10QSB 1 0001.txt FORM 10QSB FOR STARFEST, INC. U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to __________ STARFEST, INC. (Exact name of registrant as specified in its charter) Commission File No. 000-29913 State of Incorporation: Nevada IRS Employer I.D. Number: 95-4442384 9494 East Redfield Road, #1136 Scottsdale, Arizona 85260 Telephone 480-551-8280 ------------------------------------------------------- (Address and telephone number of registrant's principal executive offices and principal place of business) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes[X] No[ ] As of June 30, 2000, there were 23,000,000 shares of the Registrant's Common Stock, no par value, outstanding. Transitional Small Business Disclosure Format (check one): Yes[ ] No[X] PART I - FINANCIAL INFORMATION Item 1. Financial Statements 2 Starfest, Inc. and Subsidiary CONSOLIDATED BALANCE SHEET June 30, 2000 ASSETS ------ Current Assets -------------- Cash $ 1,105 ---------- Total Current Assets $ 1,105 ---------- Total Assets $ 1,105 ========== LIABILITIES AND SHAREHOLDERS' DEFICIT Current Liabilities ------------------- Accounts payable $ 16,044 Related Party Notes Payable 347,502 ---------- Total Current Liabilities $ 363,546 Shareholders' Deficit Authorized; 65,000,000 no par value common shares, issued and outstanding, 23,000,000 common shares 2,647,353 Accumulated deficit (3,009,794) --------- Total Shareholders' Deficit (362,441) ---------- Total Liabilities and Shareholders' Deficit $ 1,105 ==========
See accountant's review report and accompanying notes 3 Starfest, Inc. and Subsidiary CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT For the Three Months Ended June 30, -----------------------------------
2000 1999 ---- ---- REVENUES $ 0 $ 0 OPERATING EXPENSES General and Administrative Expenses 17,611 174,586 ---------- ---------- (LOSS) FROM OPERATIONS (17,611) (174,586) PROVISION FOR INCOME TAXES 800 800 ---------- ---------- NET LOSS (18,411) (175,386) ACCUMULATED DEFICIT -- beginning of year (2,991,383) (2,138,251) ---------- ---------- ACCUMULATED DEFICIT -- end of year (3,009,794) (2,316,861) ========== ========== BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 23,086,813 18,885,856 ========== ========== BASIC LOSS PER COMMON SHARE $ (.00) $ (.01) ========== ========== DILUTED LOSS PER COMMON SHARE $ (.00) $ (.01) ========== ==========
See accountant's review report and accompanying notes 4 Starfest, Inc. and Subsidiary CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT For the Six Months Ended June 30, ---------------------------------
2000 1999 ---- ---- REVENUES $ 0 $ 0 ---------- ---------- OPERATING EXPENSES General and Administative Expenses 352,137 177,810 ---------- ---------- (LOSS) FROM OPERATIONS (352,137) (177,810) PROVISION FOR INCOME TAXES 800 800 ---------- ---------- NET LOSS (352,937) (178,610) ========== ========== ACCUMULATED DEFICIT -- beginning of year (2,656,857) (2,656,857) ---------- ---------- ACCUMULATED DEFICIT -- end of year (3,009,794) (2,835,467) ========== ========== BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 22,914,637 12,713,605 ========== ========== BASIC LOSS PER COMMON SHARE $ (.02) $ (.01) ========== ========== DILUTED LOSS PER COMMON SHARE $ (.02) $ (.01) ========== ==========
See accountant's review report and accompanying notes 5 Starfest, Inc. and Subsidiary CONSOLIDATED STATEMENT OF CASH FLOWS Six Months Ended June 30, -------------------------
2000 1999 ---- ---- CASH FLOW FROM OPERATING ACTIVITIES Net Loss $ (352,937) $ (178,610) Adjustments to reconcile Net Loss To Net Cash Used by Operating Activities: Loss on disposal of equipment 0 2,216 Shares issued for services 702 358 Shares issued for debt extinguishment 0 646,379 Shares issued for assets 0 118,000 ---------- ---------- Total Adjustments 702 766,953 INCREASE (DECREASE) IN LIABILITIES Accounts payable (1,643) (413,692) Other liabilities 0 (108,800) ---------- ---------- NET CASH USED BY OPERATING ACTIVITIES (353,878) (65,851) CASH FLOWS FROM INVESTING ACTIVITIES Internet assets received in exchange for stock 0 (118,000) ---------- ---------- NET CASH USED BY INVESTING ACTIVITIES (353,878) 0 ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Loans from Concierge, Inc. 100,000 0 Advances from stockholders 247,502 0 Common stock issued for cash 7,000 190,000 ---------- ---------- NET CASH PROVIDED BY FINANCING ACTIVITIES 354,502 190,000 ---------- ---------- NET CASH PROVIDED FROM ALL ACTIVITIES 624 6,149 CASH - Beginning of Period 481 0 ---------- ---------- CASH - End of Period $ 1,105 $ 6,149 ========== ========== SUPPLEMENTAL CASH FLOW INFORMATION Cash Paid During the Period for: Interest $ 0 $ 0 Income taxes $ 0 $ 0 NON-CASH FINANCING TRANSACTIONS: Shares for services $ 702 $ 358 Shares for debt extinguishment $ 0 $ 0
See accountant's review report and accompanying notes 6 Starfest, inc. and Subsidiary NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2000 and June 30, 1999 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ (a) Starfest, Inc. (the Company), a California corporation, was incorporated on August 18, 1993 as Fanfest, Inc. In August, 1995 the Company changed its name to Starfest, Inc. During 1998, the Company was inactive, just having minimal administrative expenses. The Company purchased an internet site for $118,000 in April 1999 (paid with $2,950,000 shares of Starfest common stock). The site generated no revenues. The site was abandoned in December 1999 and expensed at that time. The Company is negotiating a merger agreement with a company (see Note 3). The purpose of the merger is to effect an online communication retrieval system such as e-mail via the telephone. In March 2000, the Company acquired approximately 96.83% ($8,250,000 shares) of the common stock of MAS Acquisition XX, Corp. (MAS XX) in a purchase acquisition for $314,688. The purchased Company had not assets or liabilities so the off-set to the purchase price was treated as goodwill. This goodwill amount was expensed in March 2000 at the time of the acquisition since it did not have any future value for the entities. (b) Cash Equivalents ---------------- Cash equivalents consist of funds invested in money market accounts and investments with a maturity of three months or less when purchased. There were no cash equivalents for the three months ended June 30, 2000 and June 30, 1999. (c) Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principals requires management to make estimates and assumptions that affect the amounts reported in financial statements and accompanying notes. Actual results could differ from those estimates. (d) Issuance of Shares for Service ------------------------------ Valuation of shares for services is based on the estimated fair market value of the services performed. (e) Income Taxes ------------ The Company's uses the liability method of accounting for income taxes specified by SFAS No. 109, "Accounting for Income Taxes", whereby deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized and measured based on the likelihood of realization of the related tax benefit in the future. The Company had no material net deferred tax assets or liabilities at June 30, 2000 and June 30, 1999. 7 Starfest, Inc. and Subsidiary NOTES TO CONSOLIDATED FINANCIAL STATEMENTS cont.'d June 30, 2000 and June 30, 1999 (f) Loss Per Share -------------- In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No. 128 "Earnings Per Share." The statement replaced primary EPS with basic EPS which is computed by dividing reported earnings available to common shareholders by weighted average shares outstanding. The provision requires the calculation of diluted EPS. The company uses the method specified by the statement. 2. ADVERTISING ----------- Advertising is expensed as incurred. 3. MERGER NEGOTIATIONS ------------------- On January 26, 2000 the Company entered into an agreement of merger with Concierge, Inc., a Nevada corporation, pursuant to which, should the merger be approved by the shareholders of both companies, the presently outstanding 1,376,380 shares of common stock of Concierge, Inc. will be converted into shares of common stock of the Company on the basis of 70,444 shares of Starfest, Inc. to be issued for each share of Concierge, Inc. The Company is registering 96,957,713 shares of its common stock on a Form S-4 to be filed with the Securities and Exchange Commission to be available should the merger be approved. 4. RELATED PARTY NOTES PAYABLE --------------------------- Notes payable to shareholders are non-interest bearing, unsecured with no specified due date in the amount of $247,502. Note payable to Concierge, Inc. is non-interest bearing with no specified due date in the amount of $100,000. Total related party notes payable is $347,502. 5. GOING CONCERN UNCERTAINTIES --------------------------- The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred a net loss of $352,937 for the six months ended June 30, 2000 and a net loss of $18,411 for the three months ended June 30, 2000. These factors, among others, raise substantial doubt as to the Company's ability to continue as a going concern. The Company's management intends to raise additional operating funds through equity and/or debt offerings. However, there can be no assurance management will be successful in this endeavor. 8 Item 2. Plan of Operation On January 26, 2000 the company entered into an agreement of merger with Concierge, Inc., a Nevada corporation, pursuant to which, should the merger be approved by the shareholders of both companies, the presently outstanding 1,376,380 shares of common stock of Concierge, Inc. will be converted into shares of common stock of the company on the basis of 70.444 shares of Starfest, Inc. to be issued for each share of Concierge, Inc. The company is registering 96,957,713 shares of its common stock on a Form S-4 to be filed with the Securities and Exchange Commission to be available should the merger be approved. Should the merger not be approved, Starfest will seek another merger partner. Our sole "asset" is our status as a public company whose stock trades on the OTC Bulletin Board. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27 Financial Data Schedule (b) Forms 8-K None SIGNATURES Pursuant to the requirements of the Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: August 17, 2000 Starfest, Inc. By /s/ Michael Huemmer -------------------------------- Michael Huemmer, President