STARTEK INC, 424B1, 1997-06-19

STARTEK INC
424B1, 1997-06-19
BUSINESS SERVICES, NEC

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<PAGE>
PROSPECTUS

Filed Pursuant to Rule 424B
Registration No. 333-20633

JUNE 18, 1997

3,666,667 SHARES

STARTEK, INC.

COMMON STOCK

Of the 3,666,667 shares of common stock, $.01 par value per share (the
"Common Stock"), offered hereby, 3,000,000 shares are being sold by StarTek,
Inc. ("StarTek" or the "Company") and 666,667 shares are being sold by the
Selling Stockholders named herein. The Company will not receive any of the
proceeds from the sale of shares by the Selling Stockholders. See "Principal and
Selling Stockholders." Prior to this offering, there has been no public market
for the Common Stock. See "Underwriting" for a discussion of the factors
considered in determining the initial public offering price. The Common Stock
has been approved for listing on the New York Stock Exchange under the symbol
"SRT," subject to official notice of issuance.

SEE "RISK FACTORS" BEGINNING ON PAGE 8 HEREOF FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO THE DISCOUNTS AND TO THE THE SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share............... $15.00 $1.05 $13.95 $13.95
Total(3)................ $55,000,005 $3,850,000 $41,850,000 $9,300,005
- -------------------------------------------------------------------------------------------
</TABLE>

(1) THE COMPANY AND THE SELLING STOCKHOLDERS HAVE AGREED TO INDEMNIFY THE
SEVERAL UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SEE "UNDERWRITING."

(2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY, ESTIMATED AT $500,000. THE
COMPANY HAS AGREED TO PAY THE EXPENSES OF THE SELLING STOCKHOLDERS, OTHER
THAN UNDERWRITING DISCOUNTS AND COMMISSIONS.

(3) THE SELLING STOCKHOLDERS HAVE GRANTED TO THE UNDERWRITERS A 30-DAY OPTION TO
PURCHASE UP TO 550,000 ADDITIONAL SHARES OF COMMON STOCK SOLELY TO COVER
OVER-ALLOTMENTS, IF ANY. IF SUCH OPTION IS EXERCISED IN FULL, THE TOTAL
PRICE TO THE PUBLIC, UNDERWRITING DISCOUNTS AND COMMISSIONS, PROCEEDS TO THE
COMPANY AND PROCEEDS TO THE SELLING STOCKHOLDERS WILL BE $63,250,005,
$4,427,500, $41,850,000 AND $16,972,505, RESPECTIVELY. SEE "UNDERWRITING."

The shares of Common Stock are being offered by the several Underwriters,
subject to prior sale, when, as and if accepted by the Underwriters, subject to
various prior conditions, including their right to reject any order in whole or
in part. It is expected that delivery of the shares will be made in New York,
New York, on or about June 24, 1997.

<TABLE>
<S> <C>
DONALDSON, LUFKIN & JENRETTE MORGAN STANLEY DEAN WITTER
SECURITIES CORPORATION
</TABLE>
<PAGE>
[StarTek Logo]

Global Integrated Outsourced Solutions

<TABLE>
<S> <C>
Technical Support and Inbound Product
Customer Care
Teleservices Orders Teleservices

[Circle of Arrows]

Value Added
Process Management

Product Distribution Selection and
and Order Fulfillment Management of Suppliers

Management of Product
Assembly and Packaging
</TABLE>

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING AND
MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION, INCLUDING "RISK FACTORS" AND CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES THERETO, INCLUDED ELSEWHERE IN THIS PROSPECTUS. UNLESS
OTHERWISE INDICATED, INFORMATION IN THIS PROSPECTUS (I) GIVES EFFECT TO THE
OFFERING RELATED TRANSACTIONS (DEFINED AND DESCRIBED BELOW) AND (II) GIVES
EFFECT TO A 322.1064 FOR ONE STOCK SPLIT OF THE COMMON STOCK TO BE EFFECTED BY A
STOCK DIVIDEND IMMEDIATELY PRIOR TO THE CLOSING OF THIS OFFERING. UNLESS
OTHERWISE INDICATED, REFERENCES TO "STARTEK" AND THE "COMPANY" REFER TO STARTEK,
INC. AND ITS WHOLLY-OWNED SUBSIDIARIES, STARPAK, INC. AND STARPAK INTERNATIONAL,
LTD., COLLECTIVELY, OR, FOR PERIODS PRIOR TO JANUARY 1997, REFER TO STARPAK,
INC. AND STARPAK INTERNATIONAL, LTD., COLLECTIVELY. SEE "OFFERING RELATED
TRANSACTIONS."

THE COMPANY

StarTek is a leading international provider of integrated, value-added
outsourced services primarily for Fortune 500 companies in targeted industries.
The Company's integrated outsourced services encompass a wide spectrum of
process management services and customer-initiated ("inbound") teleservices
throughout a product's life cycle, including product order teleservices,
supplier management, product assembly and packaging, product distribution,
product order fulfillment, and customer care and technical support teleservices.
By focusing on these services as its core business, StarTek allows its clients
to focus on their primary businesses, reduce overhead, replace fixed costs with
variable costs and reduce working capital needs.

The Company has continuously expanded its business and facilities to offer
additional services on an outsourced basis in response to the growing needs of
its clients and to capitalize on market opportunities both domestically and
internationally. StarTek operates from its Colorado facilities located in Denver
and Greeley and from a facility located in Hartlepool, England. The Company also
operates through a subcontract relationship in Singapore. For the year ended
December 31, 1996, the Company's revenues increased approximately 72.5% to $71.6
million from $41.5 million for the year ended December 31, 1995. Pro forma net
income increased approximately 144% to $3.9 million from $1.6 million during the
same period. For the three months ended March 31, 1997, the Company's revenues
increased approximately 9.5% to $16.7 million from $15.2 million for the three
months ended March 31, 1996. Pro forma net income increased approximately 131%
to $1.1 million from $459,000 during the same period. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

StarTek's goal is to grow profitably by focusing on providing high-quality
integrated, value-added outsourced services. StarTek has a strategic partnership
philosophy, through which the Company assesses each of its client's needs and,
together with the client, develops and implements customized outsourcing
solutions. Management believes that its entrepreneurial culture, long-term
relationships with clients and suppliers, efficient operations, dedication to
quality and use of advanced technology and management techniques provide StarTek
a competitive advantage in attracting and retaining clients that outsource non-
core operations. Three of the Company's top four clients have utilized its
outsourced services for more than five years and the fourth client initiated
services with the Company in April 1996.

StarTek has focused primarily on the computer software, computer hardware,
electronics, telecommunications and other technology-related industries because
of their rapid growth, complex and evolving product offerings and large customer
bases, which require frequent, often sophisticated, customer interaction.
Management believes that there are substantial opportunities to cross-sell
StarTek's wide spectrum of outsourced services to its existing base of
approximately 75 clients, which includes Broderbund Software, Inc., Canon Inc.,
Electronic Arts, Inc., Federal Express Corporation, Hewlett-Packard Company,
Microsoft Corporation, Polaroid Corporation, Sony Electronics, Inc., The 3DO
Company, and Viacom International, Inc. The Company intends to capitalize on the
increasing trend toward outsourcing by focusing on potential clients in
additional targeted industries, including health care, financial services,

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transportation services and consumer products, which could benefit from the
Company's expertise in developing and delivering integrated, cost-effective
outsourced services.

STARTEK'S INTEGRATED SERVICES

The Company's interaction with a client's customers may begin with an
inbound call or message via the Internet requesting information or placing an
order for the client's product. A StarTek service representative takes the
order, and if the Company manages the client's inventory, the Company packs and
ships the order. If the Company does not manage the client's inventory, the
Company transmits the customer's request directly to the client. In the event
the Company manages the client's inventory, the Company may receive finished
goods directly from a client or the Company may manage the production process on
an outsourced basis, following product specifications provided by the client. In
the latter case, the Company selects and contracts with the necessary suppliers
and performs all tasks necessary to assemble and package the finished product,
which may be held by the Company pending receipt of customer orders or shipped
in bulk to distributors or retail outlets.

The Company's clients typically provide their customers with telephone
numbers for product questions and technical support. Calls are routed to StarTek
customer care or technical support service representatives who have been trained
to support specific products. A call may also lead to an order for another
product or service offered by the client, in which case the Company takes the
order and the cycle begins again. StarTek's clients may utilize one or more of
the Company's outsourced services.

BUSINESS STRATEGY

StarTek's strategic objective is to increase revenues and earnings by
maintaining and enhancing its position as a leading international provider of
integrated, value-added outsourced services. To reach this objective, the
Company intends to:

PROVIDE INTEGRATED OUTSOURCED SERVICES. StarTek seeks to provide integrated
outsourced services which enable its clients to provide their customers with
high-quality services at lower cost than through a client's own in-house
operations. The Company believes that its ability to tailor operations,
materials and employee resources objectively and to provide integrated
value-added outsourced services on a cost-effective basis will allow the Company
to become an integral part of its clients' businesses.

DEVELOP STRATEGIC PARTNERSHIPS AND LONG-TERM RELATIONSHIPS. StarTek seeks
to develop long-term client relationships, primarily with Fortune 500 companies
in targeted industries. The Company invests significant resources to establish
strategic partnership relationships and to understand each client's processes,
culture, decision parameters and goals, so as to develop and implement
customized solutions. The Company believes that this solution-oriented,
value-added integrated approach to addressing its clients' needs distinguishes
StarTek from its competitors and plays a key role in the Company's ability to
attract and retain clients on a long-term basis.

MAINTAIN LOW-COST POSITION THROUGH MODERN PROCESS MANAGEMENT. StarTek
strives to establish a competitive advantage by frequently redefining its
operational processes to reduce costs and improve quality. StarTek's continuous
improvement philosophy and modern process management techniques enable the
Company to reduce waste and increase efficiency in the following areas: (i)
controlling overproduction; (ii) minimizing waiting time due to inefficient work
sequences; (iii) reducing inessential handling of materials; (iv) eliminating
nonessential movement and processing; (v) implementing fail-safe processes; (vi)
improving inventory management; and (vii) preventing defects.

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clients require evidence of ISO 9002 certification, and the Company anticipates
that many potential clients may require ISO 9002 certification prior to
selecting an outsourcing provider.

CAPITALIZE ON SOPHISTICATED TECHNOLOGY. The Company believes it has
established a competitive advantage by capitalizing on sophisticated technology
and proprietary software, including automatic call distributors, inventory
management software, transportation management software, call tracking systems
and telephone-computer integration software. These capabilities enable StarTek
to improve efficiency, serve as a transparent extension of its clients, receive
telephone calls and data directly from its clients' systems, and report detailed
information concerning the status and results of the Company's services and
interaction with clients on a daily basis.

GROWTH STRATEGY

The Company's growth strategy is designed to capitalize on the increasing
demand for outsourced services and improve and expand StarTek's position as an
international provider of integrated, value-added outsourced services. This
strategy includes the following key elements:

INCREASE CAPACITY. Management believes that as a provider of outsourced
services it must be ready to serve its clients in periods of peak demand for its
clients' products or services. Accordingly, the Company intends to continue to
increase product handling and teleservice workstation capacity to meet
anticipated demand for the Company's outsourced services. During 1996, the
Company increased its teleservice workstations by 54.6%, to 558 from 361. In
addition, the Company reengineered and expanded its primary product handling
facility to increase its daily capacity by approximately 200%, to 180,000 units
from 60,000 units for certain types of products.

CROSS-SELL SERVICES TO EXISTING CLIENTS. Management believes there are
substantial opportunities to cross-sell its wide spectrum of outsourced services
to other divisions or operations within its existing clients' organizations.
StarTek capitalizes on its relationships and comprehensive understanding of its
clients' businesses to identify additional divisions and areas where the Company
could provide its services. For example, the Company's two longest current
client relationships, which began in 1987 and 1988 utilizing only one service
each, today utilize substantially all of the Company's outsourced services.
Management further believes that its ability to provide integrated solutions
helps the Company to create strategic partnership relationships and gives the
Company a competitive advantage to be selected as the service provider of
choice.

EXPAND CLIENT BASE. The Company intends to capitalize on its low-cost
position and extensive offering of services to penetrate further the industries
which the Company currently serves and to seek clients in other industries.
Management believes that there are several additional industries, including
health care, financial services, transportation services and consumer products,
which provide significant market opportunities to the Company. To facilitate the
Company's anticipated growth, the Company increased its sales force to 10
full-time professionals as of the date of this offering, from four at the end of
1996.

INCREASE INTERNATIONAL OPERATIONS. The Company currently conducts business
in North America, Europe and Asia. Management believes that many of the trends
leading to the growth of outsourced services in the United States are occurring
in international markets as well. Management also believes that many companies,
including several of its existing multinational clients, are seeking outsourced
services on an international basis. To capitalize on these international
opportunities, the Company intends to expand its international operations.

5
<PAGE>
for the Company to provide additional outsourced services. StarTek intends to
capitalize upon its strategic long-term relationships to provide new outsourced
services to its clients as opportunities arise.

ACQUIRE COMPLEMENTARY COMPANIES AND EXPAND STRATEGIC ALLIANCES. StarTek
intends to evaluate the acquisition of complementary companies that could extend
its presence into new geographic markets or industries, expand its client base,
add new product or service applications and/or provide operating synergies.
Management believes that there could be many domestic and international
acquisition and strategic alliance opportunities as companies consider selling
their existing in-house operations and as smaller companies seek growth capital
and economies of scale to remain competitive.

The Company is a Delaware corporation with its executive offices at 111
Havana Street, Denver, Colorado 80010, and its telephone number is (303)
361-6000.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered:
By the Company.................. 3,000,000 shares
By Selling Stockholders(a)...... 666,667 shares
Total......................... 3,666,667 shares
Common Stock Outstanding after
this Offering(b)................ 13,828,571 shares
Use of Proceeds................... The estimated net proceeds to the Company of $41.4
million from this offering will be used to repay
substantially all outstanding indebtedness of the
Company (including notes payable to the Principal
Stockholders), related prepayment premiums, and for
working capital and other general corporate purposes,
including capital expenditures to increase its capacity
and for possible future acquisitions. See "Use of
Proceeds."
New York Stock Exchange Symbol.... SRT
</TABLE>

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(a) Assumes no exercise of the over-allotment option to purchase up to 550,000
additional shares granted by the Selling Stockholders to the Underwriters.
See "Principal and Selling Stockholders" and "Underwriting."

(b) Excludes 985,000 shares and 90,000 shares reserved for future issuance under
the Company's Option Plan and Director Option Plan, respectively. See
"Management--Compensation of Directors" and "Management--Stock Option Plan."

6
<PAGE>
SUMMARY FINANCIAL DATA

The following summary historical and pro forma consolidated financial data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and notes thereto, included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED DECEMBER 31,
YEAR ENDED ENDED ---------------------------------------------
JUNE 30, DECEMBER 31, PRO FORMA
1992 1992 1993 1994 1995 1996 1996(A)
---------- ------------ ------- ------- ------- ------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues................ $16,791 $11,880 $23,044 $26,341 $41,509 $71,584 $71,584
Gross profit............ 3,518 2,101 5,005 4,986 8,279 14,346 14,346
Management fee expense.. -- 400 1,702 612 2,600 6,172 --
Operating profit
(loss)................ 1,705 432 (176) (115) 338 410 6,582
Income (loss) before
income taxes.......... 1,618 424 (369) (331) (58) 38 6,210
Net income (loss)(b).... 1,031 482 (369) (331) (58) (74) 3,894
Net income per
share(c).............. $0.34
Shares outstanding(c)... 11,293

SELECTED OPERATING DATA:
Capital expenditures.... $136 $153 $1,239 $670 $2,105 $1,333 $1,333
Depreciation and
amortization.......... 149 79 456 588 873 1,438 1,438

<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
PRO FORMA
1996 1997 1997 (A)
------- ------- ---------

<S> <C> <C> <C>
STATEMENTS OF OPERATIONS D
Revenues................ $15,219 $16,667 $16,667
Gross profit............ 2,564 3,935 3,935
Management fee expense.. 199 793 --
Operating profit
(loss)................ 659 978 1,771
Income (loss) before
income taxes.......... 533 894 1,687
Net income (loss)(b).... 533 894 1,058
Net income per
share(c).............. $ 0.09
Shares outstanding(c)... 11,367
SELECTED OPERATING DATA:
Capital expenditures.... $412 $267 $267
Depreciation and
amortization.......... 290 495 495
</TABLE>

<TABLE>
<CAPTION>
AT MARCH 31, 1997
-----------------------------------------
ACTUAL PRO FORMA(D) AS ADJUSTED(E)
--------- ------------- ---------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).............................................. $ 4,874 $ (3,207) $ 35,705
Total assets........................................................... 23,459 23,459 49,863
Total debt............................................................. 7,360 15,441 545
Total stockholders' equity............................................. 8,159 78 41,378
</TABLE>

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(a) The Company was a C corporation for federal and state income tax purposes
through June 30, 1992. From and after July 1, 1992, the Company has been an
S corporation and, accordingly, has not been subject to federal or state
income taxes. Pro forma net income (i) reflects the elimination of
management fee expense and (ii) includes a provision for federal, state and
foreign income taxes at an effective rate of 37.3%. See "Offering Related
Transactions."

(b) After the elimination of management fee expense of $612 in 1994, $2,600 in
1995 and $199 in the three months ended March 31, 1996, and including a
provision for federal, state and foreign income taxes, at an effective rate
of 37.3% for each period, of $105 for 1994, $948 for 1995 and $273 for the
three months ended March 31, 1996, pro forma net income was $176, $1,594 and
$459 in 1994, 1995 and the three months ended March 31, 1996, respectively.

(d) The pro forma consolidated balance sheet at March 31, 1997 reflects notes
payable to the Principal Stockholders and amounts relating to accumulated
retained earnings and additional paid-in capital without reflecting any
proceeds from the sale by the Company of 3,000,000 shares of Common Stock.

(e) Gives effect to the sale by the Company of 3,000,000 shares of Common Stock
in this offering and the application of the estimated net proceeds
therefrom, including repayment of indebtedness of the Company. See "Use of
Proceeds" and "Capitalization."

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RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING THE COMPANY AND ITS
BUSINESS BEFORE PURCHASING SHARES OF COMMON STOCK.

RELIANCE ON PRINCIPAL CLIENT RELATIONSHIPS

A substantial portion of the Company's revenue is generated from relatively
few clients and the loss of a significant client or clients could have a
material adverse effect on the Company's business, results of operations and
financial condition. The Company's two largest clients in 1996 and the three
months ended March 31, 1997 were Hewlett-Packard Company ("Hewlett Packard") and
Microsoft Corporation ("Microsoft"). The Company provides various outsourced
services to multiple divisions of Hewlett Packard, which the Company considers
to be separate clients based upon the fact that each division acts through a
relatively autonomous decision maker. In the aggregate, however, Hewlett
Packard's various divisions accounted for approximately 38.4% of the Company's
total revenues during 1996 and 36.1% during the three months ended March 31,
1997. The Company began its outsourcing relationship with Hewlett Packard in
1987. Microsoft, which began its outsourcing relationship with StarTek in April
1996, accounted for approximately 33.4% of the Company's total revenues during
1996 and 44.2% during the three months ended March 31, 1997. There can be no
assurance that the Company will be able to retain its significant clients or
that, if it were to lose one or more of its significant clients, it would be
able to replace such clients with clients that generate a comparable amount of
revenues. See "Business--Clients" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

VARIABILITY OF QUARTERLY OPERATING RESULTS

Historically, the Company's revenues have been significantly lower in the
first and second quarters of each year due to the timing of its clients'
marketing programs and the introduction of new products, which are typically
geared toward the Christmas holiday season. Additionally, the Company has
experienced, and expects to experience in the future, quarterly variations in
operating results as a result of a variety of factors, many of which are outside
the Company's control, including: (i) the timing of new projects; (ii) the
expiration or termination of existing projects; (iii) the timing of increased
expenses incurred to obtain and support new business; (iv) the seasonal pattern
of certain of the businesses served by the Company; and (v) the cyclical nature
of certain clients' businesses. If the Company's revenues are below management's
expectations in any given quarter, StarTek's operating results could be
materially adversely affected for that quarter. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations-- Quarterly Results."

DIFFICULTIES OF MANAGING RAPID GROWTH

The Company has experienced rapid growth over the past several years and
anticipates continued future growth. Continued growth depends on a number of
factors, including the Company's ability to (i) initiate, develop and maintain
new and existing client relationships and expand its marketing operations; (ii)
recruit, motivate and retain qualified management and other personnel; (iii)
rapidly expand the capacity of the Company's existing facilities or identify,
acquire or lease suitable new facilities on acceptable terms, and complete
build-outs of such facilities in a timely and economic fashion; (iv) maintain
the high quality of the services that StarTek provides to its clients; and (v)
maintain relationships with high-quality and reliable suppliers. The Company's
continued rapid growth can be expected to place a significant strain on the
Company's management, operations, employees and resources. There can be no
assurance that the Company will be able to maintain or accelerate its current
growth, effectively manage its expanding operations or achieve planned growth on
a timely or profitable basis. If the Company is unable to manage growth
effectively, its business, results of operations and financial condition could
be materially adversely affected. See "Business--Growth Strategy."

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DEPENDENCE ON KEY PERSONNEL

The Company's success to date has depended in large part on the skills and
efforts of A. Emmet Stephenson, Jr., the Company's co-founder and Chairman of
the Board, and of Michael W. Morgan, the Company's co-founder, President and
Chief Executive Officer. Although A. Emmet Stephenson, Jr. and Michael W. Morgan
will beneficially own approximately 24.3% and 7.2% of the Common Stock of the
Company (23.1% and 6.4% if the Underwriters' over-allotment option is fully
exercised) after this offering, neither has entered into an employment agreement
with the Company and there can be no assurance that the Company can retain the
services of these individuals. The loss of either of Messrs. Stephenson or
Morgan, or the Company's inability to hire or retain other qualified officers or
key employees, could have a material adverse effect on the Company's business,
results of operations, growth prospects and financial condition. See
"Management."

DEPENDENCE ON KEY INDUSTRIES AND TREND TOWARD OUTSOURCING

The Company's clients are primarily Fortune 500 companies involved in
technology-related industries. The Company's business and growth is largely
dependent on the continued demand for the Company's services from clients in
these industries and industries targeted by the Company, and current trends in
such industries to outsource their product order teleservices, supplier
management, product assembly and packaging, product distribution, product order
fulfillment, inbound customer care and technical support teleservices and other
outsourced services offered by the Company. A general economic downturn in the
computer industry or in other industries targeted by the Company or a slowdown
or reversal of the trend in any of these industries to outsource services
provided by the Company could have a material adverse effect on the Company's
business, results of operations, growth prospects and financial condition. See
"Business--Clients."

RISKS ASSOCIATED WITH THE COMPANY'S CONTRACTS

Although the Company currently seeks to sign multi-year contracts with its
clients, the Company's contracts generally (i) permit termination upon
relatively short notice by the client; (ii) do not designate the Company as the
client's exclusive outsourced service provider; (iii) do not penalize the client
for early termination; and (iv) hold the Company responsible for products which
fail to meet the clients' specifications. Further, the Company frequently works
on a purchase order basis with no minimum purchase guarantee. Several of the
Company's contracts require the Company to maintain its ISO 9002 certification.
Management believes, however, that maintaining satisfactory relationships with
its clients has a more significant impact on the Company's revenues than the
specific terms of its client contracts. Although several of the Company's
clients have elected not to renew or extend short-term contracts, or have
terminated contracts on relatively short notice to the Company, to date, none of
the foregoing types of contractual provisions has had a material adverse effect
on the Company's business, results of operations or financial condition. See
"Business--Services," "Business--Clients," "Business--Sales and Marketing," and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Substantially all of the Company's significant arrangements with its clients
for product order teleservices, supplier management, product assembly and
packaging, product distribution, product order fulfillment and customer care and
technical support teleservices generate revenues based, in large part, on the
number and duration of customer inquiries (subject to certain minimum monthly
payments) and the volume, complexity and type of components involved in the
client's products. Changes in the number or type of components of product units
assembled by the Company may have an effect on the Company's revenues
independent of the number of product units assembled. Consequently, the amount
of revenues generated from any particular client is generally dependent upon
customers' purchase and use of the client's products. There can be no assurance
as to the number of customers who will be attracted to the products of the
Company's clients or that the Company's clients will continue to develop new
products that will require the Company's services. See "Business--Clients" and
"Business--Technology."

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RISKS ASSOCIATED WITH RAPIDLY CHANGING TECHNOLOGY

The Company's business is highly dependent on its computer equipment,
telecommunications equipment and software systems. The Company's failure to
maintain sophisticated technological capabilities or to respond effectively to
technological changes could have a material adverse effect on the Company's
business, results of operations and financial condition. The Company's future
success also will be highly dependent upon its ability to enhance existing
services and introduce new services to respond to changing technological
developments. Significant advances or changes in technology, which significantly
reduce or eliminate the need for services provided by the Company, could have a
material adverse effect on the Company's business. For example, significant
development of the Internet as a delivery system for computer software and game
play could adversely impact the demand for the Company's product order
teleservices, product order fulfillment, product assembly and packaging and
product distribution services. There can be no assurance that the Company can
successfully develop and bring to market any new services in a timely manner,
that such services will be commercially successful or that clients' and
competitors' technologies or services will not render the Company's services
noncompetitive or obsolete. See "Business--Technology."

RISKS OF BUSINESS INTERRUPTION

The Company's operations are dependent upon its ability to protect its
facilities, clients' products, confidential customer information, computer
equipment, telecommunications equipment and software systems against damage from
fire, power loss, telecommunications interruption, natural disaster, theft,
unauthorized intrusion, computer viruses and other emergencies, and the ability
of its suppliers to deliver component parts on an expedited basis. While the
Company maintains contingency plans for such events or emergencies and backs up
its computers daily, there can be no assurance that such plans will be
sufficient. In the event the Company experiences a temporary or permanent
interruption or other emergency at one or more of its facilities through
casualty, operating malfunction, employee malfeasance, disruption of supplier
arrangements or otherwise, the Company's business could be materially adversely
affected and the Company may be required to pay contractual damages to its
clients or allow its clients to terminate or renegotiate their contracts with
the Company. While the Company maintains property and business interruption
insurance, such insurance may not adequately compensate the Company for all
losses that it may incur. See "Business--Services."

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND EXPANSION

The Company currently conducts business in Europe and Asia, in addition to
its North American operations. Such international operations accounted for
approximately 20.0% of the Company's revenues in 1996 and 15.6% for the three
months ended March 31, 1997. A component of the Company's growth strategy is to
expand its international operations. There can be no assurance that the Company
will be able to continue or expand its capacity to market, sell and deliver its
services in international markets, or that it will be able to acquire companies
or integrate acquired companies to expand international operations. In addition,
there are certain risks inherent in conducting international business, including
exposure to currency fluctuations, longer payment cycles, greater difficulties
in accounts receivable collection, difficulties in complying with a variety of
foreign laws, unexpected changes in government programs and policies, regulatory
requirements and labor laws, difficulties in staffing and managing foreign
operations, political instability and potentially adverse tax consequences.
There can be no assurance that one or more of such factors will not have a
material adverse effect on the Company's international operations and,
consequently, on the Company's business, results of operations, growth prospects
and financial condition. See "Business--Growth Strategy" and
"Business--Services."

10
<PAGE>
DEPENDENCE ON LABOR FORCE

The Company's success is largely dependent on its ability to recruit, hire,
train and retain qualified employees. The Company's business is labor intensive
and has experienced high personnel turnover. Some of the Company's operations,
particularly its technical support teleservices, require specially trained
employees. A significant increase in the Company's employee turnover rate could
increase the Company's recruiting and training costs and decrease operating
efficiency and productivity. Also, the addition of significant new clients or
the implementation of new large-scale programs may require the Company to
recruit, hire and train qualified personnel at an accelerated rate. There can be
no assurance that the Company will be able to continue to recruit, hire, train
and retain sufficient qualified personnel to staff adequately for existing
business or future growth. In addition, because a significant portion of the
Company's operating costs relate to labor costs, an increase in wages (including
an increase in the mandatory minimum wage by the federal government), costs of
employee benefits, or employment taxes could have a material adverse effect on
the Company's business, results of operations and financial condition. Further,
certain of the Company's facilities are located in geographic areas with
relatively low unemployment rates, thus potentially making it more difficult and
costly to hire qualified personnel. See "Business--Employees and Training" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

SUBSTANTIAL PORTION OF NET PROCEEDS ALLOCATED FOR GENERAL WORKING CAPITAL

A substantial portion ($26.4 million) of the net proceeds to the Company
from this offering has been allocated to working capital and other general
corporate purposes. This amount may increase substantially as other anticipated
uses of net proceeds are funded through cash flow or otherwise reduced. The net
proceeds may be utilized at the discretion of the Board of Directors. As a
result, investors may not know in advance how such net proceeds will be utilized
by the Company. See "Use of Proceeds."

CONTROL BY PRINCIPAL STOCKHOLDERS

Prior to this offering, all of the outstanding capital stock of the Company
was owned or controlled by executive officers of the Company and their
affiliates (collectively, the "Principal Stockholders"). Following closing of
this offering, A. Emmet Stephenson, Jr., Chairman of the Board of the Company,
and his family, will beneficially own approximately 66.3% of the Common Stock of
the Company (approximately 63.1% if the Underwriters' over-allotment option is
fully exercised). As a result, Mr. Stephenson and his family will continue to be
able to elect the entire Board of Directors of the Company and to control
substantially all other matters requiring action by the Company's stockholders.
Such voting concentration may have the effect of discouraging, delaying or
preventing a change in control of the Company. See "Principal and Selling
Stockholders."

HIGHLY COMPETITIVE MARKET

The markets in which the Company competes are highly competitive. The
Company expects competition to persist and intensify in the future. The
Company's competitors include small firms offering specific applications,
divisions of large companies, large independent firms and, most significantly,
the in-house operations of the Company's clients or potential clients. A number
of competitors have or may develop financial and other resources greater than
those of the Company. Similarly, there can be no assurance that additional
competitors with greater name recognition and resources than the Company will
not enter the Company's markets. Because the in-house operations of the
Company's existing or potential clients are significant competitors of the
Company, the Company's performance and growth could be negatively impacted if
its existing clients decide to provide in-house services that currently are
outsourced or if potential clients retain or increase their in-house
capabilities. Further, a decision by a major client to consolidate its
outsourced services with a company other than StarTek may have an adverse impact
on the Company, particularly due to the fact that the Company is not the largest
supplier of any of the services

11
<PAGE>
currently provided by the Company to any of its largest clients. In addition,
competitive pressures from current or future competitors could result in
significant price erosion, which could have a material adverse effect upon the
Company's business, results of operations and financial condition. See
"Business--Industry and Competition."

DIFFICULTIES OF COMPLETING AND INTEGRATING ACQUISITIONS AND JOINT VENTURES

One component of the Company's growth strategy is to pursue strategic
acquisitions of companies that have services, products, technologies, industry
specializations or geographic coverage that extend or complement the Company's
existing business. The Company has never made an acquisition and there can be no
assurance that the Company will be able to identify or acquire any such
companies on favorable terms. If an acquisition is completed, there can be no
assurance that such acquisition will enhance the Company's business, results of
operations or financial condition. As part of its growth strategy, the Company
may also pursue opportunities to undertake strategic alliances in the form of
joint ventures. Joint ventures involve many of the same risks as acquisitions,
as well as additional risks associated with possible lack of control of the
joint ventures. See "Use of Proceeds" and "Business--Growth Strategy."

NO PRIOR PUBLIC MARKET; VOLATILITY OF STOCK PRICE

Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an active public market for the Common
Stock will develop or be sustained after this offering, or that the market price
of the Common Stock will not decline below the initial public offering price.
The initial public offering price of the Common Stock offered hereby will be
determined by negotiations among the Company, the Selling Stockholders and the
Underwriters based upon several factors and may not be indicative of the market
price at which the Common Stock will trade after this offering. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price.

The market price of the Common Stock may be highly volatile and could be
subject to wide fluctuations in response to quarterly variations in operating
results, the success of the Company in implementing its business and growth
strategies, announcements of new contracts or contract cancellations,
announcements of technological innovations or new products or services by the
Company or its competitors, changes in financial estimates by securities
analysts or other events or factors. In addition, the stock market has
experienced significant price and volume fluctuations that have particularly
affected the market prices of equity securities of many companies and that have
often been unrelated to the operating performance of such companies. These broad
market fluctuations may adversely affect the market price of the Common Stock.
In the past, following periods of volatility in the market price of a company's
securities, securities class action litigation has often been instituted against
such a company. Any such litigation initiated against the Company could result
in substantial costs and a diversion of management's attention and resources,
which could have a material adverse effect on the Company's business, results of
operations and financial condition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Quarterly Results."

SUBSTANTIAL AND IMMEDIATE DILUTION

Investors in this offering will incur immediate dilution of $12.01 per share
in the pro forma net tangible book value per share of Common Stock (based upon
an initial public offering price of $15.00 per share). See "Dilution."

SUBSTANTIAL NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE

The sale of a substantial number of shares of Common Stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices of the Common Stock. The Company is unable to

12
<PAGE>
make any prediction as to the effect, if any, that future sales of Common Stock
or the availability of Common Stock for sale may have on the market price of the
Common Stock prevailing from time to time. In addition, any such sale or such
perception could make it more difficult for the Company to sell equity
securities or equity-related securities in the future at a time and price that
the Company deems appropriate. Upon closing of this offering, the Company will
have 13,828,571 shares of Common Stock outstanding, excluding shares of Common
Stock issuable upon exercise of options outstanding under the StarTek, Inc.
Stock Option Plan (the "Option Plan") and the StarTek, Inc. Director Stock
Option Plan (the "Director Option Plan"). The Company, the Selling Stockholders
and the directors and executive officers of the Company have agreed not to
offer, sell, contract to sell or otherwise dispose of, any shares of Common
Stock for a period of 180 days after the date of this offering without the prior
consent of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ").
Following expiration of that 180-day period, substantially all of the shares of
Common Stock held by the Selling Stockholders will be eligible for public sale,
subject to compliance with certain volume limitations prescribed by Rule 144
under the Securities Act of 1933, as amended (the "Securities Act"). See "Shares
Eligible for Future Sale" and "Underwriting."

ANTI-TAKEOVER PROVISIONS

Upon closing of this offering, the Board of Directors will have the
authority to issue up to 15,000,000 shares of preferred stock and to determine
the price, rights, preferences, privileges and restrictions, including voting
rights, of those shares without any vote or action by the stockholders. The
rights of the holders of the Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future. The issuance of the preferred stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no present plan to issue any shares of preferred stock.
Furthermore, certain provisions of the Company's Restated Certificate of
Incorporation, Restated Bylaws and Delaware law could delay or complicate a
merger, tender offer or proxy contest involving the Company. See "Description of
Capital Stock."

FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements that can be identified
by the use of forward-looking terminology such as "may," "will," "should,"
"expect," "anticipate," "estimate," or "continue" for the negation thereof or
other variations thereon or comparable terminology. The matters set forth under
"Risk Factors" constitute cautionary statements identifying important factors
with respect to such forward-looking statements, including certain risks and
uncertainties that could cause actual results to differ materially from those in
such forward-looking statements.

13
<PAGE>
OFFERING RELATED TRANSACTIONS

The following transactions will be completed prior to the closing of this
offering (the "Offering Related Transactions").

TERMINATION OF S CORPORATION STATUS

Since July 1, 1992, the Company has been classified as an S corporation
under Subchapter S of the Internal Revenue Code of 1986, as amended (the
"Code"), and comparable state tax laws. As a result, the earnings of the Company
have been taxed for federal and state income tax purposes directly to its
stockholders, rather than to the Company. The S corporation status of the
Company will terminate upon closing of this offering, and, accordingly, from and
after such date, the Company will be directly subject to federal and state
income taxes. Immediately prior to the closing of this offering, the Company
will take certain actions relating to the termination of the S corporation
status of the Company and its subsidiaries, as described below. See "Termination
of Management Fees" and "Notes Payable to Principal Stockholders" below.

TERMINATION OF MANAGEMENT FEES

Historically, the Company has paid certain management fees and bonuses to
the Principal Stockholders, and/or their affiliates, for services rendered to
the Company, in amounts generally equal to the annual earnings of the Company,
in addition to general compensation for services rendered. Upon receipt of such
management fees and bonuses, the Principal Stockholders historically contributed
approximately 53% of such amounts to the Company to provide necessary working
capital, with substantially all of the balance used to pay federal and state
income taxes. Effective with the closing of this offering, the management fee
and bonus arrangements will be discontinued. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Management,"
"Certain Relationships and Related Party Transactions--Management Fees" and Note
1 to the Consolidated Financial Statements.

From and after January 1, 1997, an affiliate of A. Emmet Stephenson, Jr.,
will, however, be paid an advisory fee as described in "Certain Relationships
and Related Party Transactions--Management Fees," and Michael W. Morgan will
receive a salary and may be paid bonuses at the discretion of the Compensation
Committee (as defined below). See "Management--Executive Compensation."

NOTES PAYABLE TO PRINCIPAL STOCKHOLDERS

Immediately prior to the closing of this offering, the Company will declare
a dividend in an amount equal to the estimated additional paid-in capital and
retained earnings of the Company as of the closing date, payable to the
Principal Stockholders pursuant to certain promissory notes, which will not
exceed $8.2 million. The promissory notes payable to the Principal Stockholders
will be paid from net proceeds to the Company from this offering. From this
amount, the Principal Stockholders will be required to pay applicable federal
and state income taxes on S corporation earnings of the Company through closing
of this offering. See "Use of Proceeds" and "Certain Relationships and Related
Party Transactions--Notes Payable to Principal Stockholders."

FORMATION OF STARTEK AND HOLDING COMPANY STRUCTURE

The Company was incorporated in Delaware in December 1996. Effective January
1, 1997, stockholders of StarPak, Inc. exchanged all of their outstanding shares
of capital stock for shares of common stock of the Company, and StarPak, Inc.
became a wholly-owned subsidiary of the Company. Effective January 24, 1997,
shareholders of StarPak International, Ltd. contributed all of their outstanding
shares of capital stock to the Company, and StarPak International, Ltd. became a
wholly-owned subsidiary of the Company. Accordingly, the Company became a
holding company for the businesses conducted by StarPak, Inc. and StarPak
International, Ltd.

14
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,000,000 shares of
Common Stock by the Company offered hereby, after deducting the estimated
underwriting discounts and commissions and offering expenses payable by the
Company, are estimated to be $41.4 million. The Company will not receive any
proceeds from the sale of shares of Common Stock by the Selling Stockholders.
See "Principal and Selling Stockholders."

The Company intends to use approximately $14.9 million of the net proceeds
of this offering to repay substantially all of its outstanding indebtedness,
which includes approximately $5.0 million of bank and mortgage indebtedness,
$1.8 million of capitalized lease obligations and approximately $8.1 million of
notes payable to Principal Stockholders. Additionally, the Company will pay
approximately $50,000 of prepayment premiums in connection with the repayment of
such capitalized lease obligations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."
The balance of the net proceeds (approximately $26.4 million) will be used for
working capital and other general corporate purposes, including approximately
$8.0 million for capital expenditures to expand and build-out its existing
facilities (to increase its number of teleservice workstations and product
handling capacity) and to potentially make strategic acquisitions of
complementary businesses. The Company has not entered into any agreements,
commitments or understandings and is not currently engaged in any negotiations
with respect to any such acquisitions. Pending such uses, the Company plans to
invest the net proceeds to the Company from this offering in investment grade,
interest-bearing securities. See "Risk Factors--Substantial Portion of Net
Proceeds Allocated for General Working Capital," and "Offering Related
Transactions--Notes Payable to Principal Stockholders."

DIVIDEND POLICY

The Company intends to retain all future earnings in order to finance
continued growth and development of its business and does not expect to pay any
cash dividends with respect to its Common Stock in the foreseeable future. The
Company expects that any future credit facility will limit or restrict the
payment of dividends. The payment of any dividends will be at the discretion of
the Company's Board of Directors and will depend upon, among other things, the
availability of funds, future earnings, capital requirements, contractual
restrictions, the general financial condition of the Company and general
business conditions.

15
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of March
31, 1997 on (i) a historical basis, (ii) a pro forma basis to give effect to the
Offering Related Transactions, and (iii) a pro forma as adjusted basis to give
effect to the sale by the Company of 3,000,000 shares of Common Stock in this
offering and the application of the estimated net proceeds therefrom. The
capitalization of the Company should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations," "Use
of Proceeds," "Offering Related Transactions," and the Consolidated Financial
Statements and notes thereto, included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1997
-----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
--------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS.................................................... $ 5,684 $ 5,684 $ 32,088
--------- ----------- -----------
--------- ----------- -----------

DEBT:
Line of credit............................................................. $ 3,500 $ 3,500 --
Capital lease obligations.................................................. 2,191 2,191 $ 345
Notes payable to Principal Stockholders.................................... -- 8,081 --
Long-term debt............................................................. 1,669 1,669 200
--------- ----------- -----------
TOTAL DEBT............................................................... 7,360 15,441 545

STOCKHOLDERS' EQUITY:
Preferred stock, undesignated, par value $.01 per share; 15,000,000 shares
authorized, no shares issued and outstanding............................. -- -- --
Common stock, par value $.01 per share; 95,000,000 shares authorized,
10,828,571 shares issued and outstanding, 13,828,571 shares issued and
outstanding, as adjusted(a).............................................. 1 1 31
Additional paid-in capital................................................. 6,148 -- 41,320
Cumulative translation adjustment.......................................... 77 77 77
Retained earnings.......................................................... 1,933 -- (50)
--------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY............................................... 8,159 78 41,378
--------- ----------- -----------
TOTAL CAPITALIZATION..................................................... $ 15,519 $ 15,519 $ 41,923
--------- ----------- -----------
--------- ----------- -----------
</TABLE>

- ------------------------

(a) Excludes 985,000 shares and 90,000 shares of Common Stock reserved for
issuance under the Option Plan and the Director Option Plan, respectively,
approximately 610,000 shares of which will be subject to options to be
granted upon closing of this offering. See "Management--Compensation of
Directors" and "Management--Stock Option Plan."

16
<PAGE>
DILUTION

As of March 31, 1997, the Company had a pro forma net tangible book value of
$78,000, or $0.01 per share of Common Stock, based upon 10,828,571 shares of
Common Stock outstanding. Pro forma net tangible book value per share is
determined by dividing the pro forma net tangible book value of the Company
(total tangible assets less total liabilities), giving effect to the Offering
Related Transactions on such date, by the number of shares of Common Stock
outstanding as of such date after giving effect to a 322.1064 for one stock
split of the Common Stock. After giving effect to the Offering Related
Transactions, a 322.1064 for one stock split of the Common Stock and the sale by
the Company of the 3,000,000 shares of Common Stock offered by the Company
hereby at an initial public offering price of $15.00 per share and application
of the net proceeds therefrom, the Company's pro forma net tangible book value
as of March 31, 1997 would have been $41.4 million, or $2.99 per share of Common
Stock. This represents an immediate increase in pro forma net tangible book
value of $2.98 per share to the Principal Stockholders and an immediate dilution
in net tangible book value of $12.01 per share to new investors purchasing
shares of Common Stock in this offering. The following table illustrates the per
share dilution to the new investors:

<TABLE>
<S> <C> <C>
Initial public offering price per share...................... $ 15.00
Pro forma net tangible book value per share as of March 31,
1997........................................................ $ 0.01
Increase in pro forma net tangible book value per share
attributable to new investors............................... 2.98
---------
Pro forma net tangible book value per share after giving
effect to this offering..................................... 2.99
---------
Pro forma net tangible book value dilution per share to new
investors................................................... $ 12.01
---------
---------
</TABLE>

The following table sets forth as of March 31, 1997 the relative investments
of the Principal Stockholders and of the new investors, giving effect to (i) the
sale by the Company of 3,000,000 shares and the sale by the Selling Stockholders
of 666,667 shares of Common Stock being offered hereby, at an initial public
offering price of $15.00 per share, (ii) the 322.1064 for one stock split and
(iii) the payment of the Notes Payable to Principal Stockholders.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------------- --------------------------- PRICE PER
NUMBER PERCENTAGE AMOUNT PERCENTAGE SHARE
------------ ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Principal Stockholders........................... 10,161,904 73.48% $ 336 0.00% $ 0.00
New investors.................................... 3,666,667 26.52 55,000,005 100.00 15.00
------------ ------ ------------- ------ -----------
Total.......................................... 13,828,571 100.00% $ 55,000,341 100.00%
------------ ------ ------------- ------
------------ ------ ------------- ------
</TABLE>

The information in the foregoing table excludes 985,000 shares and 90,000 shares
reserved for issuance under the Option Plan and Director Option Plan,
respectively. See "Management--Compensation of Directors" and "Management--Stock
Option Plan."

17
<PAGE>
SELECTED FINANCIAL DATA

The following selected financial data for the years ended December 31, 1994,
1995 and 1996, and as of December 31, 1995 and 1996 have been derived from the
Consolidated Financial Statements of the Company, which have been audited by
Ernst & Young LLP, included elsewhere in this Prospectus. The selected financial
data for the year ended December 31, 1993 and as of December 31, 1994 have been
derived from consolidated financial statements of the Company, which have been
audited by Ernst & Young LLP. The selected consolidated financial data (i) for
the year ended June 30, 1992, the six months ended December 31, 1992, and the
three months ended March 31, 1996 and 1997, and (ii) as of June 30, 1992,
December 31, 1992 and 1993, and March 31, 1997, is unaudited. This information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and notes thereto, included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR SIX MONTHS YEARS ENDED DECEMBER 31, ENDED MARCH 31,
ENDED ENDED --------------------------------------------- --------------------------------
JUNE 30, DECEMBER 31, PRO FORMA PRO FORMA
1992 1992 1993 1994 1995 1996 1996(A) 1996 1997 1997(A)
-------- ------------ ------- ------- ------- ------- --------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENTS OF
OPERATIONS DATA:
Revenues............... $16,791 $11,880 $23,044 $26,341 $41,509 $71,584 $71,584 $15,219 $16,667 $16,667
Cost of services....... 13,273 9,779 18,039 21,355 33,230 57,238 57,238 12,655 12,732 12,732
-------- ------------ ------- ------- ------- ------- --------- ------- ------- -------
Gross profit........... 3,518 2,101 5,005 4,986 8,279 14,346 14,346 2,564 3,935 3,935
Selling, general and
administrative
expenses............. 1,813 1,269 3,479 4,489 5,341 7,764 7,764 1,706 2,164 2,164
Management fee
expense.............. -- 400 1,702 612 2,600 6,172 -- 199 793 --
Operating profit
(loss)............... 1,705 432 (176) (115) 338 410 6,582 659 978 1,771
Net interest expense
and other............ 87 8 193 216 396 372 372 126 84 84
-------- ------------ ------- ------- ------- ------- --------- ------- ------- -------
Income (loss) before
income taxes......... 1,618 424 (369) (331) (58) 38 6,210 533 894 1,687
Income tax expense
(benefit)............ 587 (58) -- -- -- 112 2,316 -- -- 629
-------- ------------ ------- ------- ------- ------- --------- ------- ------- -------
Net income (loss)
(b).................. $ 1,031 $ 482 $ (369) $ (331) $ (58) $ (74) $ 3,894 $ 533 $ 894 $ 1,058
-------- ------------ ------- ------- ------- ------- --------- ------- ------- -------
-------- ------------ ------- ------- ------- ------- --------- ------- ------- -------
Net income per share
(c).................. $0.34 $0.09
Shares outstanding
(c).................. 11,293 11,367

SELECTED OPERATING
DATA:
Capital expenditures... $136 $153 $1,239 $670 $2,105 $1,333 $1,333 $412 $267 $267
Depreciation and
amortization......... 149 79 456 588 873 1,438 1,438 290 495 495
</TABLE>
<TABLE>
<CAPTION>

<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (END OF PERIOD):
Working capital.............................. $ 1,058 $ 1,560 $ 943 $ 434 $ 798 $ 2,896
Total assets................................. 4,032 6,614 7,712 12,352 21,580 22,979
Total debt................................... 587 732 2,473 3,288 7,294 6,475
Total stockholders' equity................... 1,637 2,031 2,624 3,006 3,798 7,103

<CAPTION>
PRO FORMA
AS ADJUSTED(D)
---------------
<S> <C> <C> <C>
(UNAUDITED)
BALANCE SHEET DATA (END OF PERIOD):
Working capital.............................. $ 2,033 $ 4,874 $ 35,705
Total assets................................. 20,729 23,459 49,863
Total debt................................... 7,059 7,360 545
Total stockholders' equity................... 4,341 8,159 41,378
</TABLE>

- ----------------------------------

(d) Gives effect to (i) notes payable to the Principal Stockholders relating to
accumulated retained earnings and additional paid-in capital of
approximately $8,081 and (ii) the sale by the Company of 3,000,000 shares of
Common Stock in this offering and the application of the estimated net
proceeds therefrom, including repayment of indebtedness of the Company. See
"Use of Proceeds" and "Capitalization."

18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated
Financial Statements and notes thereto included elsewhere in this Prospectus.

OVERVIEW

The Company has grown profitably by developing integrated outsourced
services that enable its clients to provide their customers with high-quality
services at lower costs than the clients' own in-house operations. StarTek has
continuously expanded its business and facilities to offer additional services
in response to the growing needs of its clients and to capitalize on market
opportunities both domestically and internationally. From 1993 to 1996, the
Company's revenues grew at a compound annual growth rate of 45.9%. For the year
ended December 31, 1996, the Company's revenues increased approximately 72.5% to
$71.6 million from $41.5 million for the year ended December 31, 1995. For the
three months ended March 31, 1997, the Company's revenues increased
approximately 9.5% to $16.7 million from $15.2 million for the three months
ended March 31, 1996. For the year ended December 31, 1996, pro forma net income
increased approximately 144% to $3.9 million from $1.6 million for the year
ended December 31, 1995. For the three months ended March 31, 1997, pro forma
net income increased approximately 131% to $1.1 million from $459,000 for the
three months ended March 31, 1996. Management attributes this growth to the
successful implementation of the Company's strategy of developing long-term
strategic relationships with large clients in targeted industries.

StarTek generates its revenues by providing integrated outsourced services
throughout a product's life cycle, including product order teleservices,
supplier management, product assembly and packaging, product distribution,
product order fulfillment, and inbound customer care and technical support
teleservices. The Company generally recognizes revenues as services are
performed under each contract. Substantially all of the Company's significant
arrangements with its clients for its services generate revenues based, in large
part, on the number and duration of customer inquiries (subject to certain
minimum monthly payments) and the volume, complexity and type of components
involved in the handling of the client's products. Changes in the number or type
of components in the product units assembled by the Company may have an effect
on the Company's revenues, independent of the number of product units assembled.

A key element of the Company's ability to grow is the availability of
capacity to respond quickly to the needs of new clients or the increased needs
of existing clients. The Company's 138,000-square-foot facility in Denver,
Colorado, which was initially occupied at the end of 1995, is approximately
one-third utilized and can be expanded to accommodate additional outsourced
services. Management also believes that it can expand significantly the capacity
of its Greeley, Colorado and Hartlepool, England facilities.

The Company's cost of services primarily includes labor, telecommunications,
materials and freight charges that are variable in nature, as well as certain
facilities charges. Competitive vendor rates for materials, printing, compact
disc duplication and packaging costs, together with competitive labor rates
which comprise the majority of the Company's costs, have been and are expected
to continue to be a key component of the Company's expenses. All other expenses,
including expenses attributable to technology support, sales and marketing,
human resource management and other administrative functions that are not
allocable to specific client services, are recorded as selling, general and
administrative ("SG&A") expenses. SG&A expenses tend to be either semi-variable
or fixed in nature.

Since July 1992, the Company has operated as an S corporation and,
accordingly, has not been subject to federal or state income taxes. As an S
corporation, in addition to general compensation for services rendered, the
Company has historically paid certain management fees, bonuses and other fees to
the Principal Stockholders and/or their affiliates in amounts on an annual basis
which have generally been approximately equal to the annual earnings of the
Company, and all of such amounts are reflected as

19
<PAGE>
management fee expense on its consolidated statement of operations. Upon receipt
of such management fees and bonuses, the Principal Stockholders historically
contributed approximately 53% of such amounts to the Company to provide the
Company with necessary working capital, with substantially all of the balance
used to pay applicable federal and state income taxes. The amounts so
contributed are reflected in additional paid-in-capital on the Company's
consolidated balance sheet. Effective with the closing of this offering, these
management fee and bonus arrangements will be discontinued. See Note 1 to the
Consolidated Financial Statements.

From and after January 1, 1997 (including the period following this
offering), compensation will continue to be payable to persons who are now
stockholders of the Company (or an affiliate of such stockholder) as general
compensation for services rendered in the form of salaries, bonuses or advisory
fees and all such payments will be reflected in SG&A expenses on the
consolidated statement of operations. At current rates, such payments will
aggregate $516,000 annually. See "Management-- Executive Compensation,"
"Offering Related Transactions--Termination of Management Fees" and Note 1 to
the Consolidated Financial Statements.

The S corporation status of the Company will terminate upon closing of this
offering and, thereafter, the Company will be subject to federal and state
income taxes. Pro forma net income (i) reflects elimination of management fee
expense and (ii) includes a provision for federal, state and foreign income
taxes at an effective rate of 37.3%.

The Company frequently purchases components of its clients' products as an
integral part of its supplier management services and in advance of providing
its product assembly and packaging services. These components are shown as raw
materials inventory in the Company's balance sheet. At the close of an
accounting period, packaged and assembled products (together with other
associated costs) are reflected as finished goods inventory, pending shipment.
The Company generally has the right to be reimbursed by the client for unused
inventory. Client-owned inventories are not reflected on the Company's
consolidated balance sheet.

The Company's business is highly seasonal. Certain of the Company's services
related to product assembly and packaging are heavily utilized in the fourth
quarter in preparation for the Christmas holiday season. Historically, the
Company's revenues have been substantially higher in the fourth quarter than in
the first, second and third quarters.

QUARTERLY RESULTS

The following table sets forth certain unaudited statement of operations
data for the quarters in the years ended December 31, 1995 and 1996 and the
quarter ended March 31, 1997. The unaudited quarterly information has been
prepared on the same basis as the annual information and, in management's
opinion, includes all adjustments necessary to present fairly the information
for the quarters presented.
<TABLE>
<CAPTION>
1995 QUARTERS ENDED 1996 QUARTERS ENDED
-------------------------------------------------------- --------------------------------------------------
MARCH 31 JUNE 30 SEPT 30 DEC 31 MARCH 31 JUNE 30 SEPT 30 DEC 31
------------- ------------- ------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)

Revenues........ $ 7,964 $ 6,146 $ 9,683 $ 17,716 $ 15,219 $ 14,108 $ 15,479 $ 26,778
Cost of
services...... 6,380 4,758 7,536 14,556 12,655 11,121 12,198 21,264
SG&A expenses... 1,226 1,194 1,301 1,620 1,706 1,857 1,756 2,445
Management fee
expense....... 192 83 682 1,643 199 700 498 4,775
------ ------ ------ ----------- ----------- ----------- ----------- -----------
Operating profit
(loss)........ 166 111 164 (103) 659 430 1,027 (1,706)

QUARTER ENDED
MARCH 31, 1997
---------------
<S> <C>

Revenues........ $ 16,667
Cost of
services...... 12,732
SG&A expenses... 2,164
Management fee
expense....... 793
-------
Operating profit
(loss)........ 978
</TABLE>

20
<PAGE>
The following table sets forth certain unaudited statement of operations
data, expressed as a percentage of revenues.
<TABLE>
<CAPTION>
1995 QUARTERS ENDED 1996 QUARTERS ENDED
---------------------------------------------------------- -------------------------------------------
MARCH 31 JUNE 30 SEPT 30 DEC 31 MARCH 31 JUNE 30 SEPT 30
------------- ------------- ------------- ------------- ------------- ------------- -------------

<S> <C> <C> <C> <C> <C> <C> <C>
Revenues........ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of
services...... 80.1 77.4 77.8 82.2 83.2 78.8 78.8
SG&A expenses... 15.4 19.4 13.5 9.1 11.2 13.2 11.3
Management fee
expense....... 2.4 1.4 7.0 9.3 1.3 5.0 3.2
----- ----- ----- ----- ----- ----- -----
Operating profit
(loss)........ 2.1 1.8 1.7 (0.6) 4.3 3.0 6.7

QUARTER ENDED
DEC 31 MARCH 31, 1997
------------- -----------------
<S> <C> <C>
Revenues........ 100.0% 100.0%
Cost of
services...... 79.4 76.4
SG&A expenses... 9.1 13.0
Management fee
expense....... 17.8 4.7
----- -----
Operating profit
(loss)........ (6.3) 5.9
</TABLE>

The following table sets forth certain unaudited pro forma statement of
operations data for the quarters in the year ended December 31, 1996 and the
quarter ended March 31, 1997.

<TABLE>
<CAPTION>
1996 QUARTERS ENDED
-------------------------------------------------- QUARTER ENDED
MARCH 31 JUNE 30 SEPT 30 DEC 31 MARCH 31, 1997
----------- ----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)

Revenues............................................. $ 15,219 $ 14,108 $ 15,479 $ 26,778 $ 16,667
Cost of services..................................... 12,655 11,121 12,198 21,264 12,732
SG&A expenses........................................ 1,706 1,857 1,756 2,445 2,164
Management fee expense............................... -- -- -- -- --
----------- ----------- ----------- ----------- -------
Operating profit..................................... 858 1,130 1,525 3,069 1,771
</TABLE>

The following table sets forth certain unaudited pro forma statement of
operations data, expressed as a percentage of revenues.

<S> <C> <C> <C> <C> <C>
Revenues.............................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of services...................................... 83.2 78.8 78.8 79.4 76.4
SG&A expenses......................................... 11.2 13.2 11.3 9.1 13.0
Management fee expense................................ -- -- -- -- --
----------- ----------- ----------- ----------- -------
Operating profit...................................... 5.6 8.0 9.9 11.5 10.6
</TABLE>

The Company has experienced, and expects to experience in the future,
quarterly variations in revenues and earnings as a result of a variety of
factors, many of which are outside the Company's control, including (i) the
seasonal pattern of certain of the businesses served by the Company; (ii) the
timing of new projects; (iii) the expiration or termination of existing
projects; and (iv) the timing of increased expenses incurred to obtain and
support new business. See "Risk Factors--Variability of Quarterly Operating
Results."

For the quarterly periods in 1995 and 1996 and first quarter of 1997,
revenues fluctuated principally due to the seasonal pattern of certain of the
businesses served by the Company and the addition of new client programs.
Revenues in the first quarter of 1996 as compared to the fourth quarter of 1995
and in the first quarter of 1997 as compared to the fourth quarter of 1996
declined principally due to the seasonal pattern of certain businesses serviced
by the Company. Revenues in the second quarter of 1996 were higher than
expected, as compared to prior seasonal patterns, due to increased activities
for a significant new client that began business with the Company in that
quarter.

For the quarterly periods in 1995 and 1996 and the first quarter of 1997,
cost of services as a percentage of revenues fluctuated principally due to the
mix of services performed for clients. Cost of

21
<PAGE>
services in the fourth quarter of 1995 was adversely affected by start-up costs
of the Denver facility, which opened at the end of 1995, and costs incurred in
connection with the switch by certain of the Company's clients to compact discs
from 3 1/2 inch floppy disks. Cost of services as a percentage of revenues was
higher in the first and second quarters of 1996, partially as a result of
product recall and rework costs incurred on a certain product distributed from
the United Kingdom facility. The product recall related to certain anomalies
detected by the Company in a portion of finished product assembled, packaged and
distributed from the Company's United Kingdom facility. Upon detection of the
anomalies, the Company initiated the recall and inspected all potentially
affected products. The circumstances necessitating the recall were discovered in
March 1996 and the recall and related reworking of products was completed in
October 1996. In addition, the first quarter of 1996 was adversely affected by
start-up costs of the Denver facility, which opened at the end of 1995. Costs of
services as a percentage of revenues in the first quarter of 1997 as compared to
the fourth quarter of 1996 decreased principally because of improved labor
utilization and the mix of services performed for clients.

For the quarterly periods in 1995 and 1996 and the first quarter of 1997,
SG&A expenses as a percentage of revenues fluctuated principally due to the
spreading of fixed and semi-variable costs over a revenue base that fluctuates
from quarter to quarter. .

For the quarterly periods in 1995 and 1996, management fee expense
fluctuated as a percentage of revenues generally based on estimated tax
requirements of the recipients of the management fees and bonuses in the first
three quarters of each year and, in the fourth quarter of each year, on
cumulative operating profits for the entire year less management fee expense for
the preceding three quarters. For the first quarter of 1997, management fees and
bonuses were accrued based on estimated tax requirements of the recipients of
the management fees and bonuses. Effective with the closing of this offering,
these management fee and bonus arrangements will be discontinued.

Operating profit (loss) and income (loss) before income taxes fluctuated
within the quarterly periods of 1995, 1996 and the quarter ended March 31, 1997
based primarily on the factors noted above.

The unaudited pro forma quarterly information for 1996 and the quarter ended
March 31, 1997 presents the effects on operating profit of the elimination of
management fee expense paid to stockholders and their affiliates as these fees
will be discontinued effective with closing of this offering and no further
management fees will be payable thereafter by the Company. For the quarterly
periods of 1995, pro forma management fee expense would be zero for each quarter
and operating profits for the first, second, third and fourth quarters of 1995
would be $358,000, $194,000, $846,000 and $1.5 million, respectively, which
represents 4.5%, 3.2%, 8.7% and 8.7% of revenues for the respective quarterly
periods.

22
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain statement
of operations data expressed as a percentage of revenues:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
---------------------------------------------------- ---------------------------------------
PRO FORMA PRO FORMA
1994 1995 1996 1996 1996 1997 1997
----------- ----------- ----------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues........................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of services................ 81.1 80.1 80.0 80.0 83.2 76.4 76.4
----------- ----------- ----------- ----- ----- ----- -----
Gross profit.................... 18.9 19.9 20.0 20.0 16.8 23.6 23.6
SG&A expenses................... 17.0 12.8 10.8 10.8 11.2 13.0 13.0
Management fee expense.......... 2.3 6.3 8.6 -- 1.3 4.7 --
----------- ----------- ----------- ----- ----- ----- -----
Operating profit (loss)......... (0.4) 0.8 0.6 9.2 4.3 5.9 10.6
Net interest expense and
other......................... 0.8 1.0 0.5 0.5 0.8 0.5 0.5
----------- ----------- ----------- ----- ----- ----- -----
Income (loss) before income
taxes......................... (1.2) (0.2) 0.1 8.7 3.5 5.4 10.1
Income tax expense.............. -- -- 0.2 3.3 -- -- 3.8
----------- ----------- ----------- ----- ----- ----- -----
Net income (loss)............... (1.2)% (0.2)% (0.1)% 5.4% 3.5% 5.4% 6.3%
----------- ----------- ----------- ----- ----- ----- -----
----------- ----------- ----------- ----- ----- ----- -----
</TABLE>

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996

REVENUES. Revenues increased $1.5 million, or 9.5%, to $16.7 million for
the three months ended March 31, 1997 from $15.2 million for the three months
ended March 31, 1996. Revenues of $7.9 million for the three months ended March
31, 1997 were attributable to new clients. Revenues from new clients were
partially offset by the effects of completion of projects for existing clients
and fluctuating requirements with respect to ongoing projects. A portion of the
revenues for the three months ended March 31, 1996 were attributable to two
large projects, which generated unusually high revenues.

COST OF SERVICES. Cost of services was relatively unchanged at $12.7
million for each of the three months ended March 31, 1996 and 1997. As a
percentage of revenues, cost of services decreased to 76.4% for the three months
ended March 31, 1997 from 83.2% for the three months ended March 31, 1996. This
change was primarily due to improved labor utilization. Additionally, the three
months ended March 31, 1997 were affected positively by the absence of start-up
costs for the Denver facility and product recall and rework costs incurred on a
certain product distributed from the United Kingdom facility, as well as by the
discontinuation of certain lower margin projects.

GROSS PROFIT. As a result of the foregoing factors, gross profit increased
$1.3 million, or 53.5%, to $3.9 million for the three months ended March 31,
1997 from $2.6 million for the three months ended March 31, 1996. As a
percentage of revenues, gross profit increased to 23.6% for the three months
ended March 31, 1997 from 16.8% for the three months ended March 31, 1996.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses increased $0.5
million, or 26.8%, to $2.2 million for the three months ended March 31, 1997
from $1.7 million for the three months ended March 31, 1996, primarily as a
result of increased personnel costs incurred to service increasing business. As
a percentage of revenues, SG&A expenses increased to 13.0% for the three months
ended March 31, 1997 from 11.2% for the three months ended March 31, 1996,
reflecting a greater relative increase in SG&A expense as compared to the
increase in revenues.

23
<PAGE>
MANAGEMENT FEE EXPENSE. Management fee expense increased $0.6 million, or
299%, to $0.8 million for the three months ended March 31, 1997 from $0.2
million for the three months ended March 31, 1996. As a percentage of revenues,
management fee expense increased to 4.7% for the three months ended March 31,
1997 from 1.3% for the three months ended March 31, 1996. For the three months
ended March 31, 1996, management fee expense was accrued based on estimated tax
requirements of the recipients. Effective with the closing of this offering,
these management fee and bonus arrangements will be discontinued.

OPERATING PROFIT (LOSS). As a result of the foregoing factors, operating
profit increased $0.3 million, or 48.4%, to $1.0 million for the three months
ended March 31, 1997 from $0.7 million for the three months ended March 31,
1996. As a percentage of revenues, operating profit increased to 5.9% for the
three months ended March 31, 1997 from 4.3% for the three months ended March 31,
1996.

NET INTEREST EXPENSE AND OTHER. Net interest expense and other was
relatively unchanged at $0.1 million for each of the three months ended March
31, 1996 and 1997. As a percentage of revenues, net interest expense and other
decreased to 0.5% for the three months ended March 31, 1997 from 0.8% for the
three months ended March 31, 1996, reflecting lower outstanding average
borrowings relative to revenues of the Company.

INCOME (LOSS) BEFORE INCOME TAXES. As a result of the foregoing factors,
income before income taxes increased $0.4 million, or 67.7%, to $0.9 million for
the three months ended March 31, 1997 from $0.5 million income before taxes for
the three months ended March 31, 1996. As a percentage of revenues, income
before income taxes increased to 5.4% for the three months ended March 31, 1997
from 3.5% for the three months ended March 31, 1996.

INCOME TAX EXPENSE. The Company has operated as an S corporation for
federal and state income tax purposes and, accordingly, was not subject to
federal or state income taxes. No provision for income taxes was made in the
three months ended March 31, 1996 and 1997.

NET INCOME (LOSS). Based on its S corporation status and the factors
discussed above, net income increased $0.4 million, or 67.7%, to $0.9 million
for the three months ended March 31, 1997 from $0.5 million net income for the
three months ended March 31, 1996. As a percentage of revenues, net income
increased to 5.4% for the three months ended March 31, 1997 from 3.5% for the
three months ended March 31, 1996.

PRO FORMA MANAGEMENT FEE EXPENSE; PRO FORMA OPERATING PROFIT; PRO FORMA
INCOME BEFORE INCOME TAXES; PRO FORMA INCOME TAXES AND PRO FORMA NET
INCOME. Pro forma amounts reflect the elimination of accrued management fees
and bonuses payable to stockholders and their affiliates as these fees and
bonuses will be discontinued upon the closing of this offering, and provide for
related income taxes at 37.3% of pre-tax income as if the Company were taxed as
a C corporation. As a result of the foregoing factors (i) pro forma management
fee expense is zero for the three months ended March 31, 1996 and 1997; (ii) pro
forma operating profit increased $0.9 million, or 106%, to $1.8 million for the
three months ended March 31, 1997 from $0.9 million for the three months ended
March 31, 1996; (iii) pro forma income before income taxes increased $1.0
million, or 131%, to $1.7 million for the three months ended March 31, 1997 from
$0.7 million for the three months ended March 31, 1996; (iv) pro forma income
taxes increased $0.3 million, or 130%, to $0.6 million for the three months
ended March 31, 1997 from $0.3 million for the three months ended March 31,
1996; and (v) pro forma net income increased $599,000, or 131%, to $1.1 million
for the three months ended March 31, 1997 from $459,000 for the three months
ended March 31, 1996.

24
<PAGE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

REVENUES. Revenues increased $30.1 million, or 72.5%, to $71.6 million for
the year ended December 31, 1996 from $41.5 million for the year ended December
31, 1995. New clients accounted for $25.2 million of this increase, primarily
attributable to the addition of a significant new client in April 1996, while
existing clients accounted for the remaining $4.9 million of this increase.
Revenues for 1996 reflect the addition of the Denver facility, which opened at
the end of 1995.

COST OF SERVICES. Cost of services increased $24.0 million, or 72.2%, to
$57.2 million for the year ended December 31, 1996 from $33.2 million for the
year ended December 31, 1995. As a percentage of revenues, cost of services was
relatively unchanged at 80.0% for the year ended December 31, 1996 from 80.1%
for the year ended December 31, 1995.

GROSS PROFIT. As a result of the foregoing factors, gross profit increased
$6.0 million, or 73.3%, to $14.3 million for the year ended December 31, 1996
from $8.3 million for the year ended December 31, 1995. As a percentage of
revenues, gross profit was relatively unchanged at 20.0% for the year ended
December 31, 1996 from 19.9% for the year ended December 31, 1995.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses increased $2.4
million, or 45.4%, to $7.8 million for the year ended December 31, 1996 from
$5.3 million for the year ended December 31, 1995. As a percentage of revenues,
SG&A expenses decreased to 10.8% for the year ended December 31, 1996 from 12.8%
for the year ended December 31, 1995, reflecting the spreading of fixed and
semi-variable costs over a larger revenue base.

MANAGEMENT FEE EXPENSE. Management fee expense increased $3.6 million, or
137.4%, to $6.2 million for the year ended December 31, 1996 from $2.6 million
for the year ended December 31, 1995. As a percentage of revenues, management
fee expense increased to 8.6% for the year ended December 31, 1996 from 6.3% for
the year ended December 31, 1995. Management fee expense was determined by the
Board of Directors and related primarily to changes in operating profit of the
Company. Effective with the closing of this offering, these management fee and
bonus arrangements will be discontinued.

OPERATING PROFIT. As a result of the foregoing factors, operating profit
increased $0.1 million, or 21.3%, to $0.4 million for the year ended December
31, 1996 from $0.3 million for the year ended December 31, 1995. As a percentage
of revenues, operating profit decreased to 0.6% for the year ended December 31,
1996 from 0.8% for the year ended December 31, 1995.

NET INTEREST EXPENSE AND OTHER. Net interest expense and other remained
relatively unchanged at $0.4 million for the year ended December 31, 1996 and
for the year ended December 31, 1995. As a percentage of revenues, net interest
expense and other decreased to 0.5% for the year ended December 31, 1996 from
1.0% for the year ended December 31, 1995, reflecting lower outstanding
borrowings relative to revenues of the Company.

INCOME (LOSS) BEFORE INCOME TAXES. As a result of the foregoing factors,
income before income taxes increased $0.1 million to zero for the year ended
December 31, 1996 from $(0.1) million loss before income taxes for the year
ended December 31, 1995. As a percentage of revenues, income before income taxes
increased to 0.1% for the year ended December 31, 1996 from (0.2)% for the year
ended December 31, 1995.

INCOME TAX EXPENSE. The Company has operated as an S corporation for
federal and state income tax purposes and, accordingly, was not subject to
federal or state income taxes. The Company was, however, subject to certain
foreign income taxes.

NET INCOME (LOSS). Based upon its S corporation status and the factors
discussed above, net loss remained relatively unchanged at $(0.1) million for
the year ended December 31, 1996 and for the year

25
<PAGE>
ended December 31, 1995. As a percentage of revenues, net loss for the year
ended December 31, 1996 and for the year ended December 31, 1995 remained
relatively unchanged at 0.1% and 0.2%, respectively.

PRO FORMA MANAGEMENT FEE EXPENSE, PRO FORMA OPERATING PROFIT, PRO FORMA
INCOME BEFORE INCOME TAXES, PRO FORMA INCOME TAXES AND PRO FORMA NET
INCOME. Pro forma amounts reflect the elimination of management fees and
bonuses paid to stockholders and their affiliates as these fees and bonuses will
be discontinued upon closing of this offering, and provide for related income
taxes at 37.3% of pre-tax income as if the Company were taxed as a C
corporation. As a result of the foregoing factors: (1) pro forma management fee
expense is zero for 1995 and 1996; (2) pro forma operating profit increased $3.6
million, or 124%, to $6.6 million for the year ended December 31, 1996 from $2.9
million for the year ended December 31, 1995; (3) pro forma income before income
taxes increased $3.7 million, or 144%, to $6.2 million for the year ended
December 31, 1996 from $2.5 million for the year ended December 31, 1995; (4)
pro forma income taxes increased $1.4 million, or 144%, to $2.3 million for the
year ended December 31, 1996 from $0.9 million for the year ended December 31,
1995; and (5) pro forma net income increased $2.3 million, or 144%, to $3.9
million for the year ended December 31, 1996 from $1.6 million for the year
ended December 31, 1995.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

REVENUES. Revenues increased $15.2 million, or 57.6%, to $41.5 million in
1995 from $26.3 million in 1994. New clients accounted for $6.1 million of this
increase, while existing clients accounted for the remaining $9.1 million of
this increase.

COST OF SERVICES. Cost of services increased $11.9 million, or 55.6%, to
$33.2 million in 1995 from $21.4 million in 1994. As a percentage of revenues,
cost of services decreased to 80.1% in 1995 from 81.1% in 1994. This change was
primarily due to improvement in profit margins at the United Kingdom facility as
productivity improved, and improvement in product fulfillment profit margins in
domestic operations as improved product fulfillment systems were placed in
service. As a result of technological changes in software distribution, the
foregoing improvements were partially offset by lower profit margins realized
from the switch by certain of the Company's clients to lower-margin compact
discs from higher-margin 3 1/2 inch floppy disks included in such clients' final
products.

GROSS PROFIT. As a result of the foregoing factors, gross profit increased
$3.3 million, or 66.0%, to $8.3 million for the year ended December 31, 1996
from $5.0 million for the year ended December 31, 1995. As a percentage of
revenues, gross profit increased to 19.9% in 1995 from 18.9% in 1994.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses increased $0.9
million, or 19.0%, to $5.3 million in 1995 from $4.5 million in 1994. As a
percentage of revenues, SG&A expenses decreased to 12.8% in 1995 from 17.0% in
1994, reflecting the spreading of fixed and semi-variable costs over a larger
revenue base.

MANAGEMENT FEE EXPENSE. Management fee expense increased $2.0 million, or
325%, to $2.6 million in 1995 from $0.6 million in 1994. As a percentage of
revenues, management fee expense increased to 6.3% in 1995 from 2.3% in 1994.
Management fee expense was determined by the Board of Directors of the Company
and related primarily to changes in operating profit of the Company. Effective
with the closing of this offering, these management fee and bonus arrangements
will be discontinued.

OPERATING PROFIT (LOSS). As a result of the foregoing factors, operating
profit increased $0.5 million to $0.4 million in 1995 from $(0.1) million in
1994. As a percentage of revenues, operating profit increased to 0.8% in 1995
from (0.4)% in 1994.

NET INTEREST EXPENSE AND OTHER. Net interest expense and other increased
$0.2 million, or 83.3%, to $0.4 million in 1995 from $0.2 million in 1994. As a
percentage of revenues, net interest expense and other

26
<PAGE>
increased to 1.0% in 1995 from 0.8% in 1994, reflecting higher outstanding
borrowings relative to revenues of the Company.

LOSS BEFORE INCOME TAXES. As a result of the foregoing factors, loss before
income taxes decreased $0.3 million, or 82.5%, to $(0.1) million in 1995 from
$(0.3) million in 1994. As a percentage of revenues, loss before income taxes
decreased to (0.2)% in 1995 from (1.2)% in 1994.

NET INCOME (LOSS). Based upon the S corporation status of the Company and
the factors discussed above, net loss decreased $0.2 million, or 82.5%, to $0.1
million in 1995 from $0.3 million in 1994.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company has funded its operations and capital expenditures
primarily through cash flow from operations, borrowings under various lines of
credit, capital lease arrangements, short-term borrowings from its stockholders
and their affiliates, and additional capital contributions by its stockholders.
The Company has a $3.5 million revolving line of credit with Norwest Business
Credit, Inc. (the "Bank"), which matures on June 30, 1999. Borrowings under the
line of credit bear interest at the Bank's base rate, plus 1%. At March 31,
1997, $3.5 million of borrowings were outstanding under the line of credit,
accruing interest at 9.5%. Borrowings under the line of credit have been used
primarily for general corporate purposes. Outstanding borrowings will be repaid
in full from net proceeds to the Company from this offering. See "Use of
Proceeds."

The Company has entered into several capital leases with three to five year
terms. At March 31, 1997, the outstanding lease obligations were $2.2 million,
accruing interest at rates ranging from 8.7% to 13.0%. Substantially all of
these outstanding capital lease obligations will be repaid in full from net
proceeds to the Company from this offering. See "Use of Proceeds."

In February and April 1997, the Company ordered telecommunications computer
hardware and software with an aggregate purchase price of $1.0 million. The
Company has agreed to finance this computer equipment through a 36 month
operating lease, which operating lease will become effective upon completion of
the installation of the computer equipment. A portion of the computer equipment
was installed in April 1997 and the remaining portion is scheduled for
installation in June 1997.

Net cash provided by operating activities decreased to $2.1 million for the
three months ended March 31, 1997 from $2.9 million for the same period in the
prior year. The principal causes of this decrease were (i) an increase in
accounts receivable and (ii) a decrease in accrued and other liabilities,
partially offset by an increase in net income and accrued management fees. Net
cash provided by operating activities increased to $1.4 million for the year
ended December 31, 1996 from net cash used in operating activities of $1.5
million for 1995. The principal causes of this $2.9 million change were (i) an
increase in depreciation and amortization and (ii) a decrease in accounts
receivable, partially offset by a decrease in accounts payable (net of an
increase in accrued and other liabilities) and an increase in inventories. Net
cash used in operating activities in 1995 was $1.5 million as compared to $0.4
million of net cash provided by operating activities in 1994. The principal
cause of this decrease in net cash flow from operating activities between the
periods was an increase in accounts receivable, partially offset by an increase
in accounts payable.

Net cash used in investing activities decreased to $0.1 million for the
three months ended March 31, 1997 from $0.4 million for the same period in the
prior year. The cause of this decrease was a decrease in purchases of property
and equipment and receipt of payment on a note receivable due from a
stockholder. Net cash used in investing activities was $0.7 million for the year
ended December 31, 1996 as compared to $1.3 million of net cash used in
investing activities for 1995. The principal cause for this decrease related to
reduced purchases of property, plant and equipment in 1996. During 1994 and
1995, the Company's net cash used in investing activities did not change
significantly; however, the components of investing expenditures varied due to
(i) the purchase of the Denver facility in October 1995, (ii) collections of
notes

27
<PAGE>
receivable--affiliates and stockholders in 1995 and (iii) advances made to
stockholders and affiliates in 1994.

Net cash provided from financing activities increased to $0.9 million from
$(0.5) million used in financing activities for the same period in the prior
year. The principal cause for this increase in cash was an increase in
borrowings on a mortgage note, partially offset by repayments on other
borrowings. Net cash provided by financing activities decreased to $1.4 million
for the year ended December 31, 1996 from $3.2 million for 1995. The principal
causes for this decrease were (i) reduced bank borrowings in 1996 and (ii)
payments of notes payable--affiliate and stockholder in 1996, partially offset
by increases in contributed capital. Net cash provided by financing activities
increased to $3.2 million in 1995 from $1.1 million in 1994. The principal
causes for this increase were (i) mortgage borrowings relating to the purchase
of the Denver facility in 1995, (ii) an increase in borrowings from an affiliate
in 1995 and (iii) an increase in bank borrowings and capital lease payments in
1995.

The principal sources of the Company's liquidity have been cash flow from
operations, borrowings under the Company's line of credit, capital lease
financing, operating leases, borrowings from stockholders and their affiliates,
and capital contributions from stockholders. The Company expects to maintain a
$3.5 million credit facility. The credit facility is expected to contain
covenants which restrict, to a certain extent, dividends, capital expenditures
and loans to affiliates and stockholders, without prior written consent of the
lender. StarTek intends to use a portion of the net proceeds to the Company from
this offering to repay substantially all of its outstanding indebtedness and
capitalized lease obligations, and approximately $8.0 million for capital
expenditures to expand and build-out its existing facilities to provide
additional teleservices, product assembly and inventory management capacity.

The Company believes that cash flow from operations and net proceeds to the
Company from this offering, together with available funds under the line of
credit, will be sufficient to support its operations and capital expenditure and
liquidity requirements for the next 12 months and anticipated operations and
cash expenditures for the foreseeable future. However, long-term capital
requirements depend on many factors, including, but not limited to, the rate at
which the Company expands its business, whether internally or through
acquisitions and strategic alliances. To the extent that the funds generated
from the sources described above are insufficient to fund the Company's
activities in the short or long term, the Company will be required to raise
additional funds through public or private financings. No assurance can be given
that additional financing will be available or that, if available, it will be
available on terms acceptable to the Company.

INFLATION AND GENERAL ECONOMIC CONDITIONS

Although the Company cannot accurately anticipate the effect of inflation on
its operations, the Company does not believe that inflation has had, or is
likely in the foreseeable future to have, a material effect on its results of
operations or financial condition.

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<PAGE>
BUSINESS

GENERAL

The Company has continuously expanded its business and facilities to offer
additional services on an outsourced basis in response to the growing needs of
its clients and to capitalize on market opportunities, both domestically and
internationally. StarTek operates from its Colorado facilities located in Denver
and Greeley and from a facility located in Hartlepool, England. The Company also
operates through a subcontract relationship in Singapore. For the year ended
December 31, 1996, the Company's revenues increased approximately 72.5% to $71.6
million from $41.5 million for the year ended December 31, 1995. Pro forma net
income increased approximately 144% to $3.9 million from $1.6 million during the
same period. For the three months ended March 31, 1997, the Company's revenues
increased approximately 9.5% to $16.7 million from $15.2 million for the three
months ended March 31, 1996. Pro forma net income increased approximately 131%
to $1.1 million from $459,000 during the same period. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

StarTek has focused primarily on the computer software, computer hardware,
electronics, telecommunications and other technology-related industries because
of their rapid growth, complex and evolving product offerings and large customer
bases, which require frequent, often sophisticated, customer interaction.
Management believes that there are substantial opportunities to cross-sell
StarTek's wide spectrum of outsourced services to its existing base of
approximately 75 clients, which includes Broderbund Software, Inc., Canon Inc.,
Electronic Arts, Inc., Federal Express Corporation, Hewlett Packard, Microsoft,
Polaroid Corporation, Sony Electronics, Inc., The 3DO Company, and Viacom
International, Inc. The Company intends to capitalize on the increasing trend
toward outsourcing by focusing on potential clients in additional targeted
industries, including health care, financial services, transportation services
and consumer products, which could benefit from the Company's expertise in
developing and delivering integrated, cost-effective outsourced services.

STARTEK'S INTEGRATED SERVICES

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<PAGE>
process on an outsourced basis, following product specifications provided by the
client. In the latter case, the Company selects and contracts with the necessary
suppliers and performs all tasks necessary to assemble and package the finished
product, which may be held by the Company pending receipt of customer orders or
shipped in bulk to distributors or retail outlets.

BUSINESS STRATEGY

StarTek's strategic objective is to increase revenues and earnings by
maintaining and enhancing its position as a leading international provider of
integrated value-added outsourced services. To reach this objective, the Company
intends to:

PROVIDE INTEGRATED OUTSOURCED SERVICES. StarTek seeks to provide integrated
outsourced services which enable its clients to provide their customers with
high-quality services at lower cost than through a client's own in-house
operations. The Company believes that its ability to tailor operations,
materials and employee resources objectively and to provide integrated,
value-added outsourced services on a cost-effective basis will allow the Company
to become an integral part of its clients' businesses.

EMPHASIZE QUALITY. StarTek strives to achieve the highest quality standards
in the industry. To this end, the Company has received ISO 9002 certification,
an international standard for quality assurance and consistency in operating
procedures, for all of its domestic facilities and services, and expects to
receive ISO 9002 certification for its United Kingdom facility in mid-1997.
Certain of the Company's existing clients require evidence of ISO 9002
certification, and the Company anticipates that many potential clients may
require ISO 9002 certification prior to selecting an outsourcing provider.

30
<PAGE>
GROWTH STRATEGY

The Company's growth strategy is designed to capitalize on the increasing
demand for outsourced services and improve and expand StarTek's position as an
international provider of integrated value-added outsourced services. This
strategy includes the following key elements:

INCREASE CAPACITY. Management believes that as a provider of outsourced
services it must be ready to serve its clients in periods of peak demand for its
clients' products or services. Accordingly, the Company intends to continue to
increase product handling and teleservice workstation capacity to meet
anticipated demand for the Company's outsourced services. During 1996, the
Company increased its teleservice workstations by 54.6%, to 558 from 361. In
addition, the Company reengineered and expanded its primary product handling
facility to increase its daily capacity by approximately 200% to 180,000 units
from 60,000 units for certain types of products.

DEVELOP NEW SERVICES. Management believes that the trend toward outsourcing
and rapid technological advances will result in new products and types of
customer interactions which will create opportunities for the Company to provide
additional outsourced services. StarTek intends to capitalize upon its strategic
long-term relationships to provide new outsourced services to its clients as
opportunities arise.

31
<PAGE>
SERVICES

The Company offers a wide spectrum of outsourced services throughout a
product's life cycle, designed to provide cost-effective and efficient
management of the ancillary operations of its clients. The Company works closely
with its clients to develop, refine and implement efficient and productive
integrated outsourced solutions that link StarTek with such clients and their
customers. The processes that create such solutions generally include the
development of product manufacturing specifications, packaging and distribution
requirements, as well as product-related software programs for telephone,
facsimile, e-mail and Internet interactions involving product order fulfillment,
customer care and technical support. Substantially all of the Company's
teleservice activities are inbound telephone calls, rather than outbound calls.
Specific services that StarTek provides to its clients include the following:

PRODUCT ORDER TELESERVICES. Product order teleservices is generally the
process by which a call from a client's customer is received, identified and
routed to a StarTek service representative. Typically, a customer calls to
request product service information, to place an order for an advertised product
or to obtain assistance regarding a previous order or purchase. The information
and results of the call are then communicated either to StarTek's employees for
order processing and fulfillment or, if StarTek does not manage the client's
inventory, the Company transmits the customer's request directly to the client.
To properly handle these and other teleservices, StarTek utilizes automated call
distributors to identify each inbound call by the number dialed by the customer
and immediately route the call to a StarTek service representative trained for
that product. Product orders also occur as a result of a StarTek service
representative offering products in connection with a customer care or technical
support call. To facilitate product orders, the Company can process credit card
charges and other payment methods in connection with its product order
teleservices.

SUPPLIER MANAGEMENT. Company personnel are responsible for maintaining and
managing multiple supplier relationships. When the Company is selected by a
client to provide product assembly and packaging services, the Company
qualifies, selects, certifies and manages the sourcing and manufacturing of the
various products and related components including, among other things, the
printing of boxes, labels, manuals and other printed materials to be included
with the client's product and the mass duplication of software onto various
media. Such product and related components are then assembled and packaged at
the Company's facilities. The Company monitors the quality of its suppliers
through visits to manufacturing facilities and utilizes just-in-time production
to minimize inventory in the Company's warehouses. Management believes that the
Company's strong, long-term relationships with multiple suppliers allows the
Company to be flexible and responsive to its clients, while minimizing costs and
the Company's dependency on any single supplier.

PRODUCT ASSEMBLY AND PACKAGING. The Company assembles and packages products
in various containers, including folding cartons, set-up boxes, compact disc
jewel cases, digi-packs, binders and slip cases. The Company assembles and
packages products in the United States, the United Kingdom and Singapore and has
a global capacity of approximately 400,000 units per day, which capacity varies
depending on the size and complexity of the product. The Company's assembly
lines have been designed with significant flexibility, enabling the Company to
assemble and package various types of products and rapidly change the type of
product produced. During peak periods of operations, the Company's capacity is
dependent upon (i) the complexity of the product to be assembled; (ii) the
availability of materials from suppliers; (iii) the availability of temporary
personnel to increase capacity; (iv) the number of shifts operated by the
Company; and (v) the ability to activate additional production lines. During
peak periods, the Company has expanded assembly production to approximately four
times the output of slower periods.

PRODUCT DISTRIBUTION. The Company's sophisticated inventory management
systems enable the Company to ship and track products to distribution centers,
to individual stores and to its clients' customers directly. Product orders are
received by the Company via file transfer protocol (FTP), the Internet,

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<PAGE>
electronic data interchange (EDI) and facsimile, as well as through the
Company's product order teleservices described above.

PRODUCT ORDER FULFILLMENT. StarTek personnel process, pack and ship product
orders and requests for promotional and educational literature, and direct
customers of the Company's clients to product or service sources ("fulfillment")
by telephone, e-mail, facsimile and the Internet, 24 hours per day, seven days
per week. The Company provides same-day shipping of customer orders if the
product is available.

CUSTOMER CARE TELESERVICES. Customer care programs are customized by the
Company to meet its clients' needs. The Company customizes responses to various
customer product inquiries by designing special greetings, marketing messages
and specific queue-time controls. A StarTek service representative receiving a
call can enter customer information into the Company's call-tracking system,
listen to a question, and quickly access a proprietary networked database via
personal computer to locate an answer to a customer's question. A senior quality
control team member is available to provide additional assistance for complex or
unique customer questions. As additional product information becomes available,
the Company promptly integrates such information into its database, thereby
ensuring that answers are based upon the latest product information.

Each customer interaction presents the Company and its clients with an
opportunity to gather valuable customer information, including the customer's
demographic profile and preferences. This information can prompt the StarTek
service representative to make logical, progressive inquiries about the
customer's interest in additional products and services, identify additional
revenue generating and cross-selling opportunities, or resolve other issues
relating to a client's products or services.

TECHNICAL SUPPORT TELESERVICES. StarTek service representatives provide
technical support services by telephone, e-mail, facsimile and the Internet, 24
hours per day, seven days per week. Technical support inquiries are generally
driven by a customer's purchase of a product or by a customer's need for ongoing
technical assistance. Customers of StarTek's clients dial a technical support
number listed in their product manuals and, based on touch-tone responses, are
automatically connected to an appropriate StarTek service representative who is
specially trained in the applicable product. Each StarTek service representative
acts as a transparent extension of its clients when resolving complaints,
diagnosing and resolving product or service problems, or answering technical
questions.

INTERNATIONAL OPERATIONS

StarTek provides its outsourced services on an international basis from the
United Kingdom and Singapore. The Company's facility in the United Kingdom
provides the full range of the Company's outsourced services for clients
throughout Europe, including inbound product order, customer care and technical
support teleservices in five languages. The Company currently provides supplier
management, product assembly and packaging and product distribution for one of
its major clients through a subcontract relationship with a company in
Singapore. This subcontract relationship operates on a purchase order basis.

CLIENTS

StarTek provided services to approximately 75 clients in North America,
Europe and Asia during 1996. StarTek's clients include companies engaged
primarily in the computer software, computer hardware, electronics,
communications and other technology-related industries. Approximately 38.4% and
33.4% of the Company's revenues in 1996 were attributable to Hewlett Packard and
Microsoft, respectively. Approximately 36.1% and 44.2% of the Company's revenues
in the three months ended March 31, 1997

33
<PAGE>
were attributable to Hewlett Packard and Microsoft, respectively. Based upon
1996 revenues, StarTek's ten largest clients, listed alphabetically, were:

<TABLE>
<S> <C>
Broderbund Software, Inc. Microsoft Corporation
Canon Inc. Polaroid Corporation
Electronic Arts, Inc. Sony Electronics, Inc.
Federal Express Corporation The 3DO Company
Hewlett-Packard Company Viacom International, Inc.
</TABLE>

The Company typically enters into a written agreement with each client for
outsourced services or performs services on a purchase order basis. Under
substantially all of the Company's significant arrangements with its clients,
the Company generates revenues based in large part, on the number and duration
of customer inquiries (subject to certain minimum monthly payments) and the
volume, complexity and type of components involved in the clients products.
Although the Company currently seeks to sign multi-year contracts with its
clients, the Company's contracts generally (i) permit termination upon
relatively short notice by the client, (ii) do not designate the Company as the
client's exclusive outsourced service provider and (iii) do not penalize the
client for early termination. To the extent the Company works on a purchase
order basis, the agreement with the client frequently does not provide for
minimum purchase requirements, except in connection with its customer care and
technical support services. See "Risk Factors-- Risks Associated with the
Company's Contracts."

Hewlett Packard began its outsourcing relationship with the Company in 1987.
The Company currently performs the full range of its services for numerous
separate divisions of Hewlett Packard. Services are performed on a purchase
order or project-specific agreement basis, subject to a master purchase
agreement (the "HP Agreement"). The HP Agreement provides that the engagement of
the Company is non-exclusive and does not provide any minimum guarantee by
Hewlett Packard of a specific level of business for the Company. The HP
Agreement has an 18 month term, and is subject to renewal by agreement of the
parties.

Microsoft began its outsourcing relationship with the Company in April 1996.
The Company currently performs supplier management, product manufacturing, and
product distribution services for Microsoft. Services are performed on a
purchase order basis, subject to a supply, manufacturing and services agreement
(the "MS Agreement"). The MS Agreement provides that the engagement of the
Company is non-exclusive and does not guarantee the Company a minimum level of
business from Microsoft. Such agreement renews automatically for one-year
periods, subject to termination, at any time, upon 90 days prior written notice.
The Company has agreed to maintain ISO 9002 certification of its facility in
Greeley, Colorado, and a product manufacturing capacity at such facility of not
less than 400,000 units per week, at a rate of 80,000 units per day. The Company
currently maintains capacity at this facility sufficient to satisfy its
obligations under the MS Agreement and the ongoing product manufacturing,
assembly, packaging and distribution needs of other clients.

SALES AND MARKETING

The Company's marketing objective is to develop long-term relationships with
existing and potential clients to become the preferred worldwide vendor of
outsourced services. StarTek invests significant resources to create a strategic
partnership relationship with its clients to understand their existing
operations, customer service processes, culture, decision parameters and goals.
A StarTek team assesses the client's outsourcing service needs, and, together
with the client, develops and implements customized solutions. Management
believes that, as a result of StarTek's strategic relationship with its clients
and comprehensive understanding of their businesses, the Company can identify
new revenue generating opportunities, customer interaction possibilities and
product service improvements not adequately addressed by the client. The
Company's sales strategy emphasizes multiple contacts with a client to
strengthen its relationship and facilitate the cross-selling of services.

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<PAGE>
StarTek markets its outsourced services through a variety of methods,
including personal sales calls, client referrals, attendance at trade shows,
advertisements in industry publications, and the cross-selling of services to
existing clients. In order to enhance its marketing efforts, the Company
increased its sales force to 10 full-time professionals as of the date of this
offering, from four at the end of 1996. As part of its marketing efforts, the
Company encourages visits to its facilities, where the Company demonstrates its
services, quality procedures and ability to accommodate additional business.

Management believes a key element to sales growth is the ability to
flexibly, effectively and efficiently expand service capacity to meet client
needs as its clients grow or outsource more of their non-core operations to the
Company. In addition, to attract new clients to StarTek's services, the Company
must have the resources to develop a strategy to meet a new client's outsourcing
goals promptly, as well as the ability to implement operations for such client
quickly and accurately. In order to achieve these goals, the Company currently
maintains a level of excess capacity to expand its operations as necessary to
meet increased client demand.

TECHNOLOGY

The Company employs sophisticated technology and proprietary software that
incorporates digital switching, relational database management systems, call
tracking systems, workforce management systems, object-oriented software modules
and telephone-computer integration. The Company's digital switching technology
enables calls to be routed to the next available teleservice representative with
the appropriate product knowledge, skill and language abilities. Call tracking
and workforce management systems generate and track historical call volumes by
client, enabling the Company to schedule personnel efficiently, anticipate
fluctuations in call volume and provide clients with detailed information
concerning the status and results of the Company's services on a daily basis.
Management believes that the Company's proprietary technology platform provides
the Company with a competitive advantage in maintaining existing clients and
attracting new clients. A portion of the net proceeds of this offering allocated
for working capital and general corporate purposes will be used by the Company
to enhance its existing telecommunications equipment and computer and software
systems. See "Use of Proceeds."

EMPLOYEES AND TRAINING

StarTek's success in recruiting, hiring, and training large numbers of
full-time, skilled employees and obtaining large numbers of hourly employees
during peak periods for product assembly, packaging and distribution services is
critical to the Company's ability to provide high quality outsourced services.
To maintain good employee relations and to minimize turnover, the Company offers
competitive pay, hires primarily full-time employees who are eligible to receive
the full range of employee benefits, and provides employees with clear, visible
career paths. As of April 30, 1997, the Company had 1,067 employees, of which
approximately 93% were full-time. The number of temporary employees varies
significantly during the year due to the seasonal variations of the Company's
business. Management believes that the demographics surrounding its facilities,
and its reputation, stability and compensation plans should allow the Company to
continue to attract and retain qualified employees. The Company considers its
employee relations to be good. See "Risk Factors--Dependence on Labor Force."

In keeping with StarTek's continuous improvement philosophy, the Company is
committed to training all of its employees. StarTek provides formal training for
senior management, supervisors, process managers, quality coordinators, and
teleservice representatives. StarTek also maintains an employee quality program
to backup every employee, including specialized quality coordinators who teach
problem solving, assist with teleservice calls and offer immediate performance
feedback. On a more informal basis, the Company provides on-the-job process
training and tutoring for all process management personnel. Employee teams
gather daily to receive information about products to be produced and techniques
to be utilized, and have an opportunity to ask questions and receive one-on-one
training, as necessary.

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<PAGE>
The Company's in-house training program for customer care and technical
support teleservicing employees is founded on an in-depth, structured learning
environment that builds technical competence and teaches critical software
skills necessary to provide effective customer care and technical support
teleservices. Each teleservice representative is specially designated and
trained to support a particular product or group of products for a particular
client. A teleservice representative receives training in product knowledge,
call listening and computer skills prior to answering any customer calls
independently. This training time depends on the complexity of the product for
which such representative will provide teleservices. Further, the Company uses
live and taped call reviews and customer feedback surveys to continue to monitor
and enhance its level of customer support services.

INDUSTRY AND COMPETITION

With the goal of focusing on their core businesses, companies are
increasingly turning to outsourced service companies to perform specialized
functions and services. Outsourcing of non-core activities offers a strategic
advantage to companies in a wide range of industries by offering them an
opportunity to reduce operating costs and working capital needs, improve their
reaction to business cycles, manage capacity and improve customer and technical
information gathering and utilization. To realize these advantages, companies
are outsourcing the process of planning, implementing and controlling the
efficient flow of goods, services, teleservices and related information from the
point of origin to the point of consumption. Additionally, rapid technological
changes and rising customer expectations for high-quality goods and services
make it increasingly difficult and expensive for companies to maintain the
necessary personnel and product capabilities in-house to support a product's
life cycle on a cost-effective basis. Companies which focus on providing these
services as their core business, including StarTek, are expected to continue to
benefit from these outsourcing trends.

StarTek competes on the basis of quality, reliability of service, price,
efficiency, speed and flexibility in tailoring services to client needs.
Management believes its comprehensive and integrated services differentiate it
from its non-client competitors who may only be able to provide one or a few of
the outsourced services that StarTek provides. The Company continuously explores
new outsourcing service opportunities, typically in circumstances where clients
are experiencing inefficiencies in non-core areas of their businesses and
management believes it can develop a superior outsourced solution to such
inefficiency on a cost-effective basis. Management believes that it competes
primarily with the in-house teleservice, customer service and logistics
management operations of its current and potential clients. StarTek also
competes with certain companies that provide similar services on an outsourced
basis including, APAC Teleservices, Inc., Kao Corporation, Logistix Corporation,
MATRIXX Marketing Inc., National TechTeam, Inc., Precision Response Corp., SITEL
Corporation, Stream International Inc., Sykes Enterprises Incorporated, TeleTech
Holdings, Inc. and West Teleservices Corporation. In addition, there are
numerous competitors of all sizes that provide product order teleservices and
product fulfillment distribution services.

FACILITIES

StarTek's facilities include a Company-owned 138,000-square-foot building in
Denver, Colorado (which also contains the Company's executive offices), and a
100,000-square-foot Company-owned building and a 10,500-square-foot
Company-owned building, both located in Greeley, Colorado. StarTek performs its
international outsourced services from a leased 53,000-square-foot building in
Hartlepool, County Durham on the northeast coast of England. In Asia, the
Company utilizes a subcontractor that operates from a 25,000-square-foot
facility located in Singapore.

Of the Company's 532 teleservice workstations in the United States as of
April 30, 1997, 244 were located in the Denver building (which has space to
expand to approximately 1,250 workstations) and 288 were located in the Greeley
buildings. The Company's process management services in the United States
primarily operate from the Company's Greeley facilities. The Company's United
Kingdom facility provides space for each of the Company's outsourced services
and the Company's subcontractor in Singapore

36
<PAGE>
provides space for the Company's supplier management, product assembly and
packaging and product distribution services. Management believes that its
existing facilities are adequate for its current operations, but that additional
facility capacity will be required to support continued growth. The Company
intends to use a portion of the net proceeds to the Company from this offering
to expand its existing facilities. See "Use of Proceeds."

INTELLECTUAL PROPERTY

The Company owns the servicemarks "StarTek" and "StarPak," and has filed for
federal registration of these servicemarks. Due to the common use of identical
or phonetically similar servicemarks by other companies in different businesses,
there can be no assurance that the United States Patent and Trademark Office
will grant the Company registration of its servicemarks, or that such
servicemarks will not be challenged by other users. The Company does not believe
that it owns or utilizes any other servicemarks that are material to its
business. The Company's operations, however, frequently incorporate proprietary
and confidential information. In accordance with industry practice, the Company
relies upon a combination of contract provisions and trade secret laws to
protect the proprietary technology it uses and to deter misappropriation of its
proprietary rights and trade secrets.

LEGAL PROCEEDINGS

The Company has been involved from time to time in litigation arising in the
normal course of business, none of which is expected by management to have a
material adverse effect on the business, financial condition or results of
operations of the Company.

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<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The Company's directors and executive officers are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------- --- -------------------------------------------------
<S> <C> <C>
A. Emmet Stephenson, Jr..... 51 Chairman of the Board and Director
Michael W. Morgan........... 36 President, Chief Executive Officer and Director
E. Preston Sumner, Jr....... 45 Executive Vice President and Chief Operating
Officer
Dennis M. Swenson........... 62 Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
Thomas O. Ryder............. 52 Director
Ed Zschau................... 57 Director
</TABLE>

A. EMMET STEPHENSON, JR. co-founded the Company in 1987 and has served as
Chairman of the Board of the Company since its formation. Mr. Stephenson has
also served as President of Stephenson and Company, a private investment firm in
Denver, Colorado, for more than five years. Mr. Stephenson is a director of
Danaher Corporation and serves on the Advisory Boards of First Berkshire Fund
and Capital Resource Partners, L.P.

MICHAEL W. MORGAN co-founded the Company in 1987 and has held managerial
positions in companies providing outsourced services since 1984. Mr. Morgan has
served as President and Chief Executive Officer of the Company since May 1990
and has served as a Director of the Company since January 1997.

E. PRESTON SUMNER, JR. co-founded the Company in 1987, served as
Vice-Chairman of the Board from inception of the Company through December 1994
and rejoined the Company in February 1997 as Executive Vice President and Chief
Operating Officer. Mr. Sumner was also a managing director of Stephenson
Merchant Banking, a private investment firm in Denver, Colorado from 1986
through December 1994. From January 1995 through February 1997, Mr. Sumner was a
director and Vice President--Corporate Development of Merrick & Company, an
engineering and architectural firm, and will continue to serve as a director and
non-executive chairman of the board of such company.

DENNIS M. SWENSON has served as Chief Financial Officer of the Company since
October 1995 and as Executive Vice President since October 1996. From October
1991 to September 1995, Mr. Swenson was an independent financial consultant. Mr.
Swenson was a partner of Ernst & Young LLP from 1973 until 1991.

THOMAS O. RYDER has served as a Director of the Company since January 1997.
He has been President of Travel Related Services International for American
Express TRS Company, Inc. since October 1995. Mr. Ryder has also been Chairman
of the Board of American Express Publishing Corporation since December 1991.
From February 1992 through October 1995, he served as President of American
Express Establishment Services Worldwide. From January 1988 through February
1992, Mr. Ryder served as President of Direct Marketing Group, which included
American Express Merchandise Services, American Express Publishing Corporation
and Epsilon Data Management Corporation. He is a director of Club Mediterranee.

ED ZSCHAU has served as a Director of the Company since January 1997. He has
been a Senior Lecturer of Business Administration at Harvard University since
February 1996. From April 1993 to July 1995, Mr. Zschau was General Manager,
Storage System Division at IBM Corporation. From July 1988 to April 1993, he was
Chairman and Chief Executive Officer of Censtor Corp., a company that researches
and develops magnetic recording components for disk drives. Mr. Zschau is a
director of Indentix, Inc., GenRad, Inc. and Censtor Corp.

The executive officers of the Company serve at the discretion of its Board
of Directors. Directors of the Company hold office until the next annual meeting
of the Company's stockholders and until their

38
<PAGE>
successors have been duly elected and qualified, or until their earlier
resignation, removal from office or death.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors established a compensation committee and an audit
committee of its Board of Directors in January 1997.

COMPENSATION COMMITTEE. The Compensation Committee, which consists of
Messrs. Stephenson, Ryder and Zschau, will determine the compensation to be paid
to all executive officers of the Company. The current executive officer salaries
were set by the Board of Directors prior to establishment of the Compensation
Committee.

AUDIT COMMITTEE. The Audit Committee, which is comprised of Messrs. Ryder
and Zschau, the Company's two independent directors, will be responsible to make
recommendations concerning the engagement of independent public accountants,
review with the independent public accountants the plans and results of the
audit engagement, approve professional services provided by the independent
public accountants, review independence of the independent public accountants,
consider the range of audit and non-audit fees and review the adequacy of the
Company's internal accounting controls and financial management practices.

COMPENSATION OF DIRECTORS

StarTek does not pay its directors any cash compensation for their services
as directors. Directors will be reimbursed for expenses incurred in connection
with meetings of the Board of Directors or committees thereof.

The Company has adopted the Director Option Plan, which provides for an
automatic initial grant and an annual grant to each director who is not an
employee or officer of the Company (a "non-employee director") of options to
acquire shares of Common Stock. A total of 90,000 shares of Common Stock have
been reserved for issuance pursuant to options granted under the Director Option
Plan. All options granted under the Director Option Plan will be non-qualified
options that are not intended to qualify under Section 422 of the Code.

The Director Option Plan provides that each non-employee director will
receive (i) options to acquire 10,000 shares of Common Stock upon the later of
the closing of an initial public offering of Common Stock or such director's
initial election to the Board of Directors and (ii) options to acquire 3,000
shares of Common Stock on the date of each annual meeting of stockholders
thereafter at which such director is reelected. The exercise price of each
option granted under the Director Option Plan will equal the fair market value
of the Common Stock on the date of grant. Options granted under the Director
Option Plan will (a) vest immediately and (b) expire on the earliest to occur of
the tenth anniversary of the date of grant, one year following the director's
death or immediately upon the director's termination of membership on the Board
of Directors for "cause" (as defined in the Director Option Plan).

Upon closing of this offering, Thomas O. Ryder and Ed Zschau will each
receive options to acquire 10,000 shares of Common Stock, at an exercise price
per share equal to the initial public offering price, pursuant to the terms of
the Director Option Plan. The options will be fully vested and exercisable upon
closing of this offering. These options will not be adjusted for the 322.1064
for one stock split to be effected immediately prior to the closing of this
offering.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the year ended December 31, 1996, the Company did not have a
Compensation Committee of its Board of Directors, or other board committee
performing equivalent functions. Decisions concerning the compensation of
executive officers were made by the Board of Directors of each of the operating

39
<PAGE>
subsidiaries of the Company. Except for A. Emmet Stephenson, Jr., there are no
officers or employees of the Company who participated in deliberations
concerning such compensation matters.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE. The following table sets forth certain
information concerning the compensation paid by the Company to the President and
Chief Executive Officer. No other executive officer of the Company earned or was
paid compensation of more than $100,000 for the year ended December 31, 1996.
See "Certain Relationships and Related Party Transactions." The Company does not
have a pension plan or a long-term incentive plan, has not issued any restricted
stock awards and did not grant any stock options during its most recent fiscal
year.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
1996 ANNUAL COMPENSATION
----------------------------
NAME AND PRINCIPAL POSITION SALARY BONUS
- --------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Michael W. Morgan.............................................. $ 271,059(a) $ 666,893(b)
President and Chief Executive Officer
</TABLE>

- ------------------------

(a) Mr. Morgan's base salary is and following this offering will be $270,800,
subject to modification by the Compensation Committee.

(b) Mr. Morgan recontributed $337,971 of the bonus compensation to the Company
as additional capital. Substantially all of the balance was used by Mr.
Morgan to pay applicable federal and state income taxes on such bonus. On
April 15, 1997 and May 31, 1997, Mr. Morgan was paid a bonus of
approximately $280,000 and $47,000, respectively, of which approximately
$147,000 and $24,000, respectively, was recontributed by Mr. Morgan to the
Company as additional capital. Substantially all of the balance was used by
Mr. Morgan to pay applicable federal and state income taxes. These bonus
arrangements will terminate effective as of the closing of this offering.
See "Offering Related Transactions--Termination of S Corporation Status" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Historically, the Company has paid an annual management fee of approximately
$200,000 to A. Emmet Stephenson, Jr., Inc., which is wholly-owned by A. Emmet
Stephenson, Jr., Chairman of the Board of the Company, for services rendered by
Mr. Stephenson to the Company, and $70,000 annually to Stephenson Properties as
rental for certain Company facilities. This management fee and rental
arrangement terminated effective as of December 31, 1996. See "Certain
Relationships and Related Party Transactions--Management Fees" and "--Real
Property." From and after January 1, 1997, the Company will pay an annual
advisory fee of $245,000 to A. Emmet Stephenson, Jr., Inc.

Effective as of February 18, 1997, the Company will pay E. Preston Sumner,
Jr., Executive Vice President and Chief Operating Officer of the Company, an
annual base salary of $150,000.

Effective as of January 1, 1997, the Company will pay Dennis M. Swenson,
Executive Vice President and Chief Financial Officer of the Company, an annual
base salary of $126,000.

STOCK OPTION PLAN

The Company has adopted the StarTek, Inc. Stock Option Plan (the "Option
Plan"), which authorizes the issuance of up to 985,000 shares of Common Stock
through the grant of (i) incentive stock options ("ISOs") within the meaning of
Section 422 of the Code, (ii) stock options that are not intended to qualify
under Section 422 of the Code ("NSOs" and together with ISOs, "Options"), and
(iii) stock appreciation rights ("SARs"). Directors (other than non-employee
directors), officers, employees, consultants and

40
<PAGE>
independent contractors of the Company or any subsidiary of the Company, as
selected from time to time by the committee administering the Option Plan, will
be eligible to participate in the Option Plan.

The Option Plan provides that it is to be administered by a committee
comprised of two or more non-employee directors appointed by the Board of
Directors (the "Committee"). Subject to certain limitations, the Committee has
complete discretion to determine which eligible individuals are to receive
awards under the Option Plan, the form and vesting schedule of awards, the
number of shares subject to each award and the exercise price, the manner of
payment and expiration date applicable to each award. The Board of Directors has
appointed Thomas O. Ryder and Ed Zschau as members of the Committee.

Set forth below is a summary of the terms of the Option Plan that will be
applicable to each of the various types of awards covered thereby.

OPTIONS. All options will expire on the date that is the earliest of three
months after the holder's termination of employment with the Company (other than
termination for cause), six months after the holder's death and 10 years after
the date of grant. Options will be subject to forfeiture upon termination of
employment for "cause." The exercise price per share of an ISO will be
determined by the Committee at the time of grant, but in no event may be less
than the fair market value of the Common Stock on the date of grant.
Notwithstanding the foregoing, if an ISO is granted to a participant who owns
more than 10% of the voting power of all classes of stock of the Company, the
exercise price will be at least 110% of the fair market value of the Common
Stock on the date of grant and the exercise period will not exceed five years
from the date of grant. The exercise price per share of an NSO will be
determined by the Committee in its sole discretion.

STOCK APPRECIATION RIGHTS. SARs may be issued only in connection with an
NSO (a "Tandem SAR"), in which case the Tandem SAR terminates simultaneously
upon the expiration of the related NSO. A Tandem SAR will be exercisable only if
the fair market value of a share of Common Stock exceeds the exercise price of
the related NSO.

Upon the closing of this offering, Messrs. Sumner and Swenson will be
granted ISOs to purchase 100,000 shares and 70,000 shares of Common Stock,
respectively, at an exercise price equal to the initial public offering price.
The Committee presently expects to grant to other employees of the Company, on
or prior to closing of this offering, ISOs to purchase approximately 420,000
shares of Common Stock, at an exercise price per share equal to the initial
public offering price. The foregoing Options will have a term of ten years and,
except as otherwise determined by the Committee, will vest 20% per year for a
five-year period commencing on the first anniversary of closing this offering.
These options will not be adjusted for the 322.1064 for one stock split to be
effected immediately prior to the closing of this offering.

41
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

MANAGEMENT FEES

For the years ended December 31, 1994, 1995 and 1996, the Company incurred
management fees of approximately $737,000, $2.5 million and $5.7 million,
respectively (approximately $200,000 of which has been included in SG&A expenses
for financial statement purposes for each of the relevant years), payable to A.
Emmet Stephenson, Jr., Inc., which is wholly-owned by A. Emmet Stephenson, Jr.,
Chairman of the Board of the Company and a Principal Stockholder. On April 15,
1997 and May 31, 1997, the Company paid a management fee to A. Emmet Stephenson,
Jr., Inc. of approximately $2.4 million and $400,000, respectively, after giving
consideration to operating profits of the Company and the effects of certain
expense timing differences for book and tax purposes. Mr. Stephenson and Toni E.
Stephenson, his spouse and a Principal Stockholder, made capital contributions
to the Company equal to approximately 53% of such management fees, with the
remainder being used to pay applicable federal and state income taxes on such
fees. The Company will terminate this management fee arrangement effective as of
the closing of this offering. Effective January 1, 1997, the Company began
paying an annual advisory fee of $245,000 to A. Emmet Stephenson, Jr., Inc.

REAL PROPERTY

The Company leased office space at 100 Garfield Street, Denver, Colorado,
from Stephenson Properties, a partnership (the "Lessor") in which A. Emmet
Stephenson, Jr., the Company's Chairman of the Board and a Principal
Stockholder, is general partner, and Toni E. Stephenson, a Principal
Stockholder, is a limited partner. The total annual lease payments for 1994,
1995 and 1996 made to the Lessor by the Company were $70,000 each year (which
has been included in SG&A expenses for financial statement purposes for each of
the relevant years). This office lease was terminated effective December 31,
1996.

LOANS

In 1994, StarPak, Inc. loaned an aggregate amount of $663,494 to its
stockholders, with interest at 8.5% per annum. These notes were refinanced
annually and repaid by the stockholders in full on November 22, 1996. After
receipt of such loan proceeds in 1994, the stockholders of StarPak, Inc. loaned
$663,494 to StarPak International, Ltd., with interest at 8.5% per annum, for
working capital purposes. These notes were refinanced annually and repaid by
StarPak International, Ltd. on November 22, 1996.

On December 31, 1994, StarPak, Inc. loaned $77,779 to Michael W. Morgan,
President and Chief Executive Officer of the Company, payable on demand without
interest. The loan was repaid in full in August 1995.

On December 31, 1994, the Company loaned $667,800 to A. Emmet Stephenson,
Jr., Inc., which is wholly-owned by Mr. Stephenson. The loan was repaid in full
in August 1995.

In 1994, StarPak International, Ltd. borrowed $75,000 from Mr. and Mrs.
Stephenson for working capital purposes, with interest at 12% per annum. The
loan was refinanced annually until November 22, 1996, when the loan was repaid
in full.

On December 29, 1995, the Company borrowed approximately $1.1 million from
General Communications, Inc., a corporation owned by A. Emmet Stephenson, Jr.,
the Company's Chairman of the Board and a Principal Stockholder, and Toni E.
Stephenson, a Principal Stockholder, for working capital purposes. The loan
accrued interest equal to the Company's line of credit rate (10% at December 31,
1995) and was to mature on January 31, 1997. The Company repaid the loan in full
in April 1996.

On January 9, 1996, the Company borrowed $90,000 from Michael W. Morgan, the
Company's President and Chief Executive Officer and a Principal Stockholder, for
working capital purposes. The loan

42
<PAGE>
accrued interest equal to the Company's line of credit rate (10% at December 31,
1995) and matured in April 1996. The loan and all accrued interest was repaid at
such time.

During 1995, Michael W. Morgan, President and Chief Executive Officer of the
Company, exercised certain options to acquire shares of common stock of StarPak,
Inc. and delivered his promissory note in payment of the exercise price, bearing
interest at 4.63%, payable in installments during 1999. The note was repaid in
full in January 1997.

NOTES PAYABLE TO PRINCIPAL STOCKHOLDERS

Immediately prior to closing this offering, the Company will declare a
dividend in an amount equal to the estimated additional paid-in capital and
retained earnings of the Company as of the closing date, payable to the
Principal Stockholders pursuant to certain promissory notes, which will not
exceed $8.2 million. The promissory notes payable to the Principal Stockholders
will be paid from net proceeds to the Company from this offering. From this
amount, the Principal Stockholders will be required to pay applicable federal
and state income taxes on S corporation earnings of the Company through closing
of this offering. See "Use of Proceeds."

FUTURE TRANSACTIONS

The Company has implemented a policy requiring that any material transaction
between the Company and its officers, directors or an affiliated party is
subject to approval by a majority of the directors not interested in such
transaction, who must determine that the terms of any such transaction are no
less favorable to the Company than can be obtained from an unaffiliated third
party.

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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the date of this Prospectus, and
as adjusted to reflect the sale of the shares of Common Stock being offered
hereby, by (i) each stockholder who is known by the Company to beneficially own
more than 5% of the currently outstanding shares of Common Stock; (ii) each of
the Company's Directors and executive officers; (iii) all Directors and
executive officers of the Company as a group; and (iv) the Selling Stockholders.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR NUMBER OF OWNED AFTER
TO THE OFFERING SHARES THE OFFERING(A)
NAME AND ADDRESS OF ----------------------- BEING --------------------------
BENEFICIAL OWNER NUMBER PERCENT OFFERED(A) NUMBER PERCENT
- --------------------------------------------------- ---------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
A. Emmet Stephenson, Jr. (b)(c).................... 3,554,444 32.8% 195,462 3,358,982 24.3%
Michael W. Morgan (b)(d)........................... 1,129,949 10.4 133,333 996,616 7.2
E. Preston Sumner, Jr. (b)(e)...................... -- * -- -- *
Dennis M. Swenson (b)(f)........................... -- * -- -- *
Toni E. Stephenson (b)(g).......................... 3,554,444 32.8 195,462 3,358,982 24.3
FASSET Trust (b)................................... 1,294,867 12.0 71,205 1,223,662 8.8
MASSET Trust (b)................................... 1,294,867 12.0 71,205 1,223,662 8.8
Pamela S. Oliver (b)(h)............................ 2,589,734 24.0 -- 2,447,324 17.6
Thomas O. Ryder (j)................................ -- * -- 10,000(i) *
Ed Zschau (k)...................................... -- * -- 10,000(i) *
All directors and executive officers
as a group (6 persons)........................... 4,684,393 43.2% 328,795 4,375,598 31.6%
</TABLE>

- ------------------------

* Less than one percent.

(a) Assumes no exercise of the Underwriters' over-allotment option. If the
Underwriters' over-allotment option is fully exercised, A. Emmet Stephenson,
Jr., Michael W. Morgan, Toni E. Stephenson, FASSET Trust and MASSET Trust
(the "Selling Stockholders") will sell up to 550,000 additional shares, pro
rata based upon the number of shares of Common Stock being offered hereby by
the Selling Stockholders.

(b) The address of each person, trust or trustee is c/o the Company, 111 Havana
Street, Denver, Colorado 80010.

(c) Mr. Stephenson is the Chairman of the Board of the Company. See
"Management." Mr. Stephenson is the husband of Toni E. Stephenson. Mrs.
Stephenson disclaims beneficial ownership of shares owned by Mr. Stephenson.

(d) Mr. Morgan is President and Chief Executive Officer of the Company. See
"Management."

(e) Does not include 100,000 shares of Common Stock issuable upon the exercise
of stock options to be granted to Mr. Sumner upon closing of this offering.
See "Management--Stock Option Plan." Mr. Sumner is Executive Vice President
and Chief Operating Officer of the Company. See "Management."

(f) Does not include 70,000 shares of Common Stock issuable upon the exercise of
stock options to be granted to Mr. Swenson upon closing of this offering.
See "Management--Stock Option Plan." Mr. Swenson is Executive Vice President
and Chief Financial Officer of the Company. See "Management."

(g) Mrs. Stephenson is the wife of A. Emmet Stephenson, Jr. Mr. Stephenson
disclaims beneficial ownership of shares owned by Mrs. Stephenson. From the
inception of StarPak, Inc. and StarPak International, Ltd. until January 23,
1997, Mrs. Stephenson was a director of each such company, and will continue
to act as a vice president of such companies, without compensation.

44
<PAGE>
(h) Represents shares owned by the FASSET Trust and MASSET Trust. Mrs. Oliver is
the sole trustee of each of the trusts and has sole voting power and
investment power with respect to the Common Stock held by the trusts. Mrs.
Oliver is Mr. Stephenson's sister. From the inception of StarPak, Inc. and
StarPak International, Ltd. until January 23, 1997, Mrs. Oliver was a
director of each such company, and will continue to act as a vice president
of such companies, without compensation.

(i) Includes 10,000 shares of Common Stock issuable upon the exercise of stock
options to be granted to each of Messrs. Ryder and Zschau upon closing of
this offering. See "Management--Compensation of Directors."

(j) Mr. Ryder's business address is 200 Vesey Street, New York, New York 10285.

(k) Mr. Zschau's business address is Harvard Business School, Baker Library 371,
Boston, Massachusetts 02163.

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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of this offering, the Company will have 13,828,571 shares
of Common Stock outstanding. All of the shares offered hereby will be freely
tradeable without restriction or registration under the Securities Act, except
for any shares purchased by an "affiliate" of the Company (in general, a person
who has a control relationship with the Company), which will be subject to the
limitations of Rule 144 promulgated under the Securities Act. All of the
remaining 10,161,904 outstanding shares of Common Stock (or 9,611,904 shares if
the Underwriters' over-allotment option is fully exercised) are deemed to be
"restricted securities" as that term is defined in Rule 144. Beginning 180 days
after the date of this Prospectus, upon the expiration of lock-up agreements
with DLJ (described below), 10,006,630 of these restricted shares (9,566,630
shares if the Underwriters' over-allotment option is fully exercised) will be
available for sale subject to compliance with Rule 144 volume and other
requirements. The remaining 155,274 shares of restricted securities (45,274
shares if the Underwriters' over-allotment option is fully exercised) will be
eligible for sale beginning January 21, 1998, subject to compliance with Rule
144 volume and other requirements.

In general, under Rule 144, as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted securities
within the meaning of Rule 144 ("Restricted Shares") for at least one year,
including the holding period of any prior owner except an affiliate, would be
entitled to sell within any three-month period a number of shares that does not
exceed the greater of (i) one percent of the then outstanding shares of Common
Stock (approximately 138,286 shares after giving effect to this offering) or
(ii) the average weekly trading volume of the Common Stock on the NYSE during
the four calendar weeks preceding the filing of a Form 144 with respect to such
sale. Sales under Rule 144 are also subject to certain "manner of sale"
provisions, notice requirements and the availability of current public
information about the Company. Any person (or persons whose shares are
aggregated) who is not deemed to have been an affiliate of the Company at any
time during the 90 days preceding a sale, and who has beneficially owned shares
for at least two years (including any period of ownership of preceding
nonaffiliated owners), would be entitled to sell such shares under Rule 144(k)
without regard to the volume limitations, manner of sale provisions, public
information requirements or notice requirements.

The Selling Stockholders, directors and executive officers of the Company,
and the Company have agreed with DLJ that until 180 days after the date of this
Prospectus they will not, directly or indirectly, offer, sell, contract to sell,
grant any option to purchase or otherwise dispose of any Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, or
in any manner transfer all or a portion of the economic consequences associated
with the ownership of the Common Stock, or cause a registration statement
covering any shares of Common Stock to be filed, without the prior written
consent of DLJ, subject to certain limited exceptions, including grants of
options pursuant to, and issuance of shares of Common Stock upon exercise of
options under, the Option Plan and the Director Option Plan. See "Risk
Factors--Substantial Number of Shares Eligible for Future Sale."

Prior to this offering, there has been no public market for the Common
Stock. The Company can make no predictions as to the effect, if any, that public
sales of shares of Common Stock or the availability of shares for sale will have
on the market price from time to time. Nevertheless, sales of substantial
amounts of the Common Stock in the public market or the perception that such
sales could occur, could adversely affect the prevailing market prices of the
Common Stock and could impair the Company's future ability to raise capital
through an offering of its equity securities.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 95,000,000 shares of
Common Stock, and 15,000,000 shares of Preferred Stock, $.01 par value
("Preferred Stock"), which may be issued in one or more series. As of the date
of this Prospectus, the Company's issued and outstanding Common Stock is held by
five holders of record. Immediately following the completion of this offering,
an aggregate of 13,828,571 shares of Common Stock will be issued and
outstanding, and no shares of Preferred Stock will be issued or outstanding.

The following description of the Company's capital stock is a summary of the
material terms of such stock. It does not purport to be complete and is subject
in all respects to applicable Delaware law and to the provisions of the
Company's Restated Certificate of Incorporation and Restated Bylaws, copies of
which have been filed as exhibits to the Registration Statement of which this
Prospectus is a part.

COMMON STOCK

The Board of Directors of the Company in its sole discretion may issue
shares of Common Stock from the authorized and unissued shares of Common Stock.
Holders of Common Stock are entitled to one vote per share on all matters to be
voted upon by the stockholders, including the election of directors. The
Company's Restated Certificate of Incorporation does not provide for cumulative
voting in the election of directors.

Holders of Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. The Company does not anticipate paying any cash dividends in
the foreseeable future. See "Dividend Policy." In the event of liquidation,
dissolution or winding up of the Company, holders of Common Stock are entitled
to share ratably in all assets remaining after payment of liabilities and after
satisfaction of the liquidation preference of any outstanding Preferred Stock.

Holders of Common Stock have no preemptive, conversion or redemption rights
and are not subject to further assessments by the Company. Upon consummation of
this offering, all of the then outstanding shares of Common Stock will be
validly issued, fully paid and nonassessable.

PREFERRED STOCK

The Company's Board of Directors is authorized to issue from time to time,
without stockholder authorization, in one or more designated series, any or all
of the authorized but unissued shares of Preferred Stock with such dividend,
redemption, conversion and exchange provisions as may be provided for the
particular series. Any series of Preferred Stock may possess voting, dividend,
liquidation and redemption rights superior to those of the Common Stock. The
rights of the holders of Common Stock will be subject to and may be adversely
affected by the rights of the holders of any Preferred Stock that may be issued
in the future. Issuance of a new series of Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could make it more difficult for a third party to acquire,
or discourage a third party from acquiring, the outstanding voting stock of the
Company, and make removal of the present Board of Directors more difficult. The
Company has no present plans to issue any shares of Preferred Stock. See "Risk
Factors--Anti-Takeover Provisions."

CERTAIN PROVISIONS OF DELAWARE LAW

The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law ("DGCL"). In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of a
corporation's outstanding voting stock) from engaging in a "business
combination" (as defined) with a Delaware corporation for three years following
the date such person became an interested stockholder unless (i) before such
person became an interested stockholder, the board of directors of the
corporation approved the transaction in which the interested stockholder

47
<PAGE>
became an interested stockholder or approved the business combination, (ii) upon
consummation of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owns at least 85%
of the voting stock of the corporation outstanding at the time the transaction
commenced (excluding shares owned by persons who are both officers and directors
of the corporation and shares held by certain employee stock ownership plans) or
(iii) following the transaction in which such person became an interested
stockholder, the business combination is approved by the board of directors of
the corporation and authorized at a meeting of stockholders by the affirmative
vote of the holders of at least two-thirds of the outstanding voting stock of
the corporation not owned by the interested stockholder.

LIMITATION OF LIABILITY AND INDEMNIFICATION

The Company's Restated Certificate of Incorporation and Restated Bylaws
provide that, to the fullest extent permitted by the DGCL, a director of the
Company shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director. Under the DGCL, liability of
a director may not be limited (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or that involve intentional misconduct or a knowing violation of law,
(iii) in respect of certain unlawful dividend payments or stock redemptions or
repurchases and (iv) for any transaction from which the director derives an
improper personal benefit. The effect of the provisions of the Company's
Restated Certificate of Incorporation and Restated Bylaws is to eliminate the
rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to recover monetary damages against a director
for breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior), except in the
situations described in clauses (i) through (iv) above. This provision does not
limit or eliminate the rights of the Company or any stockholder to seek
nonmonetary relief such as an injunction or rescission in the event of a breach
of a director's duty of loyalty. In addition, the Company's Restated Certificate
of Incorporation and Restated Bylaws provide that the Company shall indemnify
its directors and officers, against losses incurred by any such person by reason
of the fact that such person was acting in such capacity.

CERTAIN ANTI-TAKEOVER EFFECTS

The provisions of the Restated Certificate of Incorporation and the Restated
Bylaws of the Company summarized above may be deemed to have anti-takeover
effects and may delay, defer or prevent a tender offer or takeover attempt that
a stockholder might consider to be in such stockholder's best interest,
including those attempts that might result in a premium over the market price
for the shares held by stockholders. See "Risk Factors--Anti-Takeover
Provisions."

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is UMB Bank, N.A.,
Kansas City, Missouri.

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<PAGE>
UNDERWRITING

Subject to certain terms and conditions contained in an underwriting
agreement (the "Underwriting Agreement"), the Underwriters named below for whom
DLJ and Morgan Stanley & Co. Incorporated are serving as representatives (the
"Representatives"), have severally agreed to purchase from the Company and the
Selling Stockholders, the respective number of shares of Common Stock set forth
opposite their names below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- ------------------------------------------------------------------------------------------- ----------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation........................................ 1,508,334
Morgan Stanley & Co. Incorporated.......................................................... 1,508,333
Allen & Company Incorporated............................................................... 50,000
Alex. Brown & Sons Incorporated............................................................ 50,000
Furman Selz LLC............................................................................ 50,000
ING Baring N.V. ........................................................................... 50,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated......................................... 50,000
Montgomery Securities...................................................................... 50,000
Robertson, Stephens & Company LLC.......................................................... 50,000
Raymond James & Associates, Inc............................................................ 50,000
Robert W. Baird & Co. Incorporated......................................................... 25,000
William Blair & Company, L.L.C............................................................. 25,000
Dain Bosworth Incorporated................................................................. 25,000
First of Michigan Corporation.............................................................. 25,000
Hanifen, Imhoff Inc........................................................................ 25,000
Janney Montgomery Scott Inc................................................................ 25,000
Pennsylvania Merchant Group Ltd............................................................ 25,000
Peregrine Capital Limited.................................................................. 25,000
Petrie Parkman & Co........................................................................ 25,000
Unterberg Harris........................................................................... 25,000
----------
Total.................................................................................... 3,666,667
----------
----------
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase shares of Common Stock are subject to the approval of
certain legal matters by counsel and to certain other conditions. If any of the
shares of Common Stock are purchased by the Underwriters pursuant to the
Underwriting Agreement, all of the shares of Common Stock (other than the shares
of Common Stock covered by the Underwriters' over-allotment option described
below) must be so purchased.

Prior to this offering, there has been no established trading market for the
Common Stock. The initial price to the public for the Common Stock offered
hereby has been determined by negotiation between the Company and the
Representatives. The factors considered in determining the initial price to the
public included the history of and the prospects for the industry in which the
Company competes, the performance and ability of the Company's management, the
past and present operations of the Company, the historical results of operations
of the Company, the prospects for future earnings of the Company, the general
condition of the securities markets at the time of this offering and the recent
market prices of securities of generally comparable companies.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.

The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public initially at the price
to the public set forth on the cover page of this

49
<PAGE>
Prospectus and to certain dealers (who may include the Underwriters) at such
price less a concession not to exceed $0.63 per share. The Underwriters may
allow, and such dealers may reallow, discounts not in excess of $0.10 per share
to any other Underwriter and certain other dealers. After this offering, the
offering price and other selling terms may be changed by the Underwriters.

The Selling Stockholders have granted to the Underwriters an option to
purchase up to an aggregate of 550,000 additional shares of Common Stock, pro
rata based on the number of shares of Common Stock being offered hereby by the
Selling Stockholders, at the initial public offering price less underwriting
discounts and commissions, solely to cover over-allotments. Such option may be
exercised in whole or in part from time to time during the 30-day period after
the date of this Prospectus. To the extent that the Underwriters exercise such
option, each of the Underwriters will be committed, subject to certain
conditions, to purchase from the Selling Stockholders on a pro rata basis a
number of option shares proportionate to such Underwriter's initial commitment
as indicated in the preceding table.

The Underwriters have reserved up to 5% of the shares of Common Stock
offered hereby for sale at the initial public offering price to certain
employees, consultants and other persons associated with the Company. The number
of shares of Common Stock available for sale to the general public will be
reduced to the extent such persons purchase such reserved shares. Any reserved
shares not so purchased will be offered by the Underwriters to the general
public on the same basis as the other shares offered hereby. This program will
be administered by DLJ.

The Company, Selling Stockholders, and the directors and executive officers
of the Company have agreed not to offer, sell, contract to sell or otherwise
dispose of any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or in any manner transfer all or a
portion of the economic consequences associated with the ownership of such
Common Stock, or to cause a registration statement covering any shares of Common
Stock to be filed, for 180 days after the date of this Prospectus without the
prior written consent of DLJ, subject to certain limited exceptions, and
provided that the Company may grant options pursuant to, and issue shares of
Common Stock upon the exercise of options under the Option Plan and the Director
Option Plan. See "Shares Eligible for Future Sale."

In connection with this offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may overallot the offering,
creating a syndicate short position. In addition, the Underwriters may bid for
and purchase shares of Common Stock in the open market to cover syndicate short
positions or to stabilize the price of the Common Stock. Finally, the
underwriting syndicate may reclaim selling concessions from syndicate members in
the offering, if the syndicate repurchases previously distributed Common Stock
in syndicate covering transactions, in stabilization transactions or otherwise.
Any of these activities may stabilize or maintain the market price of the Common
Stock above independent market levels. The Underwriters are not required to
engage in these activities, and may end any of these activities at any time.

The Common Stock has been approved for listing on the New York Stock
Exchange ("NYSE") under the symbol "SRT," subject to official notice of
issuance. In order to meet the requirements for listing on the NYSE, the
Underwriters have undertaken to sell lots of 100 or more shares of Common Stock
to a minimum of 2,000 beneficial holders.

50
<PAGE>
LEGAL MATTERS

The validity of the shares of the Common Stock offered hereby will be passed
upon for the Company by Otten, Johnson, Robinson, Neff & Ragonetti, P.C.,
Denver, Colorado. Certain legal matters will be passed upon for the Underwriters
by Morgan, Lewis & Bockius LLP, Los Angeles, California.

EXPERTS

The Consolidated Financial Statements of StarTek, Inc. and subsidiaries at
December 31, 1995 and 1996 and for each of the three years in the period ended
December 31, 1996, appearing in this Prospectus and the Registration Statement
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (together with all
amendments, exhibits, schedules and supplements thereto, the "Registration
Statement"), of which this Prospectus forms a part, covering the Common Stock to
be sold pursuant to this offering. As permitted by the rules and regulations of
the Commission, this Prospectus omits certain information, exhibits and
undertakings contained in the Registration Statement. Such additional
information, exhibits and undertakings can be inspected at and obtained from the
Commission at prescribed rates at the public reference facilities maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 and at certain regional offices of the Commission located
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 13th Floor, 7 World Trade Center, New York, New York, 10048.
The Commission maintains a Web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. In addition, such reports and
other information concerning the Company may be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005. For additional information with
respect to the Company, the Common Stock and related matters and documents,
reference is made to the Registration Statement. Statements contained herein
concerning any such document are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement. Each such statement is qualified in its entirety by such
reference.

The Company intends to furnish its stockholders with annual reports, which
will include audited consolidated financial statements prepared in accordance
with accounting principles generally accepted in the United States and a report
of its independent public accountants with respect to the examination of such
financial statements. In addition, the Company will make available to or furnish
its stockholders with such other interim reports as the Company deems
appropriate or as may be required by law.

51
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
STARTEK, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------

<S> <C>
Report of Independent Auditors............................................................................. F-2

Consolidated Balance Sheets as of December 31, 1995 and 1996 and March 31, 1997............................ F-3

Consolidated Statements of Operations for the years ended December 31, 1994, 1995 and 1996 and the three
months ended March 31, 1996 and 1997..................................................................... F-4

Consolidated Statements of Stockholders' Equity for the years ended December 31, 1994, 1995 and 1996 and
the three months ended March 31, 1996 and 1997........................................................... F-5

Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995 and 1996 and the three
months ended March 31, 1996 and 1997..................................................................... F-6

Notes to Consolidated Financial Statements................................................................. F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Board of Directors
StarTek, Inc.

We have audited the accompanying consolidated balance sheets of StarTek,
Inc. and subsidiaries as of December 31, 1995 and 1996, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits 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 audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of StarTek, Inc.
and subsidiaries at December 31, 1995 and 1996, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

ERNST & YOUNG LLP

Denver, Colorado
February 18, 1997

F-2
<PAGE>
STARTEK, INC. AND SUBSIDIARIES
(NOTE 1)
CONSOLIDATED BALANCE SHEETS
ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
-------------------------- MARCH 31, MARCH 31,
1995 1996 1997 1997(NOTE 2)
------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.............................. $ 451,456 $ 2,742,313 $ 5,684,058 $5,684,058
Trade accounts receivable, less allowance for doubtful
accounts of $197,747, $311,172 and $373,609 in 1995,
1996 and 1997, respectively.......................... 13,261,904 11,030,948 8,349,298 8,349,298
Inventories (Note 3)................................... 1,357,843 2,535,091 2,640,031 2,640,031
Prepaid expenses and other............................. 225,162 140,132 506,199 506,199
Notes receivable--stockholders (Note 13)................. 663,494 -- -- --
------------ ------------ ------------ ------------
Total current assets..................................... 15,959,859 16,448,484 17,179,586 17,179,586
Property, plant and equipment, net (Note 4).............. 5,614,670 6,527,238 6,276,601 6,276,601
Other assets............................................. 5,627 3,000 3,000 3,000
------------ ------------ ------------ ------------
Total assets............................................. $ 21,580,156 $ 22,978,722 $ 23,459,187 $23,459,187
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit (Note 5)................................ $ 3,450,708 $ 3,500,000 $ 3,500,000 $3,500,000
Accounts payable....................................... 9,705,673 6,961,675 5,430,335 5,430,335
Accrued liabilities.................................... 551,588 1,584,347 736,499 736,499
Current portion of capital lease obligations........... 547,595 917,244 910,775 910,775
Current portion of long-term debt...................... 7,059 5,673 187,500 187,500
Accrued amounts due stockholders (Note 13)............. -- -- 792,835 792,835
Notes payable--stockholders (Note 13).................. 738,494 -- -- --
Other.................................................. 161,049 583,813 747,398 747,398
Notes payable to Principal Stockholders (Note 14)...... -- -- -- 8,080,779
------------ ------------ ------------ ------------
Total current liabilities................................ 15,162,166 13,552,752 12,305,342 20,386,121
Capital lease obligations, less current portion (Note
6)..................................................... 1,084,575 1,503,702 1,280,543 1,280,543
Long-term debt, less current portion (Note 7)............ 353,787 548,175 1,481,250 1,481,250
Note payable--affiliate (Note 13)........................ 1,111,844 -- -- --
Other.................................................... 69,885 271,305 234,183 234,183
Commitments (Note 6)
Stockholders' equity (Notes 9 and 10)
Common stock............................................. 432 432 336 336
Additional paid-in capital............................... 2,907,826 6,148,196 6,148,292 --
Cumulative translation adjustment........................ (9,922) 129,056 76,754 76,754
Retained earnings........................................ 1,112,897 1,038,438 1,932,487 --
Note receivable--stockholder for the exercise of stock
options (Note 10)...................................... (213,334) (213,334) -- --
------------ ------------ ------------ ------------
Total stockholders' equity............................... 3,797,899 7,102,788 8,157,869 77,090
------------ ------------ ------------ ------------
Total liabilities and stockholders' equity............... $ 21,580,156 $ 22,978,722 $ 23,459,187 $23,459,187
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>

See accompanying Notes.

F-3
<PAGE>
STARTEK, INC. AND SUBSIDIARIES
(NOTE 1)
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PRO FORMA THREE MONTHS
YEAR ENDED DECEMBER 31, DECEMBER 31, ENDED MARCH 31, PRO FORMA
------------------------------------- 1996 ------------------------ MARCH 31,
1994 1995 1996 (NOTE 2) 1996 1997 1997(NOTE 2)
----------- ----------- ----------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Revenues............................ $26,340,985 $41,509,363 $71,583,861 $ 71,583,861 $15,219,397 $16,666,614 $16,666,614
Cost of services.................... 21,354,828 33,230,050 57,238,261 57,238,261 12,655,001 12,731,930 12,731,930
----------- ----------- ----------- ------------- ----------- ----------- ------------
Gross profit........................ 4,986,157 8,279,313 14,345,600 14,345,600 2,564,396 3,934,684 3,934,684
Selling, general and administrative
expenses.......................... 4,489,529 5,341,384 7,763,900 7,763,900 1,706,386 2,163,423 2,163,423
Management fee expense (Note 2)..... 612,440 2,599,612 6,172,135 -- 199,030 792,835 --
----------- ----------- ----------- ------------- ----------- ----------- ------------
Operating profit (loss)............. (115,812) 338,317 409,565 6,581,700 658,980 978,426 1,771,261
Net interest expense and other (Note
8)................................ 215,541 396,255 372,134 372,134 125,703 84,377 84,377
----------- ----------- ----------- ------------- ----------- ----------- ------------
Income (loss) before income taxes... (331,353) (57,938) 37,431 6,209,566 533,277 894,049 1,686,884
Income tax expense (Note 2)......... -- -- 111,890 2,316,168 -- -- 629,208
----------- ----------- ----------- ------------- ----------- ----------- ------------
Net income (loss)................... $ (331,353) $ (57,938) $ (74,459) $ 3,893,398 $ 533,277 $ 894,049 $ 1,057,676
----------- ----------- ----------- ------------- ----------- ----------- ------------
----------- ----------- ----------- ------------- ----------- ----------- ------------
Pro forma net income per share (Note
2)................................ $ 0.34 $ 0.09
Shares outstanding (Note 2)......... 11,293,458 11,367,290
</TABLE>

See accompanying Notes.

F-4
<PAGE>
STARTEK, INC. AND SUBSIDIARIES
(NOTE 1)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL NOTE CUMULATIVE
PAID-IN RETAINED RECEIVABLE-- TRANSLATION
SHARES AMOUNT CAPITAL EARNINGS STOCKHOLDER ADJUSTMENT
--------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994................... 35,612 $ 355 $ 1,123,419 $ 1,502,188 $ -- $ (2,121)
Issuance of stock for cash............... 6,925 70 726,816 -- -- --
Translation loss......................... -- -- -- -- -- (12,928)
Net loss................................. -- -- -- (331,353) -- --
--------- ----- ----------- ----------- ------------ -----------
Balance, December 31, 1994................. 42,537 425 1,850,235 1,170,835 -- (15,049)
Issuance of stock for cash............... 820 8 89,195 -- -- --
Issuance of stock for options exercised.. 1,728 17 231,147 -- -- --
Note receivable--stockholder............. -- -- -- -- (213,334) --
Repurchase of stock...................... (1,885) (18) (129,724) -- -- --
Contributed capital...................... -- -- 866,973 -- -- --
Translation gain......................... -- -- -- -- -- 5,127
Net loss................................. -- -- -- (57,938) -- --
--------- ----- ----------- ----------- ------------ -----------
Balance, December 31, 1995................. 43,200 432 2,907,826 1,112,897 (213,334) (9,922)
Contributed capital...................... -- -- 3,240,370 -- -- --
Translation gain......................... -- -- -- -- -- 138,978
Net loss................................. -- -- -- (74,459) -- --
--------- ----- ----------- ----------- ------------ -----------
Balance, December 31, 1996................. 43,200 432 6,148,196 1,038,438 (213,334) 129,056
Payment of note receivable--stockholder
(unaudited)............................ -- -- -- -- 213,334 --
Contribution of StarPak International,
Ltd. (unaudited)....................... (9,582) (96) 96 -- -- --
Translation loss (unaudited)............. -- -- -- -- -- (52,302)
Net income (unaudited)................... -- -- -- 894,049 -- --
--------- ----- ----------- ----------- ------------ -----------
Balance, March 31, 1997 (unaudited)........ 33,618 $ 336 $ 6,148,292 $ 1,932,487 $ -- $ 76,754
--------- ----- ----------- ----------- ------------ -----------
--------- ----- ----------- ----------- ------------ -----------

<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
------------
<S> <C>
Balance, January 1, 1994................... $2,623,841
Issuance of stock for cash............... 726,886
Translation loss......................... (12,928)
Net loss................................. (331,353)
------------
Balance, December 31, 1994................. 3,006,446
Issuance of stock for cash............... 89,203
Issuance of stock for options exercised.. 231,164
Note receivable--stockholder............. (213,334)
Repurchase of stock...................... (129,742)
Contributed capital...................... 866,973
Translation gain......................... 5,127
Net loss................................. (57,938)
------------
Balance, December 31, 1995................. 3,797,899
Contributed capital...................... 3,240,370
Translation gain......................... 138,978
Net loss................................. (74,459)
------------
Balance, December 31, 1996................. 7,102,788
Payment of note receivable--stockholder
(unaudited)............................ 213,334
Contribution of StarPak International,
Ltd. (unaudited)....................... --
Translation loss (unaudited)............. (52,302)
Net income (unaudited)................... 894,049
------------
Balance, March 31, 1997 (unaudited)........ $8,157,869
------------
------------
</TABLE>

See accompanying Notes.

F-5
<PAGE>
STARTEK, INC. AND SUBSIDIARIES
(NOTE 1)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------- ------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)......................................... $ (331,353) $ (57,938) $ (74,459) $ 533,277 $ 894,049
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization........................... 588,222 873,246 1,437,843 290,277 495,000
Changes in operating assets and liabilities:
Accounts receivable................................... (3,332,112) (6,225,471) 2,230,956 4,023,630 2,681,650
Inventories........................................... 14,759 (471,348) (1,177,248) (712,451) (104,940)
Prepaid expenses and other assets..................... 15,710 (74,844) 87,657 (28,264) (366,067)
Accounts payable...................................... 3,172,354 4,147,286 (2,743,998) (1,619,082) (1,531,340)
Accrued and other liabilities......................... 270,611 283,519 1,656,943 231,471 (721,385)
Accrued management fees............................... -- -- -- 199,030 792,835
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in) operating activities....... 398,191 (1,525,550) 1,417,694 2,917,888 2,139,802
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment, net........... (670,218) (2,104,525) (1,333,316) (411,634) (266,971)
Collections (advances) on notes receivable--stockholders.. (97,049) 110,381 663,494 -- 213,334
Collections (advances) on notes receivable--affiliate..... (587,133) 667,800 -- -- --
----------- ----------- ----------- ----------- -----------
Net cash used in investing activities..................... (1,354,400) (1,326,344) (669,822) (411,634) (53,637)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from line of credit borrowings............... 1,209,052 1,451,656 49,292 (543,608) --
Principal payments on borrowings.......................... (364,282) (1,654) (6,998) (1,692) (385,098)
Proceeds from borrowings and capital lease obligations.... -- 362,500 819,025 200,749 1,500,000
Principal payments on capital lease obligations........... (395,412) (589,624) (847,344) (207,616) (229,628)
Principal payments on notes payable--stockholders......... -- -- (738,494) -- --
Proceeds from (principal payments on) note payable--
affiliate............................................... (100,000) 1,111,844 (1,111,844) 90,000 --
Issuance of common stock.................................. 726,886 107,033 -- -- --
Contributed capital....................................... -- 866,973 3,240,370 -- --
Repurchase of common stock................................ -- (129,742) -- -- --
----------- ----------- ----------- ----------- -----------
Net cash provided by financing activities................. 1,076,244 3,178,986 1,404,007 (462,167) 885,274
Effect of exchange rate changes on cash................... (12,928) 5,127 138,978 36,779 (29,694)
----------- ----------- ----------- ----------- -----------
Net increase in cash and cash equivalents................. 107,107 332,219 2,290,857 2,080,866 2,941,745
Cash and cash equivalents at beginning of period.......... 12,130 119,237 451,456 451,456 2,742,313
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents at end of period................ $ 119,237 $ 451,456 $ 2,742,313 $ 2,532,322 $ 5,684,058
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest.................................... $ 212,981 $ 365,880 $ 535,107 $ 144,757 $ 113,152
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY
Equipment acquired or refinanced under capital leases..... $ 65,153 $ 1,671,504 $ 1,017,095 $ 226,914 --
Note received in exchange for the purchase of common stock
from options exercised.................................. -- $ 213,334 -- -- --
Contributed common stock.................................. -- -- -- -- $ 96
</TABLE>

See accompanying Notes.

F-6
<PAGE>
STARTEK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

StarTek, Inc. (the "Company" or "StarTek") was incorporated in Delaware on
December 30, 1996. Prior to the formation of the Company, StarPak, Inc. and
StarPak International, Ltd. (whose stockholder groups were substantially
identical) conducted business as affiliates under common control. Effective
January 1, 1997, the stockholders of StarPak, Inc. exchanged all of the
outstanding shares of capital stock of StarPak, Inc. for shares of common stock
of the Company, and StarPak, Inc. became a wholly-owned subsidiary of the
Company. Effective January 24, 1997, the shareholders of StarPak International,
Ltd. contributed all of its outstanding shares of capital stock to the Company,
and StarPak International, Ltd. became a wholly-owned subsidiary of the Company.
Because the shareholder groups of StarPak, Inc. and StarPak International, Ltd.
were substantially identical and the relative holdings of the individual
stockholders in StarTek were not altered as a result of the contributions, the
formation of StarTek has been treated as a combination of entities under common
control and accounted for as if it were a pooling of interests. References to
the Company and StarTek include these combined entities.

Financial statements for periods prior to January 1, 1997 reflect the
combined accounts of StarPak, Inc. and StarPak International, Ltd. After January
1, 1997, the accompanying consolidated financial statements include the accounts
of StarTek, Inc. and its wholly-owned subsidiaries, StarPak, Inc. and StarPak
International, Ltd. All significant intercompany transactions have been
eliminated.

BUSINESS OPERATIONS

The Company is an international provider of integrated outsourced services
primarily for Fortune 500 companies in targeted industries. The Company offers a
wide spectrum of services throughout a product's life cycle, including product
order teleservices, supplier management, product assembly and packaging, product
distribution, product fulfillment, customer care and technical support
teleservices. The Company has operations in North America, Europe and Asia.

INTERIM FINANCIAL INFORMATION

The consolidated financial information as of March 31, 1997 and for the
three months ended March 31, 1996 and 1997 is unaudited, but includes all
adjustments (consisting only of normal recurring adjustments) which, in the
opinion of management, are necessary to present fairly the financial position at
March 31, 1997, and the results of operations and cash flows for the periods
ended March 31, 1996 and 1997. Interim results are not necessarily indicative of
the results which may be expected for any other interim period or for a full
year.

FOREIGN CURRENCY TRANSLATION

Translation gains and losses are accumulated as a separate component of
stockholders' equity. Translation gains and losses were not material for any
period presented. Foreign currency transaction gains and losses are included in
determining net income. Such gains and losses were not material for any period
presented.

NEW ACCOUNTING STANDARDS

In March 1995, FAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, was issued, which requires
impairment losses to be recorded on long-lived assets

F-7
<PAGE>
STARTEK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
(CONTINUED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. FAS No. 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. The Company adopted FAS
No. 121 in the first quarter of 1996. The effect of adoption was not material.

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, EARNINGS PER SHARE, which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. The impact of Statement No. 128 on the
calculation of earnings per share is not expected to be material.

USE OF ESTIMATES

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

REVENUE RECOGNITION

Revenues are recognized as services are performed under each client
contract, which services may include product order teleservices, supplier
management, product assembly and packaging, product distribution, product order
fulfillment, and customer care and technical support teleservices.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments consist of cash and cash equivalents, accounts
receivable and payable, notes receivable, debt and capital lease obligations.
The carrying values of cash and accounts receivable and payable approximate fair
value. Management believes the difference between the fair values and carrying
values of the notes receivable, debt and capital lease obligations would not be
materially different since interest rates approximate market rates for material
items.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out basis) or
market.

F-8
<PAGE>
STARTEK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
(CONTINUED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Additions, improvements
and major renewals are capitalized. Maintenance, repairs and minor renewals are
expensed as incurred. Costs related to the internal development of software are
expensed as incurred.

Depreciation and amortization of equipment acquired under capital leases are
computed using the straight-line method based on the following estimated useful
lives:

<TABLE>
<CAPTION>
ESTIMATED USEFUL
LIFE
--------------------

<S> <C>
Buildings............................................................... 30 years

Equipment, and equipment acquired under capital leases.................. 3 to 5 years

Furniture and fixtures.................................................. 7 years
</TABLE>

INCOME TAXES

Effective July 1, 1992, StarPak, Inc. elected Subchapter S status for income
tax purposes, and StarPak International, Ltd. has maintained Subchapter S status
since inception. As such, the income and expenses of the Company are reportable
on the tax returns of the stockholders, and no provision has been made for
federal and state income taxes. The Company is subject to foreign income taxes
on certain of its operations.

MANAGEMENT FEE EXPENSE

Historically, certain S corporation stockholders and an affiliate have been
paid certain management fees, bonuses and other fees in connection with services
rendered to the Company, which have not been included in selling, general and
administrative expense, in addition to general compensation for services
rendered. Such management fees are reflected as management fee expense as set
forth below. Effective with the closing of the offering, these management fees,
bonuses and other fees will be discontinued.

After the closing of the offering, all compensation payable to persons who
are now stockholders of the Company (or an affiliate of such stockholder) will
be in the form of advisory fees, salaries and bonuses (which at current rates
will aggregate approximately $516,000 annually) and will be included in selling,
general and administrative expenses. Such advisory fees and salaries, together
with payments under the operating lease described in Note 6, are reflected as
selling, general and administrative expense as set forth below.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------- ----------------------
1994 1995 1996 1996 1997
---------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Selling general and administrative
expense......................................... $ 660,973 $ 560,002 $ 564,198 $ 135,205 $ 128,950
Management fee expense........................... $ 612,440 $ 2,599,612 $ 6,172,135 $ 199,030 $ 792,835
</TABLE>

F-9
<PAGE>
STARTEK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
(CONTINUED)

2. PRO FORMA INFORMATION (UNAUDITED) (SEE NOTE 14)

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

The pro forma consolidated statement of operations for the year ended
December 31, 1996 and the three months ended March 31, 1997 presents the effect
on the historical consolidated financial statements of the elimination of
management fee expense paid to stockholders and their affiliates as these fees
will be discontinued upon the completion of the offering and to provide related
income taxes as if the Company were taxed as a C corporation.

PRO FORMA CONSOLIDATED BALANCE SHEET

The pro forma consolidated balance sheet at March 31, 1997 reflects, as
Notes Payable to the Principal Stockholders, amounts relating to accumulated
retained earnings and additional paid-in capital without reflecting any proceeds
from the offering.

INCOME TAXES

Upon closing of the proposed public offering, the Company's S corporation
status will terminate. The pro forma consolidated statement of operations
reflects a provision for federal, state and foreign income taxes at an effective
rate of 37.3%.

PRO FORMA NET INCOME PER COMMON SHARE

Pro forma net income per common share is based on the number of shares of
StarTek common stock to be outstanding after contribution of all StarPak, Inc.
and StarPak International, Ltd. shares, after giving effect to a 322.1064 for
one stock split of the common stock of StarTek, Inc. In addition, the
calculation includes 464,887 and 538,719 shares at December 31, 1996 and March
31, 1997, respectively, deemed to be outstanding, representing the number of
shares (at an initial public offering price of $15.00 per share) sufficient to
fund payment of the Notes Payable to Principal Stockholders.

3. INVENTORIES

Total inventories consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1996 MARCH 31, 1997
------------ ------------ --------------
<S> <C> <C> <C>
(UNAUDITED)
Raw materials.................................... $ 1,281,363 $ 2,326,942 $ 2,317,766
Finished goods................................... 76,480 208,149 322,265
------------ ------------ --------------
$ 1,357,843 $ 2,535,091 $ 2,640,031
------------ ------------ --------------
------------ ------------ --------------
</TABLE>

F-10
<PAGE>
STARTEK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
(CONTINUED)

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1996 MARCH 31, 1997
------------ ------------- --------------
<S> <C> <C> <C>
(UNAUDITED)
Land............................................ $ 374,234 $ 374,234 $ 374,234
Buildings....................................... 1,553,028 1,553,028 1,553,028
Equipment....................................... 5,026,605 7,340,059 7,575,978
Furniture and fixtures.......................... 890,371 927,328 925,861
------------ ------------- --------------
7,844,238 10,194,649 10,429,101
Less accumulated depreciation and
amortization.................................. (2,229,568) (3,667,411) (4,152,500)
------------ ------------- --------------
Property, plant and equipment, net.............. $ 5,614,670 $ 6,527,238 $ 6,276,601
------------ ------------- --------------
------------ ------------- --------------
</TABLE>

5. LINE OF CREDIT

At December 31, 1996 and March 31, 1997, the Company had a revolving line of
credit agreement with a bank whereby the bank agreed to loan the Company up to
$4,500,000 and $3,500,000, respectively. Interest was payable monthly and
accrued at the bank's base rate plus 1% at December 31, 1996 (9.25%) and March
31, 1997 (9.5%), payable monthly. This revolving line of credit will mature on
June 30, 1999. At December 31, 1996 and March 31, 1997, the Company had drawn
$3,500,000 and $3,500,000, respectively, against this line.

Under the revolving line of credit agreement the Company has pledged as
security all of its equipment, inventories and receivables. The Company must
also maintain certain financial ratios, and is subject to certain restrictions
on the payment of dividends, capital expenditures and loans to affiliates and
stockholders.

6. LEASES

The Company had an operating lease for office space with a partnership in
which major stockholders of the Company are the general partner and a limited
partner. Payments under the lease for the years ended December 31, 1994, 1995
and 1996 were $70,000 each year. The lease was cancelled effective December 31,
1996.

The Company's property held under capital leases consists of the following,
which is included in property, plant and equipment:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- MARCH 31,
1995 1996 1997
------------ ------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
Equipment......................................... $ 3,014,273 $ 4,650,393 $ 3,149,520
Less accumulated amortization..................... (998,286) (1,930,257) (1,106,897)
------------ ------------- -------------
$ 2,015,987 $ 2,720,136 $ 2,042,623
------------ ------------- -------------
------------ ------------- -------------
</TABLE>

Amortization of leased assets is included in depreciation and amortization
expense.

F-11
<PAGE>
STARTEK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
(CONTINUED)

6. LEASES (CONTINUED)
As of December 31, 1996, future minimum rental commitments, by year and in
the aggregate, for the capital and operating leases are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDED DECEMBER 31, LEASES LEASES
- -------------------------------------------------------------------- ------------ ----------
<S> <C> <C>
1997................................................................ $ 1,101,782 $ 126,828
1998................................................................ 941,393 42,708
1999................................................................ 492,275 --
2000................................................................ 186,155 --
2001................................................................ 52,895 --
------------ ----------
Total minimum lease payments........................................ 2,774,500 $ 169,536
----------
----------
Amounts representing interest....................................... (353,554)
------------
Present value of net minimum lease payments......................... $ 2,420,946
------------
------------
</TABLE>

During the three months ended March 31, 1997 and in April 1997, the Company
entered into operating leases which require payments of $22,082 per month from
April 1997 through March 2000 and $5,191 per month from June 1997 through May
2000.

Rental expense, including equipment rentals, for 1994, 1995, 1996, and the
three months ended March 31, 1996 and 1997, was $229,925, $294,714, $382,480,
$62,839 and $80,643, respectively.

7. LONG-TERM DEBT

During 1995, the Company purchased land and an existing building for
approximately $1,500,000. The purchase was financed through the Company's
revolving line of credit and a mortgage loan in the amount of $362,500. In
January 1997, the outstanding balance of $353,848 was refinanced from proceeds
of a $1,500,000 mortgage loan on the same property. The loan bears interest at
the bank's base rate plus 2% (10.50% at March 31, 1997). The loan is payable in
monthly installments of $15,625 plus accrued interest until the earlier of June
30, 1999 or the date of termination of the revolving line of credit, when the
remaining principal balance is due.

In December 1996, the Company received a $200,000 economic development loan
which bears interest at 6% per annum and is collateralized by certain equipment.
Interest payments are due quarterly and, beginning January 1, 1999 and
continuing through January 1, 2001, principal payments of $30,000 are due
semi-annually. A final principal payment of $50,000 is due on July 1, 2001.

Future scheduled annual principal payments of long-term debt as of December
31, 1996 (including the effects of the above-described loan refinanced by the
Company in January 1997) are as follows:

F-12
<PAGE>
STARTEK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
(CONTINUED)

8. NET INTEREST EXPENSE AND OTHER

Net interest expense and other consists of the following items:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------- ------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Interest expense............ $ (239,068) $ (445,849) $ (443,764) $ (178,046) $ (141,469)
Interest income............. 12,782 2,595 18,288 28,777 48,960
Other income and expense.... 10,745 46,999 53,342 23,566 8,132
----------- ----------- ----------- ----------- -----------
Total....................... $ (215,541) $ (396,255) $ (372,134) $ (125,703) $ (84,377)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>

9. STOCKHOLDERS' EQUITY

The consolidated common stock and additional paid-in capital on a
company-by-company basis as of December 31, 1995 and 1996 were as follows:

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN
STOCK CAPITAL
----------- ------------
<S> <C> <C>
DECEMBER 31, 1995
StarPak, Inc.--5,000,000 shares, $.01 par value, authorized; 33,618 shares
outstanding.................................................................. $ 336 $ 2,703,497
StarPak International, Ltd.--5,000,000 shares, $.01 par value, authorized;
9,582 shares outstanding..................................................... 96 204,329
----- ------------
$ 432 $ 2,907,826
----- ------------
----- ------------
DECEMBER 31, 1996
StarPak, Inc.--5,000,000 shares, $.01 par value, authorized; 33,618 shares
outstanding.................................................................. $ 336 $ 5,638,771
StarPak International, Ltd.--5,000,000 shares, $.01 par value, authorized;
9,582 shares outstanding..................................................... 96 509,425
----- ------------
$ 432 $ 6,148,196
----- ------------
----- ------------
</TABLE>

The capital stock and additional paid-in capital of StarTek as of March 31,
1997 was as follows:

<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED COMMON PAID-IN
STOCK STOCK CAPITAL
----------- ----------- ------------
<S> <C> <C> <C>
(UNAUDITED)
MARCH 31, 1997
StarTek, Inc.--undesignated, 15,000,000 shares, $.01 par value,
authorized; no shares outstanding................................. -- -- --
StarTek, Inc.--95,000,000 shares, $.01 par value, authorized; 33,618
shares outstanding................................................ -- $ 336 $ 6,148,292
----------- ----- ------------
----------- ----- ------------
</TABLE>

F-13
<PAGE>
STARTEK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
(CONTINUED)

10. STOCK OPTIONS

The Company has elected to follow Accounting Principles Board Opinion No. 25
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB 25") and related interpretations
in accounting for its employee stock options because the alternative fair value
accounting provided for under FAS Statement No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, requires use of option valuation models that were not developed
for use in valuing employee stock options. Under APB 25, because the exercise
price of the Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense has been
recognized.

Effective July 24, 1987, the stockholders of StarPak, Inc. approved a Stock
Option Plan ("Plan") which provided for the grant of stock options, stock
appreciation rights ("SARs") and supplemental bonuses to key employees. The
stock options were intended to qualify as "incentive stock options" as defined
in Section 422A of the Internal Revenue Code unless specifically designated
as"nonstatutory stock options."

The options granted could be exercised for a period of not more than ten
years and one month from the date of grant, or any shorter period as determined
by StarPak, Inc.'s Board of Directors. The option price of any incentive stock
option would be equal to or exceed the fair market value per share on the date
of grant, or 110% of the fair market value per share in the case of a 10% or
greater stockholder. Options generally vested ratably over a five-year period
from the date of grant. Unexercised vested options remained exercisable for
three calendar months from the date of termination of employment.

This Plan was terminated effective January 24, 1997.

On February 13, 1997, the Company's Board of Directors approved the StarTek,
Inc. Stock Option Plan ("Option Plan") and, on January 27, 1997, the Director
Stock Option Plan ("Director Option Plan").

The Option Plan was established to provide stock options, SARs and incentive
stock options (cumulatively referred to as "Options") to key employees,
directors (other than non-employee directors), consultants, and other
independent contractors. The plan provides for Options to be granted for a
maximum of 985,000 shares of common stock, which are to be awarded by
determination of a committee of non-employee directors. Unless otherwise
determined by the committee, all Options granted under the Option Plan vest 20%
annually beginning on the first anniversary of the Option's grant date and
expire at the earlier of (i) ten years (or five years for participants owning
greater than 10% of the voting stock) from the option's grant date, (ii) three
months after the termination of employment of the participant as outlined by the
plan, or (iii) the date six months after the participant's death.

The Director Option Plan was established to provide stock options to
non-employee directors who are elected prior to the option's grant date and
serve continuously from the commencement of their term. The plan provides for
stock options to be granted for a maximum of 90,000 shares of common stock.
Participants are automatically granted options to acquire 10,000 shares of
common stock upon the later of their election as a director or the closing of
the initial public offering of the Company's common stock (see Note 14).
Additionally, each participant will be automatically granted options to acquire
3,000 shares of common stock on the date of each annual meeting of stockholders
thereafter at which such director is reelected. All options granted under the
Director Option Plan are fully vested upon grant and expire at the earlier of
(i) the date of the participant's membership on the board is terminated for
cause, (ii) ten years from the option grant date, or (iii) the date one year
after the director's death.

F-14
<PAGE>
STARTEK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
(CONTINUED)

10. STOCK OPTIONS (CONTINUED)
A summary of the Company's stock option activity and related information
follows:

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
------------------------------- ENDED MARCH
1994 1995 1996 31, 1997
--------- --------- --------- --------------
<S> <C> <C> <C> <C>
(UNAUDITED)
Outstanding-beginning of period..................... 1,728 1,728 -- --
Granted............................................. -- -- -- --
Exercised........................................... -- 1,728 -- --
Canceled............................................ -- -- -- --
--------- --------- --------- -------
Outstanding at end of period........................ 1,728 -- -- --
--------- --------- --------- -------
--------- --------- --------- -------
Exercisable at end of period........................ 472 -- -- --
--------- --------- --------- -------
--------- --------- --------- -------
</TABLE>

Exercise prices for options outstanding as of December 31, 1994 and
exercised during 1995 ranged from $21 to $320 and had a weighted average price
of $134. Options for 6,597 shares of common stock were available for grant at
the beginning and end of the years 1994, 1995, and 1996.

During 1995, StarPak, Inc.'s Board of Directors accelerated the vesting on
all outstanding options to allow the holders to exercise any granted option.
Subsequently, all outstanding options were exercised. In aggregate, the option
holders paid $17,830 in cash and delivered a note of $213,334 bearing interest
at 4.63% to StarPak, Inc. in exchange for shares of common stock. This note was
secured by 896 shares of StarPak, Inc. common stock. On January 22, 1997, the
note and all accrued interest thereon was repaid in full.

11. GEOGRAPHIC AREA INFORMATION

To date, the Company operates in North America, Europe and Asia. The
Company's operations in Asia were not material and have been combined with North
America in the following table. Prior to fiscal 1995, the Company operated
primarily in North America.

Information regarding geographical areas is as follows:

<TABLE>
<CAPTION>
NORTH AMERICA EUROPE ELIMINATIONS TOTAL
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
Revenues................................... $ 37,376,167 $ 4,133,196 -- $ 41,509,363
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Operating profit........................... $ 173,678 $ 164,639 -- $ 338,317
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Identifiable assets........................ $ 19,355,906 $ 3,090,170 $ (865,920) $ 21,580,156
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
YEAR ENDED DECEMBER 31, 1996
Revenues................................... $ 59,562,623 $ 12,021,238 -- $ 71,583,861
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Operating profit........................... $ 376,841 $ 32,724 -- $ 409,565
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Identifiable assets........................ $ 21,235,666 $ 3,459,106 $ (1,716,050) $ 22,978,722
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>

F-15
<PAGE>
STARTEK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
(CONTINUED)

12. SIGNIFICANT CLIENTS

Two clients accounted for 39.6% and 15.9% of revenues for the year ended
December 31, 1994. Two clients accounted for 46.3% and 10.9% of revenues for the
year ended December 31, 1995. Two clients accounted for 38.4% and 33.4% of
revenues for the year ended December 31, 1996. Two clients accounted for 44.2%
and 36.1% of revenues for the three months ended March 31, 1997.

The loss of one or more of its significant clients could have a material
adverse effect on the Company's business, operating results or financial
condition. To limit the Company's credit risk, management performs ongoing
credit evaluations of its clients and maintains allowances for potentially
uncollectible accounts. Although the Company is directly impacted by economic
conditions in which its clients operate, management does not believe significant
credit risk exists at December 31, 1996 or March 31, 1997.

13. RELATED PARTY TRANSACTIONS

The Company had the following notes receivable and payable from related
parties for the noted periods:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- MARCH 31,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
(UNAUDITED)
Notes receivable from stockholders bearing interest of 8.5%
and refinanced annually to be due at the end of the
following fiscal year. These notes were repaid by the
stockholders on November 22, 1996........................... $ 663,494 -- --
Notes payable to stockholders bearing interest of 8.5% and
refinanced annually to be due at the end of the following
fiscal year. These notes were repaid by the Company on
November 22, 1996........................................... $ 663,494 -- --
Notes payable to stockholders bearing interest at 12% and
refinanced annually to be due at the end of the following
fiscal year. These notes were repaid by the Company on
November 22, 1996........................................... $ 75,000 -- --
Note payable to affiliate bearing interest equal to the
Company's line of credit rate and due on January 31,
1997........................................................ $ 1,111,844 -- --
</TABLE>

For the three months ended March 31, 1997, the Company accrued management
fees and bonuses of approximately $793,000 based on estimated tax requirements
of the recipients of the management fees and bonuses. On April 15, 1997, the
Company paid management fees and bonuses of approximately $2.7 million after
giving consideration to operating profits for the first quarter and the effects
of certain expense timing differences for book and tax purposes. From the
management fees and bonuses received, the Principal Stockholders contributed
approximately $1.4 million to the capital of the Company.

F-16
<PAGE>
STARTEK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS UNAUDITED)
(CONTINUED)

14. PLANNED EVENTS SUBSEQUENT TO MARCH 31, 1997 (UNAUDITED)

The Company is contemplating an initial public offering of its common stock.

Immediately prior to closing the offering, the Company will declare a
322.1064 for one stock split to be effected by a stock dividend, and declare a
dividend in an amount equal to the estimated additional paid-in capital and
retained earnings of the Company as of the closing date, payable to the
principal stockholders (the "Principal Stockholders") pursuant to certain
promissory notes, which will not exceed $8.2 million. The promissory notes
payable to the Principal Stockholders will be paid from net proceeds of the
offering to the Company.

Upon closing of the offering, the S corporation status of the Company will
be terminated and the Company will be taxed as a C corporation thereafter. Upon
termination of the Company's S corporation status, the Company will be required
to record a one-time credit to earnings to record a net deferred tax asset. If
this credit were recorded at March 31, 1997, the amount would have been
approximately $299,000, relating to temporary differences primarily resulting
from accrued expense and depreciation. Additionally, the management fee, bonus
and other fee arrangements as described in Note 2 will be discontinued upon
completion of the offering.

F-17
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION
IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFERING OR SOLICITATION

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.............................. 3
Risk Factors.................................... 8
Offering Related Transactions................... 14
Use of Proceeds................................. 15
Dividend Policy................................. 15
Capitalization.................................. 16
Dilution........................................ 17
Selected Financial Data......................... 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 19
Business........................................ 29
Management...................................... 38
Certain Relationships and Related Party
Transactions.................................. 42
Principal and Selling Stockholders.............. 44
Shares Eligible for Future Sale................. 46
Description of Capital Stock.................... 47
Underwriting.................................... 49
Legal Matters................................... 51
Experts......................................... 51
Additional Information.......................... 51
Index to Consolidated Financial Statements...... F-1
</TABLE>

------------------------

UNTIL JULY 13, 1997 (25 DAYS AFTER COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN COMMON STOCK, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

3,666,667 SHARES

[LOGO AND ART]

COMMON STOCK

---------------------

PROSPECTUS

---------------------

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

MORGAN STANLEY DEAN WITTER

JUNE 18, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------