Stockprowler.com | 4/3/00

Last week's pick LGF hit a high of 5 before falling back to close at 3 9/16… another tough week, compounded by tax selling. Although, there was one shining star, previous pick ATMS hit a new high of 8 13/16.

We would like to begin this week with our long anticipated PTSC update. First, we would like to express our thanks to Jim Lunney, CEO of Patriot Scientific, for taking time away from his busy schedule to answer a number of questions for Stockprowler.com. The following questions and answers are presented in their entirety & unedited as of March 31, 2000:

Stockprowler: Do you anticipate being able to announce design wins and/or contracts prior to or concurrent with the annual shareholders meeting in April? There is concern among Stockprowler readers that the stock price may suffer further erosion with the stock dilution created by the $30 million equity line of credit.

Jim Lunney: We anticipate announcing additional design wins and a potential contract near term. The timing is totally dependent on the customer and its market/product development needs. As these items are firmed up, we will be making announcements. The timing of these announcements may, or may not, happen in the same time frame as the annual shareholders meeting. Activity in the Java area is showing strong rollout signs. In June of this year, Sun again will be holding the JavaOne conference in San Francisco, and it is focused on embedded Java applications. I suspect that the recent interest we are seeing is because this conference is a really good forum to highlight Java enabled products. Patriot will be exhibiting at JavaOne.

Stockprowler: Regarding the $30 million financing… is it correct to assume that Swartz Private Equity, the underwriter for the equity line, has been privy to any and all financial information, including deals in the pipeline?

Jim Lunney: The proposed $30 million equity line of credit would be available to be used over a 3 year period, when it is advantageous to the company. We will use it to increase our competitive position in the marketplace. Increased manpower resources, in both engineering and marketing, will be a principal use of already available funds. We have already added five new engineers in the last five months. We plan on acquiring additional design automation tools to support our engineering efforts. Swartz Private Equity is the underwriter of the equity line and as such it has a fiduciary responsibility to perform ongoing due diligence in support of underwriting responsibilities.

Stockprowler: The PSC1000 chip runs Java natively, and its embedded applications are staggering. In addition, it is very low cost, consumes relatively low power, and its dual stack architecture is patented. Big chip makers must have their eyes on this… how big do you expect the licensing market to be for the core technology?

Jim Lunney: We have a large range of interest in the PSC1000 that does include some of the large chip makers. They typically have some interest in the chip but are usually interested in the licensing of IP. Until late last year we were unable to provide a licensable product. We are now actively marketing our " Soft Core " version of our technology for use by customers wishing to build systems-on-chip "SOCs". More recent market interest in Java for embedded appliances is helping to fuel this interest.

Stockprowler: What are your thoughts regarding speculation that the Transmeta Crusoe microprocessors may pose a competitive threat to PTSC in wireless and net devices?

Jim Lunney: The Transmeta Crusoe processor is in a higher price, higher performance and higher power consumption microprocessor than the PSC1000. I would suspect the Pentium mobile market is their target vice our price/performance point.

Stockprowler: Can you comment on the recent buzz on the PTSC RagingBull message board regarding a possible connection between Patriot and "Java embedded chip in WAP phones in the European market?"

Jim Lunney: The PSC1000 is capable of being used in the WAP application. It is an area that I suspect our reps are pursuing due to its high volume market potential.

Stockprowler: Could you comment on the significance of Patriot partnering with Synopsis?

Jim Lunney: The partnership with Synopsys is key to expanding our ability to meet a high standard of design reuse. The Synopsys IP Catalyst program provides microprocessor users with up front IP evaluations and we believe that it will accelerate customer confidence in utilizing our microprocessor technology for their systems-on-chip and ASIC projects.

Stockprowler: Stockprowler.com received an e-mail response from Peter Keller, president of Datalink AG confirming that they are using the Patriot PSC1000 in embedded Java applications for the industrial environment. Would you care to comment on the size of this deal and the potential for others like it in the European market?

Jim Lunney: In Europe, there is a strong interest in the PSC1000 for industrial control and factory automation. In some cases, the solutions are Java based but other languages like Forth and C also are being used. These markets are good ones for Patriot but represent low to medium size volumes. Our hope would be that the exposure gained with some of these companies will lead to interest in the use of the PSC1000 in some of the products being built on these factory floors…like cars!

Jim Lunney, Patriot Scientific CEO, has to be very cautious in making statements regarding his company… a publicly traded company. The embedded Java market is going to be huge, and PTSC is extremely well positioned to take advantage of a great opportunity. Patriot Scientific was trading at 55 cents back in January..

We would like to bring our reader's attention to another previous pick FONX… Fonix Corp. technology continues to be validated as evidenced by this week's pick, Concierge/SFST's choice of Fonix's TTS engine for their PCA product. "After evaluating a number of text-to-speech engines, we selected Fonix as the most natural sounding and best suited to our needs"… Allen Kahn, CEO of Concierge.

Stockprowler.com would also like to issue a watch on ACSYS, Inc. (AYS:Amex) a leading provider of specialty staffing services in the U.S. with FY 1999 revenues of $166 million. AYS closed up Friday at 3 3/4 on recent news that the company is in merger talks… unconfirmed speculation centers around Monster.com (TMPW:Nasdaq).

And now the Stockprowler.com pick of the week…

Starfest, Inc. (SFST:OTC:BB)

Corporate Web site: http://www.pcahome.com
Shares Outstanding: 23 million
Closing Price Friday: $2.25

This week's pick, Starfest, Inc. (SFST) closed Friday at $2.25 up $.50 for the day on heavy volume (1,382,300 shares). Not bad for a company whose "sole asset is its status as a public company whose stock trades on the OTC Bulletin Board"… this according to the latest 8K SEC filing dated March 8, 2000. So, why the big interest… what's the deal here? The deal is that SFST, which is essentially a publicly traded "shell" company, has entered into an agreement to merge with Concierge, Inc., a private Los Angeles based corporation. The merger allows Concierge to take a fast track to becoming a publicly traded company… And Concierge just may have the hottest new product to come down the road in some time. Concierge founder and CEO, Allen Kahn, has invented and developed a product, Personal Communications Attendant (PCA). The product is so unique that Concierge has a provisional patent pending that covers 20 of the PCA's features and their interactions.

The PCA provides a means by which any user of Internet e-mail can have e-mail and fax messages spoken to him over any touch-tone phone or wireless phone anywhere in the world. The PCA responds to the user's voice commands to read, verbalize and manage e-mails stored on a personal computer. The PCA is "trained" to respond only to the voice commands and personal voice password of the individual user, thus guaranteeing that each user's personal messages cannot be accessed by anyone else. Responding to spoken instructions, the PCA can verbalize e-mail with fax and voice-mail capabilities over the phone, and save or delete those messages as directed by the user. In addition, the user, by voice command, over the telephone, can dictate e-mail messages to respond to the e-mail messages accessed by phone.

According to CEO Allen Kahn, Concierge has established a close collaborative working relationship with Fonix Corp. (FONX) and has signed a product licensing agreement to incorporate its Text-To-Speech (TTS) Engine into Concierge's PCA products. Fonix technology enables the PCA with TTS to read e-mail and faxes using a near human-quality voice with characteristics such as pauses, pronunciation, stress, and punctuation. The English-language PCA will be followed by PCAs for several other spoken languages including Spanish, French, German, Japanese, and Korean.

The company plans to introduce the basic e-mail software package running on Windows 95 or 98 for a purchase price of $39.95… with a $19.95 upgrade, the pro version monitors and collects fax, voice-mail and e-mail messages. There is no monthly service fee. Product release and initial customer shipments are scheduled to begin April 7. Concierge plans an aggressive, direct mail and Internet marketing campaign to introduce and promote the PCA. CEO Allen Kahn expects to ramp gross revenues up to $20 million the first year with a gross profit margin projected between 80% and 90% from direct sales. The potential market for this product is huge… recent reports predict that by 2003 there will be 200 million e-mail users in the U.S. market alone churning out a staggering 7 billion messages a day… worldwide it is anticipated that more than 1 billion mobile phones will be in use by 2003. The Gartner Group, a market research company, anticipates the general product area addressed by the PCA, will likely become a $6.6 billion market by 2001. The PCA is the right product, at the right time… PC World Online stated recently: "The PCA comes closer to the dream of the universal inbox than any off-the-shelf message solution we've seen to date." Concierge, Inc. is scheduled to premiere its new technology on a CNBC segment the first week in April to coincide with the PCA product release.

Under the terms of the agreement between Starfest, Inc. and Concierge, Inc., the shareholders of Concierge will receive 78 million shares of Starfest in exchange for all their capital stock of Concierge upon approval of the shareholders of both companies and upon completion of other regulatory steps customary for a transaction of this nature. An additional 9 million shares will be available to Concierge, Inc. for use in possible future stock offerings, options, and other purposes. Current shareholders of Starfest, Inc. stock hold 23 million shares. The current officers and directors of Concierge will become the officers and directors of Starfest, and the name of Starfest will be changed to Concierge Technologies, Inc.

Although the PCA product offers a great deal of promise… there is always the possibility that the merger between Concierge and Starfest may not be concluded. That being a possibility, an investor in Starfest could lose all or part of their investment. Please do your own due diligence, and if you decide to invest, do so cautiously.

Good trading… Stockprowler