is made to
repay such advances if it is ultimately determined that such person is not
entitled to be indemnified by the corporation.
Indemnification and payment of expenses provided by California and
Nevada law are not deemed exclusive of any other rights by which an officer,
director, employee or agent may seek indemnification or payment of expenses or
may be entitled to under any by-law, agreement, or vote of stockholders or
disinterested directors. In such regard, a California and Nevada corporation may
purchase and maintain liability insurance on behalf of any person who is or was
a director, officer, employee or agent of the corporation.
As a result of such corporation law, Starfest or Concierge may, at some
future time, be legally obligated to pay judgments (including amounts paid in
settlement) and expenses in regard to civil or criminal suits or proceedings
brought against one or more of its officers, directors, employees or agents, as
such, with respect to matters involving the proposed merger or, should the
merger be effected, matters that occurred prior to or after the merger.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the company pursuant to the foregoing provisions or otherwise, the company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable.
PENNY STOCK REGULATIONS
There is no way to predict a price range within which Starfest's common
stock would trade after the proposed merger. It presently trades on the OTC
Bulletin Board at a price less than $5 a share and is subject to the rules
governing "penny stocks."
A "penny stock" is any stock that:
o sells for less than $5 a share.
o is not listed on an exchange or authorized for quotation on The
Nasdaq Stock Market, and
o is not a stock of a "substantial issuer." Starfest is not now a
"substantial issuer" and cannot become one until it has net
tangible assets of at least $2 million, which it does not now
10
<PAGE>
have and will not have solely as a result of the proposed merger
with Concierge.
There are statutes and regulations of the Securities and Exchange
Commission (the "Commission") that impose a strict regimen on brokers that
recommend penny stocks.
The Penny Stock Suitability Rule
--------------------------------
Before a broker-dealer can recommend and sell a penny stock to a new
customer who is not an institutional accredited investor, the broker-dealer must
obtain from the customer information concerning the person's financial
situation, investment experience and investment objectives. Then, the
broker-dealer must "reasonably determine" (1) that transactions in penny stocks
are suitable for the person and (2) that the person, or his advisor, is capable
of evaluating the risks in penny stocks.
After making this determination, the broker-dealer must furnish the
customer with a written statement setting forth the basis for this suitability
determination. The customer must sign and date a copy of the written statement
and return it to the broker-dealer.
Finally the broker-dealer must also obtain from the customer a written
agreement to purchase the penny stock, identifying the stock and the number of
shares to be purchased.
The above exercise delays a proposed transaction. It causes many
broker-dealer firms to adopt a policy of not allowing their representatives to
recommend penny stocks to their customers.
The Penny stock Suitability Rule, described above, and the Penny Stock
Disclosure Rule, described below, do not apply to the following:
o transactions not recommended by the broker-dealer,
o sales to institutional accredited investors,
o sales to "established customers" of the broker-dealer persons who
either have had an account with the broker-dealer for at least a
year or who have effected three purchases of penny stocks with
the broker-dealer on three different days involving three
different issuers, and
o transactions in penny stocks by broker-dealers whose income from
penny stock activities does not exceed five percent of their
total income during certain defined periods.
The Penny Stock Disclosure Rule
-------------------------------
Another Commission rule - the Penny stock Disclosure Rule requires a
broker-dealer, who recommends the sale of a penny stock to a customer in a
transaction not exempt from the suitability rule described above, to furnish the
customer with a "risk disclosure document." This document includes a description
of the penny stock market and how it
11
<PAGE>
functions, its inadequacies and shortcomings, and the risks associated with
investments in the penny stock market. The broker-dealer must also disclose the
stock's bid and ask price information and the dealer's and salesperson's
compensation related to the proposed transaction. Finally, the customer must be
furnished with a monthly statement including prescribed information relating to
market and price information concerning the penny stocks held in the customer's
account.
Effects of the Rule
-------------------
The above penny stock regulatory scheme is a response by the Congress
and the Commission to known abuses in the telemarketing of low-priced securities
by "boiler shop" operators. The scheme imposes market impediments on the sale
and trading of penny stocks. It has a limiting effect on a stockholder's ability
to resell a penny stock.
Starfest's merger shares likely will trade below $5 a share on the OTC
Bulletin Board and be, for some time at least, shares of a "penny stock" subject
to the trading market impediments described above.
INFORMATION ABOUT STARFEST, INC.
Business Development
Starfest, Inc. was incorporated in California on August 18, 1993 as
"Fanfest, Inc." On August 29, 1995 its name was changed to Starfest,
Inc.
Pursuant to a Stock Purchase Agreement (the "Purchase Agreement") dated
March 6, 2000 between (1) MAS Capital, Inc., an Indiana corporation, the
controlling shareholder of MAS Acquisition XX Corp. ("MAS XX"), an Indiana
corporation, and (2) Starfest, approximately 96.83 percent (8,250,000 shares) of
the outstanding shares of common stock of MAS Acquisition XX Corp. were
exchanged for $100,000 and 150,000 shares of common stock of Starfest in a
transaction in which Starfest became the parent corporation of MAS XX.
Upon execution of the Purchase Agreement and the subsequent delivery of
$100,000 cash and 150,000 shares of common stock of Starfest on March 7, 2000,
to MAS Capital Inc., pursuant to Rule 12g-3(a) of the General Rules and
Regulations of the Securities and Exchange Commission, Starfest became the
successor issuer to MAS Acquisition XX Corp. for reporting purposes under the
Securities and Exchange Act of 1934 and elected to report under the Act
effective March 7, 2000.
Business of Starfest.
--------------------
Starfest's initial business was the production and promotion of theme
events involving numerous artists and performers and designed to attract mass
audiences of fans drawn by the theme. In 1994 and 1995 it produced "Fanfest,"
which was held at the Fairplex at the Los Angeles County Fairgrounds, and which
won the Airplay International Award as the "Country Music Event of the Year." In
1995 the event won the Country Music Associations of America's award as the
"Best Country Event of the
12
<PAGE>
Year." In 1996 the event was renamed "Starfest" and was again held in Los
Angeles.
The events all lost money. In 1997 the event was planned but was
cancelled before being held. The company was essentially dormant in 1998 with
its activities being limited to dealing with creditors and to attempting to
raise capital for the resumption of business.
In 1999 Starfest turned control of the company over to individuals
involved in the adult Internet entertainment business. Under this new direction
the company bought three websites found on the Internet through www.starfest.com
----------------
with the front-page title of adultstars.com. Starfest also purchased and paid
for twelve websites on the Internet, but the written transfer of the websites
was never obtained, and the right to obtain the transfer of those websites has
been sold and transferred to unrelated third parties. Stockholders owning a
majority of the outstanding stock of Starfest regained control of the management
of the company and, on December 31, 1999, pursuant to the written consent of
persons holding a majority of the outstanding shares of common stock of the
company, Starfest sold all the remaining assets of the company associated with
the adult entertainment business for $10,000 and applied this and its other cash
assets to the payment of outstanding liabilities.
On January 18, 2000, Starfest and Concierge executed a letter of intent
to submit to their stockholders a proposal to merge. The agreement of merger was
executed on January 26, 2000. Starfest will be the surviving corporation of the
merger, but the business and management of the merged companies will be that of
Concierge. Pending approval of the merger, Starfest has no business.
Starfest has no employees. Starfest's present management consists of two
persons, Michael Huemmer, president, and Janet Alexander, secretary.
Description of Property.
-----------------------
Starfest has no property.
Legal Proceedings.
-----------------
Neither Starfest nor its property is a party to, or the subject of,
pending legal proceedings. Starfest is aware of no proceeding that a
governmental authority is contemplating.
Market for Starfest's Common Stock and Related Stockholder Matters.
------------------------------------------------------------------
Starfest's Common Stock presently trades on the OTC Bulletin Board. The
high and low bid and asked prices, as reported by the OTC Bulletin Board, are as
follows for 1998 and 1999 and the first quarter of 2000. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.
13
<PAGE>
<TABLE>
<CAPTION>
High Low
---- ---
1998:
<S> <C> <C>
1st Qtr. 0.02 0.005
2nd Qtr. 0.01 0.005
3rd Qtr. 0.03 0.005
4th Qtr. 0.021 0.01
1999:
1st Qtr. 0.1000 0.0050
2nd Qtr. 0.5938 0.0200
3rd Qtr. 0.2000 0.0600
4th Qtr. 0.1050 0.0450
2000:
1st Qtr. 2.3125 0.075
</TABLE>
Rule 144 and Rule 145 Restrictions on Trading.
---------------------------------------------
Should the merger be approved and effected, all shares of common stock
of the post-merger company issued in the merger to the stockholders of Concierge
shall have been issued pursuant to registration with the Commission.
Nevertheless, there will be certain restrictions on the transfer for value of
some of the shares.
Securities and Exchange Commission rules define as "affiliates" a
corporation's executive officers, directors and other persons who, by any
manner, exercise control over the corporation's direction and policies. The
affiliates of Concierge at the time of the vote on the merger, in order to sell
their shares received in the merger, must either register them for sale or
comply with the resale provisions set forth in paragraph (d) of the Commission's
Rule 145, unless some other exemption-from-registration provision is available.
The resale provisions of paragraph (d) of Rule 145 refer to certain provisions
of the Commission's Rule 144 and require, for sales of the shares by such
affiliates, that:
o the company must have been subject to the reporting
requirements of Section 15(d) of the Securities Exchange
Act for at least 90 days (which is the case, here),
o the company must have filed all reports with the
Commission required by such rule during the twelve months
preceding such sale (or such shorter period that the
company was required to file such reports),
o transfers for value by such affiliates can occur only
either (1) through broker transactions not involving the
solicitation of buyers or (2) directly to market-makers,
and
o each such affiliate can transfer for value, during a 90-
day period, no more shares than the greater of one percent
of all issued and outstanding shares of common stock of
the company (105.8 million shares immediately after the
merger) or the average weekly volume of trading
14
<PAGE>
in such common stock reported through the automated
quotation system of Nasdaq or the Bulletin Board during
the four calendar weeks prior to placing the sell order
with a broker-dealer.
The above resale provisions of Rule 145 shall continue for such
affiliates for one year after the merger. Then, only the company's reporting
requirement shall continue. When any such affiliate has ceased to be an
affiliate of the post-merger company for at least three months, and provided at
least two years have elapsed since the date of the merger, then even the
requirement that the company file reports with the Commission will no longer be
required for such a former affiliate to sell any of the shares acquired in the
merger.
We at Starfest believe that 3.5 million shares of the presently
outstanding 23 million shares of Starfest will be subject to restrictions on
trading or transfers for value after the merger. We also believe that of the
96,957,713 shares of Starfest to be distributed in the merger to Concierge
stockholders, only the 64,437,240 shares to be distributed to Concierge'
officers, directors and affiliates will be subject to any restrictions on
transfer. Accordingly, after the effective date of the merger, there shall be
55,520,473 shares in the "public float," i.e., subject to no securities law
restrictions on their being traded or transferred for value. We estimate that
approximately 140 persons will own these shares of record. The offering of them
for sale could have a materially adverse effect on the market price of the
company's stock. Further, the affiliates of Concierge will hold 64,437,240
shares and will be able to sell these shares pursuant to Rule 144 and Rule 145
of the Securities Act.
No equity of Starfest is subject to outstanding options or warrants to
purchase, or securities convertible into, equity of the company.
Dividends. Starfest has had no operations or earnings and has declared
no dividends on our capital stock. Should you approve the merger, there are no
restrictions that would, or are likely to, limit the ability of Starfest to pay
dividends on its common stock, but it has no plans to pay dividends in the
foreseeable future and intends to use earnings for business expansion purposes.
Reports to Stockholders. Starfest is required to file reports with the
Securities and Exchange Commission. These reports are annual 10- KSB, quarterly
10-QSB and periodic 8-K reports. Starfest will furnish stockholders with annual
reports containing financial statements audited by independent public or
certified accountants and such other periodic reports as we may deem appropriate
or as required by law.
Registration Statement. Starfest has filed with the Securities and
Exchange Commission ("SEC") in Washington, D.C., a Registration Statement under
the Securities Act of 1933, with respect to the common stock offered by this
Prospectus-Proxy Statement. The public may read and copy any materials we file
with the SEC at the Public Reference Room of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. Starfest is an
electronic
15
<PAGE>
filer, and the SEC maintains an Internet Web site that contains reports, proxy
and information statements and other information regarding issuers that file
electronically with the SEC. The address of such site is http://www.sec.gov.
Stock Certificates. Certificates for the securities offered hereby
will be ready for delivery within one week after you approve the merger.
Financial Statements.
--------------------
See "Financial Statements - Starfest, Inc." for the independent
auditor's report dated February 9, 2000, with respect to Starfest's balance
sheet as of December 31, 1999, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years ended December 31,
1999 and December 31, 1998, and the notes to such financial statements.
Management's Plan of Operation.
------------------------------
Should the stockholders of the two companies not approve the merger,
Starfest will seek another partner. Its sole "asset" is its status as a public
company whose stock trades on the OTC Bulletin Board.
Changes In and Disagreements With Accountants on Accounting and Financial
--------------------------------------------------------------------------------
Disclosures.
-----------
On March 8, 2000 Starfest's principal independent accountant, Jaak
(Jack) Olesk, Beverly Hills, California, resigned. His reports on the Company's
financial statements from inception onward contained no adverse opinions or
disclaimers of opinions and were not modified as to uncertainty, audit scope or
accounting principles. There were no disagreements with Jaak (Jack) Olesk,
whether or not resolved, on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which, if not
resolved to Jaak (Jack) Olesk's satisfaction, would have caused him to make
reference to the subject matter of the disagreements in connection with his
reports.
The registrant has not yet engaged a new independent accountant or
principal accountant to audit its financial statements.
INFORMATION ABOUT CONCIERGE, INC.
Overview
Concierge was incorporated on September 20, 1996, in the State of
Nevada. Its principal office is at 6033 West Century Boulevard, Suite 1278, Los
Angeles, California 90045. Its telephone number is 310- 216-6334.
16
<PAGE>
Concierge's Plan of Operation
-----------------------------
Concierge has developed a "unified messaging" product - the Personal
Communications Attendant ("PCA"). It commenced marketing this product in
April 2000.
Description of the PCATM. Concierge's PCATM provides a means by which
any user of Internet e-mail can have e-mail messages spoken to him or her over
any touch-tone telephone or wireless phone in the world.
The PCATM responds to the user's voice commands to read, verbalize and
manage e-mail traffic stored on a personal computer. The PCATM is "trained" to
respond only to the voice commands and personal voice password of the individual
user, thus guaranteeing that each user's personal messages cannot be accessed by
anyone else. Responding to spoken instructions, the PCATM can verbalize e-mail
(with future fax and voice-mail capabilities) over the phone and save or delete
those messages as directed by the user.
The Market. As of early 1999, we estimate there were over 250 million
e-mail users worldwide, a number which is growing rapidly. As to the domestic
market, last year there were more than 40 million e-mail users in the U.S.
churning out more than 150 million messages a day. By 2003 that could reach more
than 200 million users, creating 7 billion messages a day. A substantial
majority of this group are potential users of Concierge's current products and
products planned for future release.
Distribution Methods. Concierge plans an aggressive, direct-mail and
Internet-marketing campaign to introduce and promote the PCATM.
Production Costs. The PCATM will be manufactured and produced for
Concierge by Xetel Corp. A service order fulfillment contract is being
negotiated at this time with an unaffiliated third party corporation. Emerald
Solutions, Inc. will provide project management, software and program design and
program coding services to implement products designed by Concierge.
The e-mail version will retail at $39.95. With a $19.95 upgrade, the pro
version monitors and collects fax, voice mail and e-mail messages. There will be
no monthly service fee. No device other than an ordinary telephone is needed to
access the PCA(TM). The PCATM also includes an auto pager that notifies the user
by phone or pager when new e-mail is received.
Considering direct product costs including royalties, Concierge projects
a gross profit margin of approximately 80 to 90 percent of direct sales.
Concierge intends to "nationalize" the product to accommodate several
foreign languages, possibly including Japanese, Korean, German, Latin American
Spanish, French and Brazilian Portuguese.
Governmental Approval of Principal Products. No governmental approval is
required in the U.S. for Concierge's products.
17
<PAGE>
Government Regulations. There are no governmental regulations in the
U.S. that apply to Concierge's products.
Properties. Concierge subleases approximately 150 square feet of office
space at Suite 1278, 6033 West Century Boulevard, Los Angeles, California 90045.
The space is deemed adequate for the present time, but additional space will be
needed commencing in April 2000. Concierge has not yet identified the additional
space it will lease, but ample space is available in the vicinity of its present
space and elsewhere in the Los Angeles area.
Dependence on Major Customers and Suppliers. Concierge does not
anticipate that it will be dependent on any major customers or suppliers.
Seasonality. There should be no seasonal aspect to Concierge's business
other than possible increased sales anticipated in the fourth calendar quarter
associated with the year-end holidays.
Research and Development. Concierge expended approximately $188,663 on
research and development in 1998 and $50,431 in 1999. It anticipates that it
will expend approximately $150,000 on research and development in 2000 and
approximately $200,000 in 2001.
Environmental Controls. Concierge is subject to no environmental
controls or restrictions that require the outlay of capital or the obtaining of
a permit in order to engage in business operations.
Year 2000 Computer Problem. Concierge has determined that it does not
face material costs, problems or uncertainties about the year 2000 computer
problem. This problem stems from the fact that many existing computer programs
use only two digits to identify a year in the date field and do not consider the
impact of the year 2000. Concierge presently uses off-the-shelf and easily
replaceable software programs and has determined that all software is year 2000
compliant.
Number of Employees. On March 1, 2000 Concierge employed two persons
full time and two persons part time.
Venue of Sales. Concierge anticipates that some of its initial sales
will be attributable to exports to English-speaking countries.
Patents, Trademarks, Copyrights and Intellectual Property. Concierge has
trademarked its Personal Communications Attendant. It has no patents on the
product; the underlying technology is the subject of patents, and Concierge is
required to pay royalties of $0.85 a PCATM unit to Lexicus, a subsidiary of
Motorola, and $1.00 a unit to Fonix.
Legal Proceedings. Neither Concierge nor any of its property is a party
to, or the subject of, any material pending legal proceedings other than
ordinary, routine litigation incidental to its business.
18
<PAGE>
Concierge Management's Plan of Operation
----------------------------------------
Concierge commenced marketing its Personal Communications Attendant on
April 7, 2000. Concierge's management proposes to devote the company's cash
assets and the time and efforts of its officers and staff for the next twelve
months to the promotion, sale and continued improvement of its Personal
Communications Attendant.
Liquidity. As of April 15, 2000, Concierge had cash assets of
approximately $550,000 acquired through the sale of its common stock in an
offering exempt from registration pursuant to the provisions of the Commission's
Regulation D, Rule 506. Concierge expects to improve its liquidity through sales
of its PCATM and that it will not have to raise additional funds in the next
twelve months. Should the need arise during the next twelve months for
additional capital, Concierge believes that several of its existing shareholders
will provide equity capital to meet this need.
Product Research and Development. Concierge will perform product
research and development during the next twelve months. A single user version of
the PCATM was introduced in April 2000. Concierge is developing and will soon
offer server versions for Windows NT and Windows 2000. Later in 2000 Concierge
expects to develop and offer server versions to the Unix and the Linux operating
systems. Concierge will also perform product development work on adding several
foreign languages to its present, English-language models.
Other Expected Developments. Concierge does not expect to purchase any
plant or significant equipment. It outsources the development of its products,
through the collaboration of its president, Allen Kahn, and outside providers.
Concierge does expect to increase the number of its employees during the
next twelve months by adding approximately three employees, which would include
administrative and executive personnel.
Market for Common Equity and Related Stockholder Matters.
--------------------------------------------------------
Market Information. There is no established public trading market for
Concierge's common stock. None of its authorized shares of common stock are
subject to outstanding options or warrants to purchase, or securities
convertible into, common stock.
Concierge's outstanding 1,376,380 shares of common stock will be
converted to 96,957,713 shares of common stock of Starfest on the basis of
70.444 shares to Starfest common stock to be exchanged for each share of
Concierge common stock. All 96,957,713 shares will be eligible for sale, but the
64,437,240 shares to be distributed to Concierge's officers and directors will
be subject to the resale provisions of paragraph (d) of Rule 145 discussed above
under "Information About Starfest - Rule 144 and Rule 145 Restrictions on
trading."
Holders. There are 97 holders of record of Concierge's common
stock.
19
<PAGE>
Dividends. Concierge has declared no cash dividends on its common stock
since its inception. There are no restrictions that limit Concierge's ability to
pay dividends on its common stock or that are likely to do so in the future.
Changes In and Disagreements With Accountants on Accounting and Financial
--------------------------------------------------------------------------------
Disclosures.
-----------
During the last two fiscal years and the period since June 30, 1999,
there have been no changes in Concierge's principal independent accountant.
Financial Statements.
--------------------
See "Financial Statements - Concierge, Inc." for the independent
auditor's report dated March 17, 2000 with respect to Concierge's balance sheet
as of June 30, 1999 and the related statements of operations and deficit
accumulated, changes in shareholders' deficit and cash flows for the fiscal
years ended June 30, 1999 and June 30, 1998, and the notes to such financial
statements.
See also Concierge's unaudited interim balance sheet dated December 31,
1999, and statements of operation and deficit accumulated and cash flows for the
six months ended December 31, 1999 and December 31, 1998 and the notes to such
interim financial statements. In the opinion of management, the interim
financial statements include all adjustments necessary to make the financial
statements not misleading.
20
<PAGE>
VOTING AND MANAGEMENT INFORMATION
Starfest's management and Concierge's management will each solicit the
proxy of their company's stockholders with respect to the proposed merger
described herein.
Date, Time and Place Information.
--------------------------------
Starfest. Starfest's stockholders will vote on the proposed merger at a
special meeting of the stockholders of Starfest to be held at 11:00 A.M.,
________________, ________________, 2000, at 9494 East Redfield Road, No. 1136,
Scottsdale, Arizona 85260. Starfest's officers, directors and affiliates are
entitled to vote 3.7 percent of the outstanding shares entitled to vote. They
have indicated that they will vote to approve the merger.
Concierge. Stockholders of Concierge will vote on the proposed merger at
a special meeting of the stockholders of Concierge to be held on 11:00 A.M.,
__________, ___________________, 2000, at ____________
_________________________________________________________. Concierge's officers,
directors and their affiliates are entitled to vote 66.5 percent of the
outstanding shares entitled to vote. They have indicated that they will vote
their shares to approve the merger.
Voting Procedure. Voting by Starfest's stockholders and by Concierge's
stockholders may be by written ballot at the meetings or by written proxy.
Starfest stockholders of record as of ______________, 2000 shall be entitled to
vote at their meeting. Concierge stockholders of record as of the day before the
date of this Prospectus-Proxy Statement shall be entitled to vote at their
meeting. Provided a quorum is present in person or by proxy (as determined by
the aggregate voting rights of the common stock, considered as a whole),
abstentions by stockholders present in person at the meeting shall be counted as
a vote for rejecting the merger. None of the shares of Concierge are held of
record by brokers. Some ____________ of the 23 million shares of Starfest are
held by brokers. Broker non-votes shall be counted as votes disapproving the
proposed merger.
Revocability of Proxy.
---------------------
A person giving a proxy has the power to revoke it. A revocation of a
proxy earlier given can be accomplished either (1) by written notification by
the giver of the proxy of an intent to revoke it, or (2) by attendance at the
special stockholders' meeting called to vote on the proposed merger and either
oral or written instruction to the person counting ballots on the merger vote of
an intention to revoke the earlier given proxy.
Effect of the Merger.
--------------------
Should the merger be approved and effected -
o the Concierge entity merges into the Starfest entity, and the
separate existence of the Concierge entity ceases;
21
<PAGE>
o the title to any real estate and other property owned by
Concierge is vested in Starfest without reversion or impairment;
o Starfest has all the liabilities of Concierge;
o Any proceeding pending against Concierge may be continued as if
the merger had not occurred or Starfest may be substituted in the
proceeding for Concierge;
o the articles of incorporation of Starfest are amended to the
extent provided in the plan of merger, to-wit:
o Starfest's authorized capital is increased from 65 million
shares of common stock, no par value, to 190 million
shares of common stock, par value $0.001, and ten million
shares of preferred stock, par value, $0.001, and
o Starfest's name is changed to "Concierge Technologies,
Inc.";
o the Concierge shareholders' interest in the Concierge common
stock are converted to interests in Starfest common stock, as
described in the Agreement of Merger, appended hereto as
"Appendix A," and in the Prospectus-Proxy Statement, to-wit: each
share of Concierge common stock will be converted into 70.444
shares of common stock of Starfest; and
o the shareholders of Concierge and of Starfest do not become
personally liable for the debts, liabilities or obligations of
the surviving entity by reason of the merger.
Dissenters' Rights of Appraisal.
-------------------------------
Stockholders of Starfest and of Concierge who do not vote for or consent
in writing to the proposed merger, and who continuously hold their shares
through the effective date of the merger (should it be effected), are entitled
to exercise dissenters' rights of appraisal. Generally, any stockholder of
either Starfest or Concierge is entitled to dissent from consummation of the
plan of merger and to obtain payment of the fair value of his shares should the
merger be consummated. The notices of the special meetings of stockholders of
Starfest and of Concierge, at which the votes shall be taken whether to approve
the proposed merger, must state that all stockholders are entitled to assert
dissenters' rights. The notices must be accompanied by a copy of the relevant
portions of California corporation law for the stockholders of Starfest and of
Nevada corporation law for the stockholders of Concierge, describing dissenters'
rights, the procedure for exercise of dissenters' rights, and the procedure for
judicial appraisal of the value of the shares of common stock of Starfest or
Concierge, as the case may be, should a dissenter and his or her corporation not
agree on the value of such shares.
All stockholders of Starfest or Concierge who desire to consider whether
their dissenters' rights should be exercised should carefully
22
<PAGE>
read the relevant portions of the California corporation law or the Nevada
corporation law that will accompany the notice of the special meeting of
stockholders. You should especially be alert to the requirement that if you wish
to assert your dissenters' rights, you must deliver to the corporation, before
the vote is taken, written notice of your intent to demand payment for your
shares if the merger is approved. You must not vote your shares in favor of, or
consent in writing to, the merger, although you will not lose your dissenter's
rights by failing to vote. Other procedures are required and will be described
in detail in the copy of state corporation law that describe dissenters' rights.
A mere vote against the merger does not satisfy the requirement of delivering
written notice before the meeting of your intent to demand payment for your
shares if the proposed merger is effectuated.
Persons Making the Solicitation.
-------------------------------
Members of management of each of Starfest and of Concierge will solicit
proxies for that entity. MANAGEMENT OF EACH COMPANY RECOMMENDS THAT THE PROPOSED
MERGER BE APPROVED.
They will solicit proxies by the mails, by telephone, or by personal
solicitation. Starfest and Concierge will each bear its cost of its
solicitation.
Management of each of Starfest and of Concierge will vote signed but
otherwise unmarked proxies to approve the merger.
Interest of Certain Persons in the Proposed Merger.
--------------------------------------------------
Other than having an interest in the proposed merger by reason of (1)
his or her ownership of common stock of Starfest or Concierge or (2) election to
office of the surviving company, there is no substantial interest in the merger,
direct or indirect, of any Starfest or Concierge director, executive officer
since the beginning of the last fiscal year, nominee for election as a director
or associate of any of the foregoing persons.
Voting Securities and Principal Holders Thereof.
-----------------------------------------------
The merger must be approved by an affirmative vote of the holders of a
majority of the outstanding shares of common stock of each of Starfest and of
Concierge.
There are presently outstanding 23 million shares of common stock of
Starfest held of record by ______________ stockholders. Each share is entitled
to one vote on the proposed merger.
There are presently outstanding 1,376,380 shares of common stock of
Concierge held of record by 97 stockholders. Each share is entitled to one vote
on the proposed merger.
The record date for determining the right to vote on the proposed merger
is _________________, 2000 for Starfest shareholders and the day before the date
on the cover of this Prospectus-Proxy Statement for Concierge shareholders.
23
<PAGE>
Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
The following table sets forth certain information regarding the
beneficial ownership of the common stock of Starfest as of May 7, 2000 by each
individual who is known to Starfest, as of the date of this filing, to be the
beneficial owner of more than five percent of Starfest's common stock, its only
voting security.
<TABLE>
<CAPTION>
Name and Address Amount and
Of Beneficial Nature of Percent of
Owner Beneficial Ownership Class
---------------- -------------------- ----------
<S> <C> <C>
Thomas J. Kenan 1,360,000 shares(1) 5.9%
212 N.W. 18th St.
Oklahoma City, OK 73103
Gary Bryant 1,310,000 shares(2) 5.7%
46471 Manitou
Indian Wells, CA 92210
-------------------------
</TABLE>
(1) 760,000 of these shares are held of record by the Marilyn C. Kenan
Trust, of which trust Marilyn C. Kenan, the spouse of Thomas J. Kenan,
is the trustee and beneficiary. Mr. Kenan disclaims any beneficial
ownership of any of the shares held in the trust.
(2) 570,000 of these shares are held of record by Suzanne Bryant, Mr.
Bryant's spouse, and 370,000 are held of record by Newport Capital
Corporation, a corporation under the control of Mr. Bryant. Mr. Bryant
disavows any beneficial ownership of any of the shares held by Mrs.
Bryant.
The table below sets forth the ownership, as of May 7, 2000, by all
directors and nominees, and each of the named executed officers of Starfest, and
directors and executive officers of Starfest as a group, of the common stock of
Starfest, its only voting security.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of
of Owner Beneficial Ownership Class
---------------- -------------------- ----------
<S> <C> <C>
Michael Huemmer 760,000 shares 3.3%
#1136
9494 East Redfield Road
Scottsdale, AZ 85260
Janet Alexander 100,000 shares 0.4%
Suite C
120 East Andreas Road
Palm Springs, CA 92262
Officers and Directors
as a Group (2 persons) 860,000 shares 3.7%
</TABLE>
There are no arrangements which may result in a change in control of
Starfest other than the proposed merger described herein. There are no known
voting trusts, pooling arrangements or similar agreements in place between or
among any of the shareholders.
The following table sets forth certain information regarding beneficial
ownership of the common stock of Concierge as of May 7, 2000
24
<PAGE>
by each individual who is known to Concierge, as of the date of this filing, to
be the beneficial owner of more than five percent of Concierge's common stock,
its only voting security.
<TABLE>
<CAPTION>
Amount of Post-
Merger Company
Amount and Nature Shares To Be
Name and Address of of Beneficial Percent of Owned If Merger Percent of
Beneficial Owner Ownership Class Is Approved Class
------------------- ----------------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
Allen E. Kahn 370,000 shares 26.9% 26,064,280 21.7%
7547 W. Manchester Ave., No. 325
Los Angeles, CA 90045
Samuel C.H. Wu 403,500 shares(1) 29.3% 28,424,154 23.7%
1202 Tower 1, Admiralty Centre
18 Harcourt Road
Hong Kong, China
Polly Force Co., Ltd. 160,000 shares(1) 11.6% 11,271,040 9.4%
1202 Tower 1, Admiralty Centre
18 Harcourt Road
Hong Kong, China
East Asia Strategic Holdings, Ltd. 109,500 shares(2) 8.0% 7,713,618 6.4%
1202 Tower 1, Admiralty Centre
18 Harcourt Road
Hong Kong, China
Gary E. Bryant 75,000 shares 5.1% 6,593,300(3) 5.3%
3 Gavina
Monarch Beach, CA 92629
-------------------------
</TABLE>
(1) Mr. Wu is the record owner of 110,000 shares of common stock of
Concierge and is deemed to be the beneficial owner of the following
number of shares held of record by the following corporations of each of
which Mr. Wu is a director: Polly Force, Ltd.-160,000 shares, East Asia
Strategic Holdings, Ltd. - 109,500 shares, and Link Sense, Ltd. - 24,000
shares.
(2) The beneficial ownership of these shares is also attributed to Samuel
C.H. Wu. See footnote (2) above.
(3) This number includes 1,310,000 shares of Starfest owned by Mr. Bryant
prior to the vote on the proposed merger.
The table below sets forth the ownership, as of May 7, 2000, by all
directors and nominees and each of the named executive officers of Concierge,
and of directors, director nominees and executive officers of Concierge as a
group, of the common stock of Concierge, its only voting security.
25
<PAGE>
<TABLE>
<CAPTION>
Amount of Post-
Merger Company
Amount and Nature Shares To Be
of Beneficial Percent of Owned If Merger Percent of
Name and Address of Owner Ownership Class Is Approved Class
------------------------- ---------------- ---------- --------------- --------
<S> <C> <C> <C> <C>
Allen E. Kahn 370,000 shares 26.9% 26,064,280 21.7%
7547 W. Manchester Ave., No. 325
Los Angeles, CA 90045
F. Patrick Flaherty 70,000 shares(1) 5.1% 4,931,080 4.1%
637 29th Street
Manhattan Beach, CA 90266
Donald V. Fluken 2,130 shares (2) 150,046 (2)
313 Pagosa Way
Fremont, CA 94539
James E. Kirk 57,500 shares 4.2% 4,050,530 3.4%
1401 Kirby, N.E.
Albuquerque, NM 87112
Herbert Marcus, III 500 shares (2) 35,222 (2)
5505 Wenonan Drive
Dallas, TX 75209
Harry F. Camp 500 shares (2) 35,222 (2)
1150 Bayhill Drive
San Bruno, CA 94066
David W. Neibert 10,600 shares(3) (2) 746,706 (2)
24028 Clarington Drive
West Hills, CA 91304
John Conners 0 shares - 0 -
The Ayco Company L.P.
17877 Von Karman Avenue, Ste 500
Irvine, CA 92614
Samuel C.H. Wu 403,500 shares(4) 29.3% 28,424,154 23.7%
1202 Tower 1, Admiralty Centre
18 Harcourt Road
Hong Kong, China
Officers and Directors
as a Group (9 persons) 914,730 shares 66.5% 64,437,240 53.7%
-------------------------
</TABLE>
(1) The shares attributed to Mr. Flaherty include 10,000 shares held of
record by each of Mr. Flaherty's sons, Ryan Flaherty and Cole Flaherty.
(2) Less than one percent.
(3) The shares attributed to Mr. Neibert include 200 shares issued to his
son, Ryan Neibert, and 100 shares issued to his daughter, Megan Neibert.
26
<PAGE>
(4) Mr. Wu is the record owner of 110,000 shares of common stock of
Concierge and is deemed to be the beneficial owner of the following
number of shares held of record by the following corporations of each of
which Mr. Wu is a director: Polly Force, Ltd.-160,000 shares, East Asia
Strategic Holdings, Ltd. - 109,500 shares, and Link Sense, Ltd. - 24,000
shares.
Directors, Executive Officers and Significant Employees.
Set forth below are the names and terms of office of each of the persons who
will serve as a director or an executive officer of the company should the
merger be approved and a description of the business experience of each during
the past five years.
<TABLE>
<CAPTION>
Office Held Term of
Person Office Since Office
------ ------ ----------- -------
<S> <C> <C> <C>
Allen E. Kahn, 63 Chief Executive Officer, 1996 2000
President, Director, and
Chairman of the Board of
Directors
F. Patrick Flaherty, 62 Executive Vice President 2000 2001
Donald V. Fluken, 58 Vice President of Finance, 2000 2001
Chief Financial Officer
James E. Kirk, 64 Secretary 1999 2001
and Director 1996 2001
Herbert Marcus, III, 61 Director 2000 2001
Harry F. Camp, 77 Director 2000 2001
David W. Neibert, 44 Director 2000 2001
John Conners, 46 Director 2000 2001
Samuel C.H. Wu, 52 Director 2000 2001
</TABLE>
Allen E. Kahn. Mr. Kahn invented the company's initial product, the
-------------
Personal Communications Attendant, and formed Concierge in 1996. Immediately
prior to that time, he had been employed as president of Advanced Imaging
Centers, an organization formed to establish Ultrafast CT medical imaging
centers in San Diego and Las Vegas.
F. Patrick Flaherty. Mr. Flaherty was the president of Manhattan
-------------------
Resources of Manhattan Beach, California from April 1994 to January 1998. He
became employed in January 1998, and was employed until recently, as the
regional manager of W. Quinn Associates, Inc. of Reston, Virginia. In December
1999 he became employed as the executive vice president of Concierge.
Donald V. Fluken. Mr. Fluken was employed from May 1991 until January
----------------
1997 as the managing director of Results Management of Fremont, California. From
January 1997 until June 1999 he was employed as the chief financial officer of
Chemtrak, Inc. of Sunnyvale, California. After Mr. Fluken terminated his
employment with Chemtrak, it filed a voluntary chapter 11 petition under the
U.S. Bankruptcy Code. From June
27
<PAGE>
1999 he became employed and is still employed as the part-time chief financial
officer of Connection, Inc. of San Jose, California. He became employed in
February 2000 as the part-time chief financial officer of Concierge.
James E. Kirk. Mr. Kirk has been a self-employed attorney in
-------------
Albuquerque, New Mexico for the last five years.
Herbert Marcus, III. Mr. Marcus has been employed since January 1991 as
-------------------
the senior vice president of Burgess Management Corp. of Dallas, Texas, a real
estate management company.
Harry F. Camp. Mr. Camp founded the Harry Camp Company in 1948, a
--------------
company that operated retail women's accessory departments inside department and
retail stores and operated boutique stores in major shopping centers. Prior to
its sale in 1975, the Harry Camp Company operated in 310 cities in 42 states. In
1971 Mr. Camp co-founded the Identicator, Inc., which designs, develops,
manufactures and markets inkless identification systems. This is the first
company to introduce PC-based fingerprint identification systems. A division of
the company merged with Identix, Inc. in April 1999, at which time the
division's clients included several Fortune 500 companies, the F.B.I., the
Social Security Administration, the U.S. Secret Service, the Defense Manpower
Data Center and several states. In 1982 Mr. Camp founded Camp Investors, Ltd. a
limited partnership that provided venture capital financing to start-up and
emerging growth technology companies. Mr. Camp serves today as chairman of the
board of directors of Identicator, Inc.
David W. Neibert. Mr. Neibert was employed from June 1993 until October
----------------
1997 as the president and chief operating officer of Roamer One of Torrance,
California. From October 1997 until March 1999 he was employed as the executive
vice president of business development of InterGlobal Corp. of Kansas City,
Missouri. From April 1999 until the present he has been employed as the
president and general partner of The Wallen Group of West Hills, California.
John Conners. Mr. Conners is currently Vice President, Financial
-------------
Counseling for The Ayco Company, L.P., based in the Irvine, California office.
Mr. Conners received his law degree from Albany Law School in 1978 and joined
the New York State Bar in the same year. He also received a Bachelor of Science
degree from the State University of New York. Mr. Conners' practice involves
counseling executive in major Fortune 500 companies, many of which are involved
in telecommunications and Internet technology.
Samuel C.H. Wu. Mr. Wu is a graduate of the University of California,
--------------
Berkley, where he received a BSEE degree in electronics and computer sciences
and an MBA degree. After being employed as a senior marketing and credit officer
with the Bank of America - World Banking Division in Tokyo, London and Hong
Kong, he founded and directs Hong Kong-based Woodsford Shipping & Trading Co.,
Ltd., an import-export and financial services company.
28
<PAGE>
Harry F. Camp, a director, is the uncle of Herbert Marcus, III, a
director.
Executive Compensation.
----------------------
The following information concerns the compensation of Concierge's chief
executive officer for the last three completed fiscal years. No other executive
officers or individuals received total annual salary and bonus that exceeded
$100,000 during the last three completed fiscal years.
<TABLE>
<CAPTION>
Name of Chief Executive Officer Year Cash Salary
------------------------------- ---- -----------
<S> <C> <C>
Allen E. Kahn 1999 None
1998 None
1997 None
</TABLE>
Other than as stated above, no cash or stock compensation, deferred
compensation or long-term incentive plan awards were issued or granted to
Concierge's management during or with respect to the last fiscal year.
Other Arrangements. There are no employment contracts, compensatory
plans or arrangements, including payments to be received from Starfest, with
respect to any director or executive officer of Starfest which would in any way
result in payments to any such person because of his or her resignation,
retirement or other termination of employment with Starfest or its subsidiaries,
any change in control of Starfest, or a change in the person's responsibilities
following a change in control of Starfest.
Stock Options.
-------------
Starfest has adopted a stock option plan which shall survive the merger,
the major provisions of which Plan are as follows:
Options granted under the plan may be "employee incentive stock options"
as defined under Section 422 of the Internal Revenue Code or non-qualified stock
options, as determined by the option committee of the board of directors at the
time of grant of an option. The plan enables the option committee of the board
of directors to grant up to 500,000 stock options to employees and consultants
from time to time.
The option committee has granted no options.
Concierge has no stock option plan but in June 1997 issued still-
outstanding options to the following persons as set forth below:
<TABLE>
<CAPTION>
Relationship Shares Per Share Expiration
Person to Concierge Under Option Exercise Price Date
------------ ------------ ------------ -------------- ----------
<S> <C> <C> <C> <C>
Harold Adams None 30,000 $10 06-21-00
Ron Layton None 40,000 $10 06-21-00
-------
70,000
</TABLE>
29
<PAGE>
Should the merger between Starfest and Concierge be approved, the
anti-dilution provisions of the above options would result in the options being
exercisable as follows:
<TABLE>
<CAPTION>
Post-Merger Shares Post-Merger Per-Share Post-Merger
Person Under Option Exercise Price Expiration Date
------------ ------------------ --------------------- ---------------
<S> <C> <C> <C>
Harold Adams 2,113,320 $0.142 06-21-00
Ron Layton 2,817,760 $0.142 06-21-00
---------
4,931,080
</TABLE>
Certain Relationships and Related Transactions.
----------------------------------------------
With respect to Starfest, Concierge and each person who will serve as a
director or executive officer of the company should the proposed merger be
approved, there have been no transactions during the last two years, or proposed
transactions, in which any of them had or is to have a direct or indirect
material interest.
Transactions with Promoters. The persons, whose names are set forth
below, may be deemed to be "promoters" of the company. Set forth opposite the
name of each is (1) a description of the nature and amount of anything of value
(including money, stock, property, contracts, options, or rights of any kind)
that was, or is to be received by each promoter, directly or indirectly, either
from Starfest or Concierge and (2) the nature and amount of any assets, services
or other consideration (therefore received) or to be received by Starfest or
Concierge:
<TABLE>
<CAPTION>
Shares of Common Stock of Concierge
Received or To Be Received or To Be
Received by the Person Received by Concierge
----------------------------------- ---------------------
Person No. of Shares Value Nature Value
------------------- ------------- -------- -------- -----------
<S> <C> <C> <C> <C>
Allen E. Kahn 260,000 $148,000 Services $ 260
110,000 Services $ 35,200(1)
James E. Kirk 25,000 $ 10,000 Services $ 10,000(2)
20,000 $ 20,000 Services $ 20,000(3)
12,500 $ 5,000 Cash $ 5,000
F. Patrick Flaherty 10,000 $ 10,000 Cash $ 10,000
70,000 $ 22,400 Services $ 22,400(4)
Donald V. Fluken 2,130 $ 682 Services $ 682(4)
Herbert Marcus, III 500 $ 160 Services $ 160(4)
Harry F. Camp 500 $ 160 Services $ 160(4)
David W. Neibert 10,600 $ 3,392 Services $ 3,392(4)
Samuel C.H. Wu 378,500 $139,200 Cash $139,200
25,000 $ 10,000 Services $ 10,000(5)
Newport Capital 75,000 $ 24,000 Services $ 24,000(6)
</TABLE>
30
<PAGE>
John Everding 37,500 $ 12,000 Services $ 12,000(6)
-------------------------
(1) Mr. Kahn's services consisted of his services as chief executive officer
of Concierge from September 26, 1996 until the date of the proposed
merger with Starfest. His services were valued at $0.32 a share of
Concierge's Common Stock and were valued by Mr. Kahn and by James E.
Kirk, officers and directors of Concierge from 1996 until 2000.
(2) Mr. Kirk's services consisted of legal services from September 26, 1996
until the date of the proposed merger with Starfest. His services were
valued at $0.40 a share of Concierge's common stock and were valued by
himself and Allen Kahn, officers and directors of Concierge from 1996
until 2000, and Garth W. Reynolds, a former officer and director of
Concierge from 1996 to 1999.
(3) These legal services were performed in between September 1996 and May
2000, at a time when shares of stock of Concierge were being sold at
prices varying from $0.40 to $3.00 a share.
(4) This person's services consisted of his services as an officer and a
director of Concierge rendered during 2000 prior to May 5, 2000. The
shares were valued at Concierge's $0.32 book value at the time the
services were rendered, and the services were valued by the board of
directors of Concierge.
(5) Mr. Wu's services consisted of his raising money for Concierge in Hong
Kong, where Mr. Wu lives. The services were valued at $0.40 a share by
the board of directors of Concierge.
(6) This person's services consisted of his services as a consultant to the
company rendered during 2000 prior to May 5, 2000 and in connection with
the proposed merger with Starfest. The shares were valued at Concierge's
$0.32 book value at the time the services were rendered, and the
services were valued by the Concierge board of directors.
31
<PAGE>
FINANCIAL STATEMENTS INDEX
The financial statements of Starfest and of Concierge appear as follows:
Starfest, Inc.
Independent Auditors' Report....................................... F-1
Balance Sheet as of December 31, 1999.............................. F-2
Statement of Operations for the years
ended December 31, 1999 and
December 31, 1998 .......................................... F-3
Statement of Changes in Stockholders' Equity
(Deficit) for the period from
December 31, 1997 to December 31, 1999 ..................... F-4
Statements of Cash Flows for the years ended
December 31, 1999 and December 31, 1998 .................... F-5
Notes to Financial Statements ..................................... F-6
Balance Sheet as of March 31, 1999 and
March 31, 2000 (Unaudited) ..................................F-9
Statement of Operations for the three-month
periods ended March 31, 1999 and
March 31, 2000 (Unaudited) .................................F-10
Statement of Changes in Stockholders' Equity
(Deficit) for the period December 31,
1998 to March 31, 2000 (Unaudited) .........................F-11
Statements of Cash Flows for the three months
ended March 31, 1999 and March 31,
2000 (Unaudited) ...........................................F-13
Notes to Financial Statements (Unaudited) .........................F-14
Concierge, Inc.
Report of Independent Auditors.....................................F-17
Balance Sheet as of June 30, 1999 .................................F-18
Statement of Operations and Deficit Accumulated
for the Years Ended June 30, 1999 and
June 30, 1998 and the Period from
September 20, 1996 (Inception Date)
to June 30, 1999 ...........................................F-19
Statement of Changes in Shareholders' Deficit
for the Years Ended June 30, 1999 and
June 30, 1998 and the Period from
September 20, 1996 (Inception Date)
to June 30, 1999 ...........................................F-20
Statement of Cash Flows for the Years Ended
June 30, 1999 and June 30, 1998 and
the Period from September 20, 1996
(Inception Date) to June 30, 1999 ..........................F-21
Notes to Financial Statements......................................F-22
Balance Sheet as of December 31, 1999 (unaudited)..................F-24
Statement of Operations and Deficit Accumulated
(Unaudited) for the Interim Six Months
Ended December 31, 1999 and December 31,
1998 and the Period From September 20, 1996
(Inception Date) to December 31, 1999 ......................F-25
Statement of Cash Flows
(Unaudited) for the Six Months Ended
December 31, 1999 and December 31, 1998
and the Period From September 20, 1996
(Inception Date) to December 31, 1999 ......................F-26
Notes to Financial Statements December 31, 1999
(Unaudited) ................................................F-27
32
<PAGE>
Jaak (Jack) Olesk
Certified Public Accountant
270 North Canon Drive, Suite 203
Beverly Hills, CA 90210
Telephone 310-288-0693
Fax 310-288-0863
e-mail: [email protected]
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors
Starfest, Inc.
I have audited the accompanying balance sheet of Starfest, Inc. as of December
31, 1999, and the related statements of operations, stockholders' equity
(deficit) and cash flows for the year ended December 31, 1999 and the year ended
December 31, 1998. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Starfest, Inc. as of December 31,
1999, and the results of its operations and its cash flows for the year ended
December 31, 1999 and the year ended December 31, 1998, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring significant losses from
operations that raises substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Jaak Olesk
----------------------------------
Beverly Hills, California
February 9, 2000
F-1
<PAGE>
STARFEST, INC.
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
<TABLE>
<S> <C>
Cash $ 481
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable $ 17,687
-----------
Total current liabilities $ 17,687
-----------
Stockholders' equity (deficit)
Common stock: no par value,
65,000,000 shares authorized;
21,697,999 shares issued and
outstanding 2,639,651
Retained earnings (deficit) (2,656,857)
----------
Total stockholders' equity (deficit) (17,206)
----------
$ 481
==========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
STARFEST, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ - $ -
----------- -----------
General and Administrative
Expenses 518,606 2,366
----------- -----------
Operating (Loss) (518,606) (2,366)
Provision for income taxes - -
----------- -----------
NET (LOSS) $ (518,606) $ (2,366)
Net (Loss)
per common share $ (.04) $ (01)
Weighted Average Shares
Outstanding 15,893,441 8,301,323
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
STARFEST, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY/(DEFICIT)
<TABLE>
<CAPTION>
Common Stock Retained
Number of Amount Earnings
Shares Total (Deficit) Total
--------- ------ --------- -----
Balance,
<S> <C> <C> <C> <C>
December 31, 1997 6,236,323 $1,598,072 $(2,135,885) $ (537,813)
Net (loss) for
year ended
December 31, 1998 - - (2,366) (2,366)
--------- --------- --------- ---------
Balance,
December 31, 1998 6,236,323 1,598,072 (2,138,251) (540,179)
Shares issued
for services 2,313,338 87,200 - 87,200
Shares issued
for assets 2,950,000 118,000 - 118,000
Shares issued
for debt
extinguishment 6,165,005 646,379 - 646,379
Shares issued
for cash 4,033,333 190,000 - 190,000
Net (loss) for
year ended
December 31, 1999 - - (518,606) (518,606)
---------- ---------- ----------- ---------
Balance,
December 31, 1999 21,697,999 $2,639,651 $(2,656,857) $ (17,206)
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
STARFEST, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
---------- ----------
Net Cash From
Operating Activities:
<S> <C> <C>
Net (loss) $(518,606) $ (2,366)
Adjustments to reconcile
net loss to net cash
used by operating activities:
Shares issued for services 87,200 -
Shares issued for assets 118,000 -
Shares issued for
debt extinguishment 646,379 -
Changes in assets
and liabilities:
Accounts payable (413,692) 2,366
Other liabilities (108,800) -
--------- ---------
Net cash used)
by operating activities (189,519) -
Investing Activities:
Net cash provided (used) by
Investing Activities - -
--------- ---------
Cash flows from Financing
Activities
Common stock issued for cash 190,000 -
--------- ---------
Net cash provided by
Financing Activities: 190,000
Increase in Cash 481 -
Cash at beginning of period - -
--------- ---------
Cash at end of period $ 481 $ -
Supplemental cash flow information:
Cash paid during the period for:
Interest $ - $ -
Income taxes $ - $ -
Non cash financing transactions:
Shares for services $ 87,200 $ -
Shares for debt extinguishment $ 646,379 $ -
Shares for assets $ 118,000 $ -
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
STARFEST, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1 - Summary of Significant Accounting Policies
Nature of Operations
Starfest, Inc. (the "Company"), a California corporation, was incorporated on
August 18, 1993 as Fanfest, Inc.. In August, 1995 the Company changed its name
to Starfest, Inc.. During the year ended December 31, 1998, the Company was
inactive, just having minimal administrative expenses. During the year ended
December 31, 1999 the Company attempted to pursue operations in the online adult
entertainment field. However, the Company was not successful in this pursuit.
Cash equivalents
Cash equivalents consist of funds invested in money market accounts and
in investments with a maturity of three months or less when purchased.
There were no cash equivalents at December 31, 1999.
Loss per share
The computation of loss per share of common stock is based on the
weighted average number of shares outstanding during the periods presented.
Fully diluted calculations are not presented since the Company only had losses
for all periods presented (thus antidilutive).
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 amounts reported in financial statements and
accompanying notes. Actual results could differ from those estimates.
Issuance of Shares for Services
Valuation of shares for services is based on the estimated fair market
value of the services performed.
Income taxes
The Company records its income tax provision in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". (See Note 3).
F-6
<PAGE>
STARFEST, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1 - Summary of Significant Accounting Policies(continued)
Fair Value of Financial Instruments
Pursuant to SFAS No. 107, Disclosures about Fair Value of Financial
Instruments, the Company is required to estimate the fair value of all financial
instruments included on its balance sheet at December 31, 1999. The Company
considers the carrying value of such amounts in the consolidated financial
statements to approximate their expected realization and interest rates, which
approximate current market rates. During the periods presented and at December
31, 1999 the Company had no financial instruments.
Comprehensive Income (Loss)
In fiscal 1999, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. This statement establishes standards for the reporting of
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements. The adoption
of SFAS No. 130 required no additional disclosure for the Company and did not
have any effect on the Company's financial position, as there was no difference
between comprehensive loss and the net loss as reported.
Segment Disclosures
In Fiscal 1999, the Company adopted SFAS No. 131, Disclosures About
Segments of an Enterprise and Related Information. This Statement establishes
standards for the way companies report information regarding operating segments
in annual financial statements. The adoption of SFAS No. 131 required no
additional disclosure for the Company as the Company operated in one principal
business segment.
Reclassifications
Certain items in prior period financial statements have been
reclassified to conform with 1999 classifications.
NOTE 2 - Basis of presentation and considerations related to continued
existence (going concern)
The Company's financial statements have been presented on the basis that
it is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
incurred a net loss of $518,606 for the year ended December 31, 1999. The
Company incurred a net loss of $2,366 for the year ended December 31, 1998.
F-7
<PAGE>
STARFEST, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 2 - Basis of presentation and considerations related to continued existence
(going concern) (continued)
These factors, among others, raise substantial doubt as to the Company's
ability to continue as a going concern.
The Company's management intends to raise additional operating funds
through equity and/or debt offerings. However, there can be no assurance
management will be successful in this endeavor.
NOTE 3 - Income Taxes
The Company records its income tax provision in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" which requires the use of the liability method of accounting for
deferred income taxes.
Since the Company did not have taxable income during the periods
presented, no provision for income taxes has been provided. At December 31,
1999, the Company did not have any significant tax net operating loss
carryforwards (tax benefits resulting from losses for tax purposes have been
fully reserved due to the uncertainty of a going concern). At December 31, 1999,
the Company did not have any significant deferred tax liabilities or deferred
tax assets.
NOTE 4 - Subsequent Events
On January 18, 2000 the Company issued 1,302,001 of its common shares,
for January, 2000 services, to three shareholders.
In January and February, 2000 the Company was in negotiations
regarding possibly entering into a business combination with Concierge,
Inc., a development stage software developer. Concierge, Inc. does not have
significant assets or revenues.
F-8
<PAGE>
Starfest, Inc.
Balance Sheets
March 31, 2000
Assets
------
<TABLE>
<CAPTION>
2000
-----------
Current Assets:
<S> <C>
Cash $ 833
----------
Total Current Assets $ 833
==========
</TABLE>
Liabilities And Stockholders' Equity (Deficit)
----------------------------------------------
<TABLE>
Current Liabilities:
<S> <C>
Accounts payable $ 5,461
Payable to shareholders 24,814
-----------
Total current liabilities $ 30,275
-----------
Stockholders, Equity (Deficit):
Common stock, no par value,
65,000,000 shares authorized;
19,499,999 and 23,000,000 shares
issued and outstanding 2,647,253
Retained earnings (deficit) (2,676,695)
-----------
Total stockholders, equity
(deficit) (29,442)
-----------
$ 833
===========
</TABLE>
See notes to financial statements.
F-9
<PAGE>
Starfest, Inc.
Statements Of Operations
Three Months Ended March 31,
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Revenues $ - $ -
----------- -----------
General and Administrative
Expenses 19,038 2,424
----------- -----------
Operating Loss (19,038) (2,424)
Provision for income taxes 800 800
----------- -----------
Net Loss $ (19,838) (3,224)
=========== ===========
Accumulated Deficit - beginning of year (2,656,857) (2,138,251)
----------- -----------
Accumulated Deficit - end of year (2,676,695) (2,141,475)
Basic and Diluted Weighted Average
Number of Common Shares Outstanding 23,038,298 6,478,397
=========== ===========
Basic Loss Per Common Share $ (.00) $ (.00)
=========== ===========
Diluted Loss Per Common Share $ (.00) $ (.00)
=========== ===========
</TABLE>
See notes to financial statements.
F-10
<PAGE>
Starfest, Inc.
Statement Of Changes In Stockholders' Equity (Deficit)
For the Three Months ended March 31, 2000 and March 31, 1999
<TABLE>
<CAPTION>
Common Stock Retained
------------------------
Number of Earnings
Shares Amount (Deficit) Total
--------- ---------- ------------ ----------
Balance,
<S> <C> <C> <C> <C>
December 31, 1998 6,236,323 $1,598,072 $(2,138,251) $(540,179)
Shares issued
for services 208,339 208 - 208
Shares issued for
debt extinguished 298,338 127,400 - 127,400
Net loss for
three months
ended
March 31, 1999 - - (3,224) (3,224)
---------- --------- ---------- ---------
Balance,
March 31, 1999 6,7843,000 $1,725,680 $(2,141,475) $(415,795)
========== ========= ========== =========
Balance, December
31, 1999 21,697,999 $2,639,651 $(2,656,857) $ (17,206)
Shares issued
for services 602,001 602 602
Shares issued
for cash 700,000 7,000 7,000
Net loss for
three months
ended
March 31, 2000 (19,838) (19,838)
---------- --------- ---------- --------
Balance March
31, 2000 23,000,000 $2,647,253 $(2,676,695) $ (29,442)
========== ========= ========== ========
</TABLE>
See notes to financial statements.
F-11
<PAGE>
Starfest, Inc.
Statements Of Cash Flows
Three Months Ended March 31,
<TABLE>
<CAPTION>
2000 1999
----------- -----------
Net Cash From
operating Activities:
<S> <C> <C>
Net loss $ (19,838) $ (3,224)
Adjustments to reconcile
net loss to net cash
used by operating activities:
Shares issued for services 602 208
Loss on disposal of equipment - 2,216
Shares issued for debt
extinguishment - 127,400
---------- ----------
Total Adjustments 602 129,824
Increase (Decrease) in Liabilities
Accounts payable (12,226) 800
Other liabilities - (127,400)
---------- ----------
Net cash used
by operating activities (31,462) -
Cash Flows From Investing Activities - -
Cash Flows From Financing Activities
Proceeds from Shareholders issued notes 24,814 -
Proceeds from issuance of common stock 7,000 -
---------- ----------
Net cash provided by
Financing Activities 31,814 -
---------- ----------
Net Cash Provided from All Activities 352 -
Cash - beginning of period 481 -
---------- ----------
Cash at end of period $ 831 $ -
========== ==========
Supplemental cash flow information:
Cash paid during the period for:
Interest $ - $ -
Income taxes $ - $ -
Non cash financing transactions:
Shares for services $ 602 $ 208
Shares for debt extinguishment $ 0 $ 127,400
</TABLE>
See notes to financial statements.
F-12
<PAGE>
Starfest, Inc.
Notes To Financial Statements
March 31, 2000 and March 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
(a) Starfest, Inc. (the Company), a California corporation, was incorporated
on August 18, 1993 as Fanfest, Inc. In August, 1995 the Company changed its name
to Starfest, Inc. During 1998, the Company was inactive, just having minimal
administrative expenses. During 1999 the Company attempted to pursue operations
in the online adult entertainment field. There were no revenues from this
endeavor. The Company is negotiating an agreement with a copy (see Note 3). The
purpose of the merger is to effect an online communication retrieval system such
as e-mail via the telephone.
(b) Cash Equivalents
Cash equivalents consist of funds invested in money market accounts and
in investments with a maturity of three months or less when purchased. There
were no cash equivalents for the three months ended March 31, 2000 and March 31,
1999.
(c) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the amounts reported in financial statements and
accompanying notes. Actual results could differ from those estimates.
(d) Issuance of Shares for Services
Valuation of shares for services is based on the estimate fair market
value of the services performed.
(e) Income Taxes
The Company's uses the liability method of accounting for income tax
specified by SFAS No. 109, "Accounting for Income Taxes", whereby deferred tax
liabilities and assets are determined based on the difference between financial
statements and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse. Deferred
tax assets are recognized and measured based on the likelihood of realization of
the related tax benefit in the future. The Company had no material net deferred
tax assets or liabilities at March 31, 2000 and March 31, 1999.
F-13
<PAGE>
Starfest, Inc.
Notes To Financial Statements
March 31, 2000 and March 31, 1999
(f) Loss Per Share
In February 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 128 "Earnings Per Share." The statement replaced primary EPS
with basic EPS which is computed by dividing reported earnings available to
common shareholders by weighted average shares outstanding. The provision
requires the calculation of diluted EPS. The company uses the method specified
by the statement.
2. ADVERTISING
-----------
Advertising is expensed as incurred.
3. MERGER NEGOTIATIONS
-------------------
On January 26, 2000 the Company entered into an agreement of merger with
Concierge, Inc., a Nevada corporation, pursuant to which, should the merger be
approved by the shareholders of both companies, the presently outstanding
1,376,380 shares of common stock of Concierge, Inc. will be converted into
shares of common stock of the Company on the basis of 70,444 shares of Starfest,
Inc. to be issued for each share of Concierge, Inc. The Company is registering
96,957,713 shares of its common stock on a Form S-4 to be filed with the
Securities and Exchange Commission to be available should the merger be
approved.
4. RELATED PARTY NOTES PAYABLE
---------------------------
Payable to shareholders is non-interest bearing, unsecured with no
specified due date.
5. GOING CONCERN UNCERTAINTIES
---------------------------
At the end of the first quarter (March 31, 2000) the Company incurred an
operating loss of (3,224). If management will be unable to generate revenue or
secure adequate financing to do its current business operational plan, there
will be substantial doubt of the Company's ability to continue as a going
concern. The Company, however, believes that its current financing and
reorganization plan will generate the resources required to continue and sustain
its operation indefinitely.
F-14
<PAGE>
BRAD B. HAYNES 9005 Burton Way
Certified Public Accountant Los Angeles, California 90048
Tel (310) 273-7417
Fax (310) 285-0865
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Shareholders and Board of Directors
Concierge, Inc.
(A Development Stage Company)
Los Angeles, California
We have audited the accompanying balance sheet of Concierge, Inc. (A Development
Stage Company) as of June 30, 1999 and the related Statements of Operations and
Deficit Accumulated, Cash Flows and Changes in Shareholders' Deficit for the
years ended June 30, 1999 and June 30, 1998 as well as for the period from
September 20, 1996 (inception) to June 30, 1999. The 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 audit in accordance with generally accepted auditing standards.
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 audit 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 Concierge, Inc. (A Development
Stage Company) as of June 30, 1999 and June 30, 1998, and the results of its
operations, its cash flows and its changes in shareholders' equity (deficit) for
the years then ended and the period from inception until June 30, 1999 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Companies will continue as a going concern. As discussed in Note 6, the Company
has suffered a current loss from operations and has a capital deficiency to
pursue its projected operation that raises substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 6. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Brad B. Haynes
--------------------------
Brad B. Haynes
March 17, 2000
F-15
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
BALANCE SHEET
June 30, 1999
ASSETS
------
<TABLE>
<CAPTION>
CURRENT ASSETS
--------------
<S> <C> <C> <C>
Cash in Bank $ 6,383
Prepaid Expenses 800
---------
Total Current Assets $ 7,183
PROPERTY AND EQUIPMENT
(Net of $5,868 depreciation) 5,776
--------
TOTAL ASSETS $12,959
======
LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES
-------------------
Accounts Payable - Trade $ 70,093
Accrued Expenses 20,218
Related Party Notes Payable 22,000
---------
Total Current Liabilities $112,311
SHAREHOLDERS' DEFICIT
Common Stock, 10,000,000 Shares
Authorized, $.01 par value,
1,166,326 shares issued
and outstanding 11,663
Additional Paid-In Capital 359,728
Deficit Accumulated During the
Development Stage (470,743)
--------
Total Stockholders' Deficit (99,352)
-------
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT $12,959
======
</TABLE>
See accompanying notes to Financial Statements
F-16
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS AND DEFICIT ACCUMULATED For
the Years Ended June 30, 1999 and June 30, 1998 and the Period
From
September 20, 1996 (Inception Date) to June 30, 1999
----------------------------------------------------
<TABLE>
<CAPTION>
09-20-96
Year Year (Inception
Ended Ended Date) to
06-30-99 06-30-98 06-30-99
-------- -------- --------
<S> <C> <C> <C>
REVENUES $ 0 $ 0 $ 0
--------
COSTS AND EXPENSES
------------------
Product Launch Expenses 58,607 205,285 357,466
General and Administrative Expenses 30,512 77,806 110,877
-------- -------- --------
TOTAL COSTS AND EXPENSES 89,119 283,091 468,343
(LOSS) FROM OPERATIONS (89,119) (283,091) (468,343)
----------------------
PROVISION FOR INCOME TAXES 800 800 2,400
-------------------------- -------- --------- ---------
NET LOSS (89,919) (283,891) 470,743
-------- ======== ========= =========
DEFICIT ACCUMULATED DURING THE
------------------------------
DEVELOPMENT STAGE - beginning (380,824) (96,933)
----------------- -------- ---------
DEFICIT ACCUMULATED DURING THE
------------------------------
DEVELOPMENT STAGE - end (470,743) (380,824)
-----------------
BASIC AND DILUTED WEIGHTED AVERAGE
----------------------------------
NUMBER OF COMMON SHARES OUTSTANDING 1,061,938 853,410 1,061,938
----------------------------------- ========= ========= =========
BASIC LOSS PER COMMON SHARE $ (.08) $ ( .33) $ (.44)
--------------------------- ========= ========= =========
DILUTED LOSS PER COMMON SHARE $ (.08) $ ( .33) $ (.44)
----------------------------- ========= ========= =========
</TABLE>
See accompanying notes to Financial Statements
F-17
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT For
the Years Ended June 30, 1999 and June 30, 1998 and the Period From
September 20, 1996 (Inception Date) to June 30, 1999
----------------------------------------------------
<TABLE>
<CAPTION>
Common Stock
-----------------------
Additional
Paid-In Accumulated Shareholders'
Shares Amount Capital Deficit Equity
--------- ------ ---------- ----------- -------------
Common Stock Issued for
<S> <C> <C> <C> <C> <C>
Cash Through June 30, 1997 176,306 $ 1,763 $106,162 $ 0 $107,925
Common Stock Issued for
Services Through June 30,
1997 621,545 6,215 0 0 6,215
Net Loss Through June 30,
1997 0 0 0 (96,933) (96,933)
--------- ------- -------- ---------- --------
Balance at June 30, 1997 797,851 7,978 106,162 (96,933) 17,207
Common Stock Issued for
Cash in the Fiscal Year
Ended June 30, 1998 137,475 1,375 194,650 0 196,025
Common Stock Issued for
Services in the Fiscal Year
Ended June 30, 1998 22,550 226 0 0 226
Net Loss Incurred During the
Fiscal Year Ended June 30,
1998 0 0 0 (283,891) (283,891)
--------- ------- -------- ---------- ---------
Balance at June 30, 1998 957,876 $ 9,579 $300,812 $ (380,824) $ (70,433)
Beginning Balance July 1,
1998 957,876 9,579 300,812 (380,824) (70,433)
Common Stock Issued for
Cash in the Year Ended June
30, 1999 208,000 2,080 58,916 0 60,996
Common Stock Issued for
Services in the Year Ended
June 30, 1999 450 4 0 0 4
Net Loss Incurred During the
Year Ended June 30, 1999 0 0 0 (89,919) (89,919)
--------- ------- -------- ---------- --------
Balance at June 30, 1999 1,166,326 $11,663 $359,728 $ (470,743) $(99,352)
========= ======= ======== ========== ========
</TABLE>
See accompanying notes to Financial Statements
F-18
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Years Ended June 30, 1999 and June 30, 1998 and the Period From
September 20, 1996 (Inception Date) to June 30, 1999
----------------------------------------------------
<TABLE>
<CAPTION>
09-20-96
Year Ended Year Ended (Inception Date)
06-30-99 06-30-98 to 06-30-99
---------- ---------- ----------------
CASH FLOW FROM OPERATING ACTIVITIES
-----------------------------------
<S> <C> <C> <C>
Net Loss $ (89,919) $(283,891) $(470,743)
Adjustments to reconcile Net Loss:
To Net Cash Used by Operating
Activities:
Depreciation 2,329 2,329 5,868
Stock issued for Services - - 6,441
-------- -------- --------
Total Adjustments 2,329 2,329 12,309
(INCREASE) DECREASE IN ASSETS
-----------------------------
INCREASE (DECREASE) IN LIABILITIES
----------------------------------
Prepaid Expenses - (800) (800)
Other Assets 1,625 (1,625) -
Accounts Payable 5,717 64,376 70,093
Accrued Expenses 10,784 9,435 20,218
Loans from Shareholders - - 12,000
-------- -------- --------
NET CASH USED BY OPERATING
ACTIVITIES $ (69,464) $(210,176) $(356,923)
----------
CASH FLOWS FROM INVESTING
-------------------------
ACTIVITIES
----------
Purchase of Office Furniture
and Equipment - (4,396) $ (11,644)
CASH FLOWS FROM FINANCING
-------------------------
ACTIVITIES
----------
Proceeds from Issuance of
Common Stock 61,000 196,251 364,950
Proceeds from Related Party
Borrowing 10,000 12,000 10,000
-------- -------- --------
NET CASH PROVIDED BY FINANCING
------------------------------
ACTIVITIES 71,000 208,251 374,950
----------
NET INCREASE IN CASH 1,536 (6,321) 6,383
--------------------
CASH - Beginning of Period 4,847 11,169 -
---- -------- -------- --------
CASH - End of Year $ 6,383 $ 4,848 $ 6,383
----
</TABLE>
See accompanying notes to Financial Statements
F-19
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
1. NATURE OF OPERATIONS
--------------------
Concierge, Inc. is a development stage company incorporated in Nevada
on September 20, 1996. The company is in the process of developing
Software to provide local telecommunication/internet service and to
provide long distance telecommunications as well as sales of cellular
units. The Company has generated no revenues.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
(a) Cash Equivalents
----------------
Cash equivalents consist of funds invested in money market
accounts and investments with a maturity of three months or less
when purchased. There were no cash equivalents for the fiscal
years ended June 30, 1999.
(b) Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principals requires management to
make estimates and assumptions that affect the amounts reported
in financial statements and accompanying notes. Actual results
could differ from those estimates.
(c) Issuance of Shares for Service
------------------------------
Valuation of shares for services is based on the estimated fair
market value of the services performed.
(d) Income Taxes
------------
The Company's uses the liability method of accounting for income
taxes specified by SFAS No. 109, "Accounting for Income Taxes",
whereby deferred tax liabilities and assets are determined based
on the difference between financial statements and tax bases of
assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse. Deferred
tax assets are recognized and measured based on the likelihood of
realization of the related tax benefit in the future. The Company
had no material net deferred tax assets or liabilities at June
30, 1999.
(e) Property and Equipment
----------------------
Depreciation for equipment and vehicles are computed using the
straight-line method calculated to depreciate the cost of assets
over the estimated useful lives. Leasehold improvements are
amortized over the life of the original lease. Costs of
maintenance and repairs are charged to expense while costs of
significant renewals and betterments are capitalized.
F-20
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(f) Loss Per Share
--------------
In February 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 128 "Earnings Per Share." The statement
replaced primary EPS with basic EPS which is computed by dividing
reported earnings available to common shareholders by weighted
average shares outstanding. The provision requires the
calculation of diluted EPS. The company uses the method specified
by the statement.
3. RELATED PARTY NOTES PAYABLE
---------------------------
A promissory note of Ten Thousand Dollars ($10,000) was given to an
individual for funds received by the Company. The interest rate was
fifteen percent per annum payable on demand.
A promissory of Twelve Thousand Dollars ($12,000) was given to an
individual for funds received by the Company. The interest rate was
fifteen percent (15%) per annum. Further consideration for this loan was
the issuance of four hundred and fifty (450) shares of Company shares.
4. ADVERTISING
-----------
Advertising is expensed as incurred.
5. LEASE AGREEMENT
---------------
The Company is on a month-to-month tenant occupancy.
6. GOING CONCERN UNCERTAINTIES
---------------------------
At the end of the current year, the Company incurred an operating loss
of $89,919. If management will be unable to generate more revenue or
secure adequate financing to do its current business operational plan,
there will be substantial doubt of the Company's ability to continue as
a going concern. The Company, however, believes that its current
financing and reorganization plan will generate the resources required
to continue and sustain its operation indefinitely.
F-21
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
BALANCE SHEET
December 31, 1999
-----------------
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
CURRENT ASSETS
--------------
<S> <C> <C> <C>
Cash in Bank $ 76,383
Prepaid Expenses 800
---------
Total Current Assets $ 77,183
PROPERTY AND EQUIPMENT
----------------------
(Net of $7,032 depreciation) 11,644 4,612
--------
TOTAL ASSETS $81,795
=======
LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES
-------------------
Accounts Payable - Trade $ 66,843
Accrued Expenses 21,962
Note Payable 12,000
Related Party Note Payable 5,000
---------
Total Current Liabilities $105,805
SHAREHOLDERS' DEFICIT
---------------------
Common Stock, 10,000,000 Shares
Authorized, $.01 par value,
1,080,076 shares issued
and outstanding 10,800
Additional Paid-In Capital 491,508
Deficit Accumulated During the
Development Stage (526,318)
---------
Total Stockholders' Deficit (24,010)
-------
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT $81,795
=======
</TABLE>
See accompanying notes to Financial Statements
F-22
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS AND DEFICIT ACCUMULATED
(Unaudited)
For the Interim Six Months Ended December 31, 1999 and
December 31, 1998 and the Period From
September 20, 1996 (Inception Date) to December 31, 1999
--------------------------------------------------------
<TABLE>
<CAPTION>
09-20-96
Six Months Ended (Inception)
----------------------- -----------
12-31-99 12-31-98 to 12-31-99
-------- -------- -----------
<S> <C> <C> <C>
REVENUES $ 0 $ 0 $ 0
-------- ---------- ---------- ----------
COSTS AND EXPENSES
------------------
Product Launch Expenses 8,780 16,682 366,246
General and Administrative
Expenses 45,995 7,104 156,872
---------- ---------- ----------
TOTAL COSTS AND EXPENSES 54,775 23,786 523,118
(LOSS) FROM OPERATIONS (54,775) (23,786) (523,118)
----------------------
PROVISION FOR INCOME TAXES 800 800 3,200
-------------------------- ---------- ---------- ----------
NET LOSS (55,575) (24,586) (526,318)
--------
DEFICIT ACCUMULATED DURING THE
------------------------------
DEVELOPMENT STAGE - beginning (470,743) (380,824)
----------------- ---------- ----------
DEFICIT ACCUMULATED DURING THE
------------------------------
DEVELOPMENT STAGE - end (526,318) (405,410)
-----------------
BASIC AND DILUTED WEIGHTED AVERAGE
NUMBER OF COMMON SHARES
OUTSTANDING 1,076,575 957,876 1,076,575
----------- ========== ========= ==========
BASIC LOSS PER COMMON SHARE $(.05) $(.25) $(.49)
--------------------------- ====== ====== ======
DILUTED LOSS PER COMMON SHARE $(.05) $(.25) $(.49)
----------------------------- ====== ====== ======
</TABLE>
See accompanying notes to Financial Statements
F-23
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
BALANCE SHEET
March 31, 2000
--------------
(Unaudited)
ASSETS
------
<TABLE>
CURRENT ASSETS
--------------
<S> <C>
Cash in Bank $ 540,629
Prepaid Expenses 800
-----------
Total Current Assets $ 541,429
PROPERTY AND EQUIPMENT
----------------------
(Net of $7,615 depreciation) 4,029
-----------
TOTAL ASSETS $ 545,458
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
LIABILITIES $ 0
-----------
SHAREHOLDERS' EQUITY
--------------------
Common Stock, 10,000,000 Shares
Authorized, $.01 par value,
1,175,410 shares issued
and outstanding 11,754
Additional Paid-In Capital 1,251,555
Deficit Accumulated During the
Development Stage (717,851)
----------
TOTAL STOCKHOLDERS' EQUITY $ 545,458
----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 545,458
==========
</TABLE>
See accompanying notes to Financial Statements
F-24
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
For the Interim Nine Months Ended March 31, 2000 and
March 31, 1999 and the Period From
September 20, 1996 (Inception Date) to March 31, 2000
-----------------------------------------------------
<TABLE>
<CAPTION>
09-20-96
Nine Months Ended (Inception)
----------------------- -----------
03-31-00 03-31-99 to 03-31-00
-------- -------- -----------
<S> <C> <C> <C>
REVENUES $ 0 $ 0 $ 0
-------- ---------- ---------- ----------
COSTS AND EXPENSES
------------------
Product Launch Expenses 155,665 55,482 527,529
General and Administrative
Expenses 90,640 23,839 187,172
---------- ---------- ----------
TOTAL COSTS AND EXPENSES 246,308 78,321 714,651
(LOSS) FROM OPERATIONS (246,308) (78,321) (714,651)
---------------------- ---------- ---------- ----------
PROVISION FOR INCOME TAXES 800 800 3,200
-------------------------- ---------- ---------- ----------
NET LOSS (247,108) (79,121) (717,851)
--------
DEFICIT ACCUMULATED DURING THE
------------------------------
DEVELOPMENT STAGE - beginning (470,743)
----------------- ----------
DEFICIT ACCUMULATED DURING THE
------------------------------
DEVELOPMENT STAGE - end (717,851)
-----------------
</TABLE>
See accompanying notes to Financial Statements
F-25
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
For the Interim Nine Months Ended March 31, 2000 and
March 31, 1999 and the Period From
September 20, 1996 (Inception Date) to March 31, 2000
-----------------------------------------------------
<TABLE>
<CAPTION>
09-26-96
Nine Months Ended (Inception)
--------------------- -----------
03-31-00 03-31-99 to 03-31-00
-------- -------- -----------
CASH FLOW FROM OPERATING ACTIVITIES
-----------------------------------
<S> <C> <C> <C>
Net Loss $(247,186) $ (79,121) $(717,851)
Adjustments to reconcile Net Loss:
To Net Cash Used by Operating
Activities:
Depreciation 1,746 1,771 7,615
--------- -------- ----------
Total Adjustments (1,746) 1,771 7,615
DECREASE (INCREASE) IN ASSETS
-----------------------------
INCREASE (DECREASE) IN LIABILITIES
----------------------------------
Prepaid Expenses - - (800)
Accounts Payable (70,093) 8,820 -
Accrued Expenses (20,219) 9,429 -
--------- -------- ---------
NET CASH USED BY OPERATING
--------------------------
ACTIVITIES $(335,672) $ (59,101) $ (711,036)
----------
CASH FLOWS FROM INVESTING
-------------------------
ACTIVITIES
----------
Purchase of Office Furniture
and Equipment - - (11,644)
CASH FLOWS FROM FINANCING
-------------------------
ACTIVITIES
----------
Proceeds from Issuance of
Common Stock and Additional
Paid-In Capital 891,918 49,982 1,263,309
Proceeds from Related Party
Borrowing (22,000) 10,000 -
-------- -------- ----------
NET CASH PROVIDED BY FINANCING
------------------------------
ACTIVITIES 869,918 59,982 1,263,309
---------- -------- -------- ----------
NET CASH PROVIDED FROM 534,246 (881) 540,629
----------------------
ALL ACTIVITIES
--------------
CASH - Beginning of Period 6,383 4,848 -
---- -------- -------- ---------
CASH - End of Period $540,629 $ 5,729 $ 540,629
---- ======== ======== =========
Interest Paid $ 3,617 $ 3,617
Interest Paid $ 800 $ 2,400
</TABLE>
See accompanying notes to Financial Statements
F-26
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
March 31, 2000
--------------
(Unaudited)
1. NATURE OF OPERATIONS
--------------------
Concierge, Inc. is a development stage company incorporated in Nevada on
September 20, 1996. The Company is in the process of developing Software to
provide local telecommunications/internet service and to provide long
distance telecommunications as well as sales of cellular units. The Company
has generated no revenue.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
(a) Cash Equivalents
----------------
Cash equivalents consist of funds invested in money market accounts and
investments with a maturity of three months or less when purchased.
There were no cash equivalents for the interim periods ended March 31,
2000 and March 31, 1999.
(b) Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates
and assumptions that affect the amounts reported in financial
statements and accompanying notes. Actual results could differ from
those estimates.
(c) Issuance of Shares for Service
------------------------------
Valuation of shares for shervices is based on the estimated fair market
value of the services performed.
(d) Income Taxes
------------
The Company's uses the liability method of accounting for income taxes
specified by SFAS No. 109, "Accounting for Income Taxes", whereby
deferred tax liabilities and assets are determined based on the
difference between financial statements and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Deferred tax assets are recognized
and measured based on the likelihood of realization of the related tax
benefit in the future. The Company had no material net deferred tax
assets or liabilities at March 31, 2000 and March 31, 1999.
F-27
<PAGE>
CONCIERGE, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
March 31, 2000
--------------
(Unaudited)
(e) Property and Equipment
----------------------
Depreciation for equipment and vehicles are computed using the
straight-line method calculated to depreciate the cost of assets over
the estimated useful lives. Leasehold improvements are amortized over
the life of the original lease. Costs of maintenance and repairs are
charged to expense while costs of significant renewals and betterments
are capitalized.
(f) Loss Per Share
--------------
In February 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 128 "Earnings Per Share." The statement replaced
primary EPS with basic EPS which is computed by dividing reported
earnings available to common shareholders by weighted average shares
outstanding. The provision requires the calculation of diluted EPS.
The company uses the method specified by the statement.
3. ADDITIONAL PAID-IN CAPITAL
--------------------------
The Company has entered into subscription agreements to issue "post
acquisition" shares in exchange for case to finance continued product
development and other operational costs. During March, 2000, the Company
received $956,500 based on these agreements. The Company's only obligation
is to issue either "post acquisition" shares, or original Company shares
using a procedure agreed to by both share subscribers and the Company, in
the event the acquisition is not successfully completed. As part of securing
this financing, the Company incurred associated costs of $273,999. Since
the issuance of specific shares are contingent upon future events, the
proceeds have been recorded as additional paid-in capital, net of the costs
of securing the financing.
4. ADVERTISING
-----------
Advertising is expensed as incurred.
5. LEASE AGREEMENT
---------------
The Company is on a month-to-month tenant occupancy.
6. CONCENTRATION OF CREDIT RISK
----------------------------
The Company maintains all cash in bank deposit accounts, what at times may
exceed federally insured limits. The Company has not experienced a loss in
such accounts.
F-28
<PAGE>
APPENDIX A
AGREEMENT OF MERGER
This Agreement of Merger (the "Agreement") is made and entered into as
of January 26, 2000 by and among:
STARFEST, Inc., a California corporation ("STARFEST"); and
CONCIERGE, Inc., a Nevada corporation ("CONCIERGE").
RECITALS
WHEREAS, STARFEST's common stock, no par value per share (the "Common
Stock"), is currently traded on the OTC Bulletin Board; and
WHEREAS, STARFEST currently operates an Internet entertainment business;
and
WHEREAS, the parties hereto wish to reorganize STARFEST by merging
CONCIERGE into STARFEST, with STARFEST being the surviving corporation of the
merger; and
WHEREAS, as part of the reorganization, STARFEST wishes to sell its
Internet entertainment business to a third party in order that the sole business
of STARFEST after the merger will be the business of CONCIERGE.
NOW, THEREFORE, in consideration of the following representations,
promises and undertakings, the parties hereto hereby agree as follows:
1. STARFEST merger with CONCIERGE. Promptly after the execution of
this Agreement, the officers and directors of each of STARFEST and CONCIERGE
shall cause all corporate actions to occur, including without limitation the
holding of any required special meeting of the shareholders of each of STARFEST
and CONCIERGE, that are required to approve:
The merger of STARFEST with CONCIERGE, STARFEST to be the
surviving corporation, with the stockholders of CONCIERGE
receiving a total of 78 million shares of Common Stock of
STARFEST in the merger and the stockholders of STARFEST
retaining their presently issued 23 million shares of
Common Stock of STARFEST;
The change of name of the post-merger company to "CONCIERGE
TECHNOLOGIES, INC."
The change of management of the post-merger company to that of
the directors and officers of CONCIERGE immediately before
the effectiveness of the merger;
A-1
<PAGE>
An increase in the authorized capital of the post-merger
corporation to 190 million shares of Common Stock, $0.001
a share, and 10 million shares of Preferred Stock, par
value $0.001 a share;
The authorization of the directors of the post-merger
corporation to issue no more than 9 million shares of
Common Stock (or common stock equivalents or derivatives)
to raise the necessary capital to commence its business
and to attract additional members of management; and
2. Representations by STARFEST. STARFEST represents as follows:
---------------------------
2.1 STARFEST is a corporation duly organized, validly existing
and in good standing under the laws of the State of California and is authorized
to transact its business and is in good standing in each state in which its
ownership of assets or conduct of business requires such qualifications.
2.2 Subject to shareholder approval of the transactions
contemplated by this Agreement, STARFEST has the right, power, legal capacity
and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement and the documents, instruments and certificates
to be executed and delivered by it pursuant to this Agreement. The execution and
delivery of and performance of the obligations contained in this Agreement by
STARFEST and all documents, instruments and certificates made or delivered by
STARFEST pursuant to this Agreement, and the transactions contemplated hereby,
have been or as of the Closing will be, duly authorized by all necessary action
on the part of STARFEST.
2.3 Subject to shareholder approval of the transactions
contemplated by this Agreement, the terms and provisions of this Agreement and
all documents, instruments and certificates made or delivered from time to time
by STARFEST hereunder and thereunder shall constitute valid and legally binding
obligations of STARFEST, enforceable against STARFEST in accordance with the
terms hereof and thereof.
2.4 The execution of this Agreement by STARFEST does not require
any consent of, notice to or action by any person or governmental authority,
other than as provided in Exhibit 2.4 hereto. The performance of this Agreement
by STARFEST and the consummation by STARFEST of the transactions contemplated
hereby will not require any consent of, notice to or action by any person or
governmental authority, other than as provided in Exhibit 2.4 hereto.
2.5 The making and performance of this Agreement by STARFEST and
the consummation of the transactions contemplated hereby will not result in a
breach or violation by STARFEST of any of the terms or provisions of, or
constitute a default under, its Articles of Incorporation, its Bylaws, any
indenture, mortgage, deed of trust (constructive or other), loan agreement,
lease, franchise, license or other agreement or instrument to which STARFEST is
bound, any statute, or any judgment, decree, order, rule or regulation of any
court or governmental agency or body applicable to STARFEST or any of the
properties of STARFEST.
2.6 Attached hereto as Exhibit 2.6 are financial statements of
STARFEST for the annual periods ended December 31, 1998 and December 31, 1999
and as of December 31, 1998 and as of December 31, 1999, which have been audited
in accordance with GAAP. These financial statements present fairly the financial
condition and results of operations of its business, in accordance with
generally accepted accounting principles as of the dates thereof and the periods
covered thereby.
A-2
<PAGE>
2.7 As of the date hereof, the executive officers and directors
of STARFEST are Michael Huemmer and Janet Alexander.
2.8 STARFEST has authorized capital of 65 million shares of
Common Stock, no par value. Of these shares, 23 million are issued and
outstanding. Except as described in Exhibit 2.8 hereto, there are no existing
agreements, options, warrants, rights, calls or commitments of any kind
providing for the issuance of any shares, or for the repurchase or redemption of
shares, of STARFEST's capital stock, and there are no outstanding securities or
other instruments convertible into or exchangeable for shares of such capital
stock and no commitments to issue such securities or instruments. Each person
that has such a right shall surrender it to Starfest for no consideration other
than that of promoting the Closing of the transaction described in this
Agreement. All of the outstanding shares of STARFEST common stock have been duly
authorized and validly issued and are fully paid and nonassessable. None of the
outstanding shares of STARFEST common stock were issued in violation of the
Securities Act or any state securities laws.
2.9 Attached hereto as Exhibit 2.9 is a true and correct list of
all known material liabilities of STARFEST, contingent or matured, as of
December 31, 2000, which are not reflected on the balance sheet dated as of
December 31, 1999 and which arose in the ordinary course of business.
2.10 There is no claim for personal injury, products liability,
property or other damages, grievance, action, proceeding or governmental
investigation pending or, to STARFEST's knowledge, threatened against STARFEST
or affecting its assets or business, other than as listed on Exhibit 2.10
hereto.
2.11 STARFEST has filed, or will have filed prior to Closing, all
income, franchise, real property, personal property, sales, employment and other
tax returns required to be filed by any taxing authority and has paid or accrued
all taxes required to be paid by it in respect to the periods covered by such
returns, whether or not shown on such returns, and STARFEST has no liability for
such taxes in excess of the amounts so paid. A true and complete copy of all
federal income tax returns for the tax year ended December 31, 1998 as filed
with the Internal Revenue Service has been delivered to CONCIERGE, together with
all supporting schedules thereto. STARFEST is not delinquent in the payment of
any tax, assessment or governmental charge, has not requested any extension of
time within which to file any tax returns which have not since been filed, and
no deficiencies for any tax, assessment or governmental charge have been
claimed, proposed or assessed by any taxing authority. STARFEST's federal income
tax return has not been audited. As used herein, the term "tax" includes all
governmental taxes and related governmental charges imposed by the laws and
regulations of any governmental jurisdiction.
2.12 STARFEST's business, properties, plant and offices do not
exist or operate in violation of any federal, state or local code, law,
regulation or ordinance regulating zoning, city planning, fire safety,
environmental protection or similar matters. All permits, licenses, franchises,
consents and other authorizations necessary for the conduct of STARFEST's
business have been timely obtained and are currently in effect. STARFEST is not
in violation of any term or provision of any such permit, license, franchise,
consent or other authorization.
2.13 Except as described on Schedule 2.13, STARFEST is not a
party as of the date hereof to any written or oral (i) bonus, pension, insurance
or other plan providing employee benefits, (ii) contract, or series of related
contracts with any one vendor or customer, for purchase, sale or exchange made
in the ordinary course of business and in an amount in excess of $1,000, (iii)
contract not made in the ordinary course of business, (iv) franchise, licensing
or manufacturer's representative agreement, (v) contract with any
A-3
<PAGE>
shareholder of STARFEST or an affiliate of any shareholder of STARFEST within
the meaning of the federal securities laws, or (vi) any contract for borrowed
money either as borrower or lender. All agreements listed on Schedule 2.13, to
the extent that the same give rights to STARFEST, are enforceable by STARFEST,
and STARFEST has not received notice of any claim to the contrary. Complete and
correct copies of all items listed in Schedule 2.13 have been delivered to
CONCIERGE prior to the execution of this Agreement.
Except as listed in Schedule 2.13, all parties other than
STARFEST obligated under the agreements listed on Schedule 2.13 are in
compliance in all material respects with the terms thereof and there has been no
notice of default or termination with respect to any such agreement that has not
been cured or waived in writing.
2.14 No employee pension benefit plan within the meaning of
Section 3(a) of the Employment Retirement Income Security Act of 1994, as
amended ("ERISA"), has been maintained or sponsored by STARFEST or exists to
which STARFEST has contributed since its formation or is obligated to contribute
for the benefit of its employees. Neither STARFEST nor any corporation or other
entity affiliated with STARFEST contributes to, is obligated to contribute to,
or has during the last five years contributed to or been obligated to contribute
to, and none of STARFEST's employees are participants in, any multi-employer
plan within the meaning of Section 4001(a) of ERISA.
2.15 Since its formation, STARFEST has not infringed any patents,
trademarks, service marks or trade names registered to or used by it in its
business, nor has STARFEST claimed any such infringement.
2.16 The Company is not a party to or bound by any collective
bargaining agreement or any other agreement with a labor union.
2.17 All of the unrestricted outstanding shares were issued
pursuant to the exemption from registration provided by Regulation D, Rule 504.
No legend or other reference to any purported lien or encumbrance appears upon
any certificate representing the unrestricted shares.
2.18 STARFEST has not made any material misstatement of fact or
omitted to state any material fact necessary or desirable to make complete,
accurate and not misleading every representation and warranty set forth herein.
3. Representations of CONCIERGE. CONCIERGE represents as follows:
----------------------------
3.1 CONCIERGE is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada and is authorized to
transact its business and is in good standing in each state in which its
ownership of assets or conduct of business requires such qualifications.
CONCIERGE is engaged in the business of designing, developing, manufacturing and
marketing computer telephony technology devices.
3.2 The authorized capital stock of CONCIERGE consists of 10
million shares of common stock, $0.01 par value, of which 895,276 shares are
issued and outstanding (the "CONCIERGE Shares. All of the CONCIERGE Shares have
been duly authorized and are validly issued, fully paid and non-assessable.
Except for the obligations set forth on Exhibit 3.2 attached hereto, there are
no existing agreements, options,
A-4
<PAGE>
warrants, rights, calls or commitments of any kind to which CONCIERGE is a party
or it is bound providing for the issuance of any shares, or for the repurchase
or redemption of shares, of CONCIERGE's capital stock, and there are no
outstanding securities or other instruments convertible into or exchangeable for
shares of such capital stock and no commitments to issue such securities or
instruments. None of the CONCIERGE Shares were issued in violation of the
Securities Act or any state securities laws.
3.3 CONCIERGE has the right, power, legal capacity and authority
to execute and deliver this Agreement and to perform its obligations under this
Agreement, and the documents, instruments and certificates to be executed and
delivered by CONCIERGE pursuant to this Agreement. The execution and delivery of
and performance of the obligations contained in this Agreement by CONCIERGE and
all documents, instruments and certificates made or delivered by CONCIERGE
pursuant to this Agreement, and the transactions contemplated hereby, have been
or as of the Closing Date will be duly authorized by all necessary action on the
part of the CONCIERGE shareholders and CONCIERGE.
3.4 The terms and provisions of this Agreement and all documents,
instruments and certificates made or delivered from time to time by CONCIERGE
hereunder and thereunder constitute valid and legally binding obligations of
CONCIERGE, enforceable against CONCIERGE in accordance with the terms hereof and
thereof.
3.5 The execution and delivery of this Agreement by CONCIERGE do
not require any consent of, notice to or action by any person or governmental
authority, which consent, notice or action has not been made, given or otherwise
accomplished, and satisfactory evidence thereof has been delivered to Starfest.
The performance of this Agreement by CONCIERGE and the consummation by CONCIERGE
of the transactions contemplated hereby will not require any consent of, notice
to or action by any person or governmental authority.
3.6 The making and performance of this Agreement by CONCIERGE and
the consummation of the transactions contemplated hereby will not result in a
breach or violation by CONCIERGE of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust (constructive
or other), loan agreement, lease, franchise, license or other agreement or
instrument to which CONCIERGE is bound, any statute, or any judgment, decree,
order, rule or regulation of any court or governmental agency or body applicable
to CONCIERGE or any of the properties of CONCIERGE.
3.7 Attached hereto as Exhibit 3.7 are unaudited financial
statements of CONCIERGE from its inception through December 31, 1999. These
financial statements present fairly the financial condition and results of
operations of its business, in accordance with generally accepted accounting
principles, except for those adjustments that would be required for audited
financial statements.
3.8 As of the date hereof, the executive officers and directors
of CONCIERGE are Allen E. Kahn, James E. Kirk and G. Robert Knauss.
3.9 Attached as Exhibit 3.9 is a true and correct list of all
material liabilities of CONCIERGE, contingent or matured, which are not
reflected on the balance sheet dated as of December 31, 1999 and which arose in
the ordinary course of business.
3.10 There is no claim for personal injury, products liability,
property or other damages,
A-5
<PAGE>
grievance, action, proceeding or governmental investigation pending, or to
CONCIERGE's knowledge, threatened against CONCIERGE or affecting its assets or
business, other than as listed on Exhibit 3.10 hereto.
3.11 CONCIERGE has not made any material misstatement of fact or
omitted to state any material fact necessary or desirable to make complete,
accurate and not misleading every representation, warranty and agreement set
forth herein.
3.12 CONCIERGE has filed, or will have filed prior to Closing,
all income, franchise, real property, personal property, sales, employment and
other tax returns required to be filed by any taxing authority and has paid or
accrued all taxes required to be paid by it in respect to the periods covered by
such returns, whether or not shown on such returns, and CONCIERGE has no
liability for such taxes in excess of the amounts so paid. CONCIERGE is not
delinquent in the payment of any tax, assessment or governmental charge, has not
requested any extension of time within which to file any tax returns which have
not since been filed, and no deficiencies for any tax, assessment or
governmental charge have been claimed, proposed or assessed by any taxing
authority. As used herein, the term "tax" includes all governmental taxes and
related governmental charges imposed by the laws and regulations of any
governmental jurisdiction.
3.13 CONCIERGE's business, properties, plant and offices do not
exist or operate in violation of any federal, state or local code, law,
regulation or ordinance regulating zoning, city planning, fire safety,
environmental protection or similar matters. All permits, licenses, franchises,
consents and other authorizations necessary for the conduct of CONCIERGE's
business have been timely obtained and are currently in effect. CONCIERGE is not
in violation of any term or provision of any such permit, license, franchise,
consent or other authorization.
3.14 Except as described on Schedule 3.14, CONCIERGE is not a
party as of the date hereof to any written or oral (i) bonus, pension, insurance
or other plan providing employee benefits, (ii) contract, or series of related
contracts with any one vendor or customer, for purchase, sale or exchange made
in the ordinary course of business and in an amount in excess of $1,000, (iii)
contract not made in the ordinary course of business, (iv) franchise, licensing
or manufacturer's representative agreement, (v) contract with any shareholder of
CONCIERGE or an affiliate of any shareholder of CONCIERGE within the meaning of
the federal securities laws, or (vi) any contract for borrowed money either as
borrower or lender. All agreements listed on Schedule 3.14, to the extent that
the same give rights to CONCIERGE, are enforceable by CONCIERGE, and CONCIERGE
has not received notice of any claim to the contrary. Complete and correct
copies of all items listed in Schedule 3.14 have been delivered to Starfest
prior to the execution of this Agreement.
Except as listed in Schedule 3.14, all parties other than
CONCIERGE obligated under the agreements listed on Schedule 3.14 are in
compliance in all material respects with the terms thereof and there has been no
notice of default or termination with respect to any such agreement that has not
been cured or waived in writing.
3.15 No employee pension benefit plan within the meaning of
Section 3(a) of the Employment Retirement Income Security Act of 1994, as
amended ("ERISA"), has been maintained or sponsored by CONCIERGE or exists to
which CONCIERGE has contributed since its formation or is obligated to
contribute for the benefit of its employees. Neither CONCIERGE nor any
corporation or other
A-6
<PAGE>
entity affiliated with CONCIERGE contributes to, is obligated to contribute to,
or has during the last five years contributed to or been obligated to contribute
to, and none of CONCIERGE's employees are participants in, any multi-employer
plan within the meaning of Section 4001(a) of ERISA.
3.16 Since its formation, CONCIERGE has not infringed any
patents, trademarks, service marks or trade names registered to or used by it in
its business, nor has CONCIERGE claimed any such infringement.
3.17 CONCIERGE is not a party to or bound by any collective
bargaining agreement or any other agreement with a labor union.
4. Confidentiality From the Closing Date and for a period of five years
---------------
thereafter, each of the parties hereto covenants that it will not use for the
benefit of any of them or disclose to another any Confidential Information (as
hereafter defined) except as such disclosure or use may be consented to in
advance by the party which had supplied the information in a writing which
specifically refers to this covenant. Confidential Information as used herein
means information of commercial value to the supplying party and that is not
normally made public by the supplying party, including but not limited to the
whole or any part of any scientific or technical information, design, process,
procedure, formula, or improvement, trade secret, data, invention, discovery,
technique, marketing plan, strategy, forecast, customer or supplier lists,
business plan or financial information.
5. Conditions Precedent to STARFEST's Obligations.
----------------------------------------------
5.1 Conditions Precedent. The obligations of STARFEST to
consummate the transactions contemplated herein are subject to the satisfaction
(unless waived in writing), on or before the Closing Date, of the following
conditions:
(a) CONCIERGE shall have materially performed and
complied with all covenants, conditions and obligation required by this
Agreement to be performed or complied with by CONCIERGE on or before the Closing
Date.
(b) All representations and warranties of CONCIERGE
contained in this Agreement, the Exhibits, and in any document, instrument or
certificate that shall be delivered by CONCIERGE under this Agreement shall be
materially true, correct and complete on and as though made on the Second
Closing Date.
(c) During the period from the date of this Agreement
through and including the Closing Date: (i) there shall not have occurred any
material adverse change affecting CONCIERGE; (ii) CONCIERGE shall not have
sustained any loss or damage that materially affects its ability to conduct its
business; (iii) the performance by CONCIERGE shall not have been rendered, by
a change incircumstances or actions by third parties (including, without
limitation, a change in any law or actions by a governmental authority),
impossible, illegal, commercially impracticable or capable of accomplishment
only on terms and conditions which require STARFEST to incur substantially
greater costs or burdens than STARFEST reasonably anticipated on the date of
this Agreement.
(d) As of the Closing Date, no action or proceeding
against any of the parties
A-7
<PAGE>
hereto shall be before any court or governmental agency seeking to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the transactions contemplated hereby and which, in the judgment of Starfest,
makes the consummation of the transactions contemplated by this Agreement
inadvisable.
(e) CONCIERGE shall have tendered to STARFEST all
documents, certificates, payments and other items required by this Agreement
hereof to be delivered to STARFEST.
(f) A majority of the STARFEST Shareholders shall have
approved of the transactions contemplated by this Agreement.
(g) CONCIERGE shall have received any consents
necessary to perform their obligations under this Agreement.
(h) STARFEST shall have received any and all permits,
authorizations, approvals and orders under federal and state securities
laws for the issuance of STARFEST's Common Stock, without the imposition of
any conditions adverse to STARFEST.
THE SALES OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT
BEEN QUALIFIED WITH THE COMMISSIONERS OF CORPORATIONS OF THE STATES OF NEVADA OR
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY
PART OF THE CONSIDERATION THEREFORE PRIOR TO SUCH QUALIFICATION IS UNLAWFUL
UNLESS THE SALE OF SUCH SECURITIES IS EXEMPT FROM QUALIFICATION UNDER THE LAWS
OF THOSE STATES. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
Conditions Precedent to CONCIERGE's Obligations.
-----------------------------------------------
The obligation of CONCIERGE to consummate the transactions
contemplated herein are subject to the satisfaction (unless waived in writing),
on or before the Closing Date, of the following conditions:
(a) STARFEST shall have materially performed and
complied with all covenants, conditions and obligations required by this
Agreement to be performed or complied with by STARFEST on or before the Closing
Date.
(b) All representations and warranties of STARFEST
contained in this Agreement, the Exhibits, and in any document, instrument or
certificate that shall be delivered by STARFEST under this Agreement shall be
materially true, correct and complete on and as though made on the Closing Date.
(c) During the period from the date of this Agreement
through and including the Closing Date: (i) there shall not have occurred any
material adverse change affecting STARFEST; (ii) STARFEST shall not have
sustained any loss or damage that materially affects its ability to conduct its
business; (iii) the performance by STARFEST shall not have been rendered, by a
change in circumstances or actions by third parties (including, without
limitation, a change in any law or actions by a governmental authority),
impossible, illegal, commercially impracticable or capable of accomplishment on
terms and
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<PAGE>
conditions which require CONCIERGE to incur substantially greater costs or
burdens than CONCIERGE reasonably anticipated on the date of this Agreement.
(d) As of the Closing Date, no action or proceeding
against any of the parties hereto shall be before any court or governmental
agency seeking to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the transactions contemplated hereby and
which, in the judgment of CONCIERGE, makes the consummation of the transactions
contemplated by this Agreement inadvisable.
(e) STARFEST shall have tendered to CONCIERGE all
documents, certificates, and other items required by this Agreement hereof to be
delivered to CONCIERGE.
STARFEST shall have received any consents necessary to perform
their obligations under this Agreement.
7. Closing.
-------
7.1 The closing of the transaction contemplated by this Agreement
(the "Closing") shall take place at such time and at such place as the parties
shall mutually agree no later than April 15, 2000 (the "Closing Date") unless
such date is extended by written agreement of STARFEST and CONCIERGE and shall
be effected in accordance with the following:
(a) CONCIERGE shall deliver to STARFEST, and STARFEST
shall deliver to CONCIERGE, good standing certificates from the secretary of
state of any state where the ownership of its assets or the conduct of its
business would require such qualification, attesting to the good standing of
CONCIERGE or, as the case may be, STARFEST, in each such state.
(b) There shall be delivered all other previously
rendered documents, instruments and other writings required to be delivered by
CONCIERGE to STARFEST or STARFEST to CONCIERGE, as the case may be, at or prior
to the Closing pursuant to this Agreement or otherwise legally required or
reasonably necessary in connection herewith.
STARFEST shall deliver to CONCIERGE the certificate of its
corporate Secretary certifying that the necessary corporate action of STARFEST's
directors and stockholders has taken place to approve the merger contemplated by
this Agreement, and CONCIERGE shall deliver to STARFEST the certificate of its
corporate Secretary certifying that the necessary corporate action of
CONCIERGE's directors and stockholders has taken place to approve the merger
contemplated by this Agreement.
STARFEST shall provide the documents needed to be filed
with the Secretaries of State of Nevada and California to effect the merger, and
the officers of each of STARFEST and CONCIERGE shall execute the documents
and deliver them to such Secretaries of State for filing.
(e) CONCIERGE shall deliver to STARFEST a list of its
stockholders, certified by its Secretary, setting forth the number of shares of
CONCIERGE common stock owned by each such stockholder and the number of shares
each such stockholder is to receive in the merger. STARFEST shall send the list
to its transfer agent and stock registrar with instructions to issue the 78
million shares to the
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<PAGE>
CONCIERGE stockholders in accordance with the list. The certificates that will
represent such 78 million shares of Common Stock of the post-merger company will
not bear a legend restricting the transferability of the shares.
8. Termination. This Agreement may be terminated prior to the Closing by
delivery of notice in writing to that effect as follows:
8.1 By CONCIERGE, if any one or more of the conditions to the
obligations CONCIERGE to close has not been fulfilled as of the Closing Date;
8.2 By STARFEST, if any one or more of the conditions to its
obligations to close have not been fulfilled as of the Closing Date.
8.3 At any time on or prior to the Closing Date by mutual written
consent of the parties hereto.
If this Agreement so terminates, it shall become null and void and have no
further force or effect.
9. Survival and Indemnification.
9.1 The representations, warranties and covenants of the parties
made in this Agreement shall survive the Closing for a period of two years after
the Closing Date. Each party shall indemnify and hold harmless the other parties
from and against any loss, liability, damage, cost or expense (including
reasonable attorneys' and accountants' fees) which shall arise out of or is
connected with any breach of any representation or warranty made or covenant to
be performed by the party or parties against whom indemnification is sought;
provided, however, that no claims may be asserted against any party until and
unless the aggregate of all claims against such party exceeds $10,000 and the
maximum aggregate amount of the obligations of any individual party to provide
indemnification under this Agreement shall not exceed $200,000.
9.2 Upon the assertion by a third party against one of the
parties to this Agreement of a claim to which the indemnification provisions of
this Section apply, the party against whom the claim has been asserted shall
promptly notify the other party to this Agreement against whom a claim for
indemnification is expected to be made of such claim (and such notice shall be a
condition precedent to the liability of the parties or party so notified with
respect to such claim). Any party so notified shall have the right, at its own
expense and with counsel of its choice, to control the defense of any such claim
and all actions and proceedings in connection therewith, provided that any party
seeking indemnification shall have the right to participate in such defense with
counsel of its choice at its own expense. No such claim shall be compromised or
settled by any party to this Agreement without the prior written consent of the
other party. Each other party shall cooperate in every reasonable way with the
party assuming responsibility for the defense and disposition of such claim.
10. Post-Closing Covenants. CONCIERGE covenants that after the Closing:
----------------------
10.1 The post-merger company will exert all reasonable effort and
take all reasonable actions required to register its Common Stock with the SEC
on SEC Form 10-SB and to maintain its status as a company whose Common Stock is
quoted on the OTC Bulletin Board or shall change its status to a company whose
Common Stock is listed on The Nasdaq Stock Market.
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<PAGE>
10.2 The post-merger company shall not reverse split its stock
for a period of at least two years from the date hereof without the written
consent of Gary Bryant of Indian Wells, California..
10.3 For a period of one year, without the written consent of
Michael Huemmer the post-merger company will not issue or reserve for issuance
more than 9 million shares of its Common Stock for the purposes of attracting
qualified management and officers and of obtaining sufficient capital to
commence its business in a viable manner.
11. This Agreement shall be governed and construed in accordance with
the laws of the State of Nevada without application of Nevada's conflicts of
laws provision.
12. Execution in Counterparts. This Agreement and any of the documents
described herein that are necessary for Closing may be executed in counterparts,
each of which shall be deemed an original and together which shall constitute
one and the same instrument.
13. Further Assurances. If, at any time before, on or after either
Closing Date, any further action by any of the parties to this Agreement is
necessary or desirable to carry out the purposes of this Agreement, such party
shall take all such necessary or desirable action or use such party's best
efforts to cause such action to be taken.
14. Expenses. CONCIERGE shall bear all expenses incurred by it in
connection with the negotiation, preparation or execution of this Agreement, and
STARFEST shall bear all expenses incurred by it in connection with the
negotiation, preparation or execution of this Agreement.
15. Judicial Proceedings. Each party hereto consents to the exclusive
jurisdiction over it of the courts of the State of Nevada in the County of
Hamilton and of the courts of the United States in the Southern District of
Nevada and agrees that personal service of all process may be made by registered
or certified mail pursuant to the provisions of Section 19. All actions arising
out of or relating in any way to any of the provisions of this Agreement or the
transactions contemplated hereby shall be brought or maintained only in one of
such courts. The parties hereby irrevocably waive any objection that they may
now have or hereafter acquire to the laying of venue of any such action or
proceeding brought in such courts and any claim that any action or proceeding
brought in any such court has been brought in an inconvenient forum. The parties
further agree that a final judgment in any such action or proceeding brought in
any such court, after all appeals or all rights of appeal have expired, shall be
conclusive and binding upon them and may be enforced in any competent court
located elsewhere.
16. Notices. Any notice or demand desired or required to be given
hereunder shall be in writing and deemed given when personally delivered, sent
by overnight courier or deposited in the mail (postage prepaid, certified or
registered, return receipt requested) and addressed as set forth below or to
such other address as any party shall have previously designated by such a
notice. Any notice delivered personally shall be deemed to be received on the
date of personal delivery; any notice sent by overnight courier shall be deemed
to be received upon confirmation one business day after the date sent; and any
notice mailed shall be deemed to be received on the date stamped on the receipt.
If to CONCIERGE Allen E. Kahn, Chief Executive Officer
Concierge, Inc.
7547 West Manchester Ave., No. 325
Los Angeles, CA 90045
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<PAGE>
Copy to: James E. Kirk, Esq.
11927 Menaul, N.E.
Albuquerque, NM 87112
If to STARFEST Michael Huemmer, President
Starfest, Inc.
9494 E. Redfield Road, #1136
Scottsdale, AZ 85260
Copy to: Thomas J.Kenan
Fuller, Tubb, Pomeroy & Stokes
201 Robert S. Kerr Ave., Suite 1000
Oklahoma City, OK 73102
17. Parties in Interest. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto, whether herein
so expressed or not.
18. Severability. Any provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining provisions of this Agreement or affecting the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
19. Amendment. Except as otherwise provided herein, the parties hereto
may modify or supplement this Agreement at any time, but only in writing duly
executed by each of the parties hereto.
20. Headings. The headings preceding the text of sections of this
Agreement are for convenience only and shall not be deemed a part hereof.
21. Entire Understanding. The terms set forth in this Agreement
including its Exhibits are intended by the parties as the final, complete and
exclusive expression of the terms of their agreement and may not be
contradicted, explained or supplemented by evidence of any prior agreement, any
contemporaneous oral agreement or any consistent additional terms. The Exhibits
attached to this Agreement are made a part of this Agreement.
22. Confidentiality. The parties hereto shall not make any public
announcement regarding the transactions contemplated by this Agreement without
the prior written consent of CONCIERGE and STARFEST, which consent shall not be
unreasonably withheld, conditioned or delayed. The parties hereto will issue a
press release regarding the transactions contemplated by this Agreement upon the
execution of this Agreement. Each of the parties hereto shall keep strictly
confidential any and all information furnished to it or its agents or
representatives in the course of negotiations relating to this Agreement or any
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<PAGE>
transactions contemplated by this Agreement, and such parties have instructed
their representative officers, partners, employees and other representatives
having access to such information of such obligation of confidentiality. .
IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.
STARFEST, INC. CONCIERGE, INC.
By: /s/ Michael Huemmer By: /s/ Allen E. Kahn
--------------------- -------------------------
Michael Huemmer, Allen E. Kahn, President
President
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<PAGE>
UNTIL _____________________, 2000 (90 DAYS AFTER THE EFFECTIVE DATE OF THE
MERGER), ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES MAY BE
REQUIRED TO DELIVER A PROSPECTUS.
<PAGE>
Exhibits and Financial Statement Schedules.
------------------------------------------
Separately bound but filed as part of this Registration Statement are
the following exhibits:
Exhibit Item
------- ----
2 - Agreement of merger of January 26, 2000, between
Starfest, Inc. and Concierge, Inc.*
2.1 - Stock Purchase Agreement of March 6, 2000 between
Starfest, Inc. and MAS Capital, Inc.*
3.1 - Articles of Incorporation and Amended Articles of
Incorporation of Starfest, Inc.*
3.2 - Bylaws of Starfest, Inc.*
3.3 - Articles of Incorporation of Concierge, Inc.
3.4 - Bylaws of Concierge, Inc.
5 - Opinion of Thomas J. Kenan, Esq., as to the
legality of the securities covered by the
Registration Statement.
8 - Opinion of Thomas J. Kenan, Esq., as to tax matters
and tax consequences.
10 - 1999 Stock Option Plan adopted by Starfest, Inc.*
23 - Consent of Thomas J. Kenan, Esq. to the reference
to him as an attorney who has passed upon certain
information contained in the Registration Statement
23.1 - Consent of Brad B. Haynes, C.P.A., independent
auditor of Concierge, Inc.
23.2 - Consent of Jaak (Jack) Olesk, C.P.A., independent
auditor of Starfest, Inc.
23.3 - Consent of Harry F. Camp to serve as a director
should the proposed merger with Concierge, Inc.
become effective.
23.4 - Consent of John Conners to serve as a director
should the proposed merger with Concierge, Inc.
become effective. (To be filed by amendment.)
23.5 - Consent of F. Patrick Flaherty to serve as a
director should the proposed merger with Concierge,
Inc. become effective.
23.6 - Consent of Donald W. Fluken to serve as a director
should the proposed merger with Concierge, Inc.
become effective.
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<PAGE>
23.7 - Consent of Allen E. Kahn to serve as a director
should the proposed merger with Concierge, Inc.
become effective.
23.8 - Consent of James E. Kirk to serve as a director
should the proposed merger with Concierge, Inc.
become effective.
23.9 - Consent of Herbert Marcus, III to serve as a
director should the proposed merger with Concierge,
Inc. become effective.
23.10 - Consent of David W. Neibert to serve as a director
should the proposed merger with Concierge, Inc.
become effective.
23.11 - Consent of Samuel C.H. Wu to serve as a director
should the proposed merger with Concierge, Inc.
become effective.
27 - Financial Data Schedule.
* Previously filed with Form 8-K12G3 on March 10, 2000; Commission
File No. 000- 29913, incorporated herein.
UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("the Act") may be permitted to directors, officers and controlling
persons of Starfest, Inc. pursuant to the foregoing provisions, or otherwise,
Starfest, Inc. has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Starfest,
Inc. of expenses incurred or paid by a director, officer or controlling person
of Starfest, Inc. in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, Starfest, Inc. will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Scottsdale, Arizona.
Date: May 17, 2000 Starfest, Inc.
By/s/ Michael Huemmer
-----------------------------------
Michael Huemmer, president
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: May 17, 2000 /s/ Michael Huemmer
------------------------------------
Michael Huemmer, president, director,
principal financial officer, and
authorized representative of the
Registrant
Date: May 18, 2000 /s/ Janet Alexander
-------------------------------------
Janet Alexander, secretary and
director of the Registrant
34
<PAGE>
Starfest, Inc.
Commission File No. 000-29913
Form S-4
List of Exhibits
Exhibit Item
------- ----
2 - Agreement of merger of January 26, 2000, between Starfest,
Inc. and Concierge, Inc.*
2.1 - Stock Purchase Agreement of March 6, 2000 between Starfest,
Inc. and MAS Capital, Inc.*
3.1 - Articles of Incorporation and Amended Articles of
Incorporation of Starfest, Inc.*
3.2 - Bylaws of Starfest, Inc.*
3.3 - Articles of Incorporation of Concierge, Inc.
3.4 - Bylaws of Concierge, Inc.
5 - Opinion of Thomas J. Kenan, Esq., as to the legality of the
securities covered by the Registration Statement.
8 - Opinion of Thomas J. Kenan, Esq., as to tax matters and tax
consequences.
10 - 1999 Stock Option Plan adopted by Starfest, Inc.*
23 - Consent of Thomas J. Kenan, Esq. to the reference to him as
an attorney who has passed upon certain information
contained in the Registration Statement.
23.1 - Consent of Brad B. Haynes, C.P.A., independent auditor of
Concierge, Inc.
23.2 - Consent of Jaak (Jack) Olesk, C.P.A., independent auditor of
Starfest, Inc.
<PAGE>
23.3 - Consent of Harry F. Camp to serve as a director should the
proposed merger with Concierge, Inc. become effective.
23.4 - Consent of John Conners to serve as a director should the
proposed merger with Concierge, Inc. become effective. (To
be filed by amendement.)
23.5 - Consent of F. Patrick Flaherty to serve as a director should
the proposed merger with Concierge, Inc. become effective.
23.6 - Consent of Donald W. Fluken to serve as a director should
the proposed merger with Concierge, Inc. become effective.
23.7 - Consent of Allen E. Kahn to serve as a director should the
proposed merger with Concierge, Inc. become effective.
23.8 - Consent of James E. Kirk to serve as a director should the
proposed merger with Concierge, Inc. become effective.
23.9 - Consent of Herbert Marcus, III to serve as a director should
the proposed merger with Concierge, Inc. become effective.
23.10 - Consent of David W. Neibert to serve as a director should
the proposed merger with Concierge, Inc. become effective.
23.11 - Consent of Samuel C.H. Wu to serve as a director should the
proposed merger with Concierge, Inc. become effective.
27 - Financial Data Schedule.
* Previously filed with Form 8-K12G3 on March 10, 2000; Commission
File No. 000-29913, incorporated herein.
