SECURITIES AND EXCHANGE COMMISSION
                               
                     Washington, D.C. 20549
                               
                           FORM 10-Q
                               
                               
                       QUARTERLY REPORT
                Pursuant to Section 13 or 15(d)
             of the Securities Exchange Act of 1934



For the Quarter Ended March 31, 1998             Commission File No. 0-6518


                  Trilogy Gaming Corporation 


State of Incorporation                   I.R.S. Employer Identification No.
  Delaware                                            87-0280129

                               
                           1717 E. Bell Road, Suite 12
                           Phoenix, Arizona 85022
                           Telephone: (602) 788-5801


Securities Registered Pursuant to Section 12 (b) of this Act:



Title of Each Class               Name of Each Exchange on Which Registered
   None                                             None


Securities Registered Pursuant to Section 12 (g) of this Act:



 Title of Each Class             Name of Each Exchange on Which  Registered
Common Voting Stock,                                 None
Par Value $0.001 Per Share

Indicate by check mark whether the Registrant (1) has filed all annual,
quarterly and other reports
required to be filed with the Commission, and (2) has been subject to the
filing requirements for at
least the past ninety days.
                               
                               Yes                             No
                                
                            BUSINESS

The Company has the exclusive United States license for the Trilogy scratch tab
game and is currently  in development
its scratch tab.  The Trilogy game shall be introduced with free promotional
plays on the $2 and $5 Trilogy scratch tabs
to stimulate sales for maximum performance and player appeal.  The TRILOGY
scratch tab game combines on the same
Trilogy scratch tab (ticket), the two most familiar and popular state lottery
games, the scratch ticket game and Lotto
numbers game, hence the education process is minimized and the public should
learn quickly, that with TRILOGY they
could get more "bang for the buck".

The Company plans to market its Trilogy scratch tab game for added player
promotion to Indian Gaming casinos, Indian
gaming bingo halls, Charity gaming organizations and State Lotteries and
anticipates to earn 7 % +/- of the Trilogy
scratch tab sales.  Marketing will be pursued with commissioned representatives
experienced in Indian, Charity and/or
Lottery gaming.  The Company and its marketing agents may be required to have
gaming license.

ITEM 1.    THE NATURE OF BUSINESS, PRODUCTS AND SERVICES   

The Company is in the business of marketing its products to Indian gaming
enterprises, Charitable gaming entities and
State Lotteries in the United States.  Gaming & Wagering magazine reported in
1995 in the United States: Indian
Reservation Gaming Revenues of 49 billion dollars, up 9.4% over the previous
year, Charitable Gaming revenues of
9.8 billion dollars, up 9% over the previous year 1996 and State Lottery sales
of 38.8 billion dollars, up 12% over the
previous year 1996.  Most Indian Gaming enterprises market bingo, pull-tabs,
and video slot games.  There are
Charitable Gaming enterprises that market bingo, raffle and pull-tabs games. 
State lotteries market on-line lottery
drawings, or numbers type games, scratch or instant type scratchier tickets
games.

In July of 1996, the Company begun to take commitments for orders.  The Company
entered into an agreement with the
St. Regis Mohawk Indian Tribe of NY for 1,500 Trilogy dispensers and also has a
"Location Agreement of Intent"
signed 7/25/1996 with Indian Tribal Authority for 1,000 Trilogy scratch tab
dispensers

The Company entered into an agreement with the St. Regis Mohawk Indian Tribe of
NY for 1,500 Trilogy dispensers
and also has a "Location Agreement of Intent" signed 7/25/1996 with the St.
Regis Mohawk Indian tribe located within
the state of NY.  The agreement provides in part that the "Company and or its
authorized Distributor shall begin to
deliver on or before 120 days after receipt of Class II classification from
either the State of New York or National Indian
Gaming Commission three hundred (300) Trilogy tab dispensers to the TRIBE and
from said dispensers, the TRIBE
shall market TNAG's Trilogy scratch tabs on consignment from the Tribes Indian
Reservation within the State of New
York and 60 days after said 300 dispensers have been delivered, TGC shall
deliver two hundred fifty (250) additional
Trilogy dispensers per month until a total of one thousand five hundred (1,500)
Trilogy dispensers have been delivered".
No financing plan for the dispensers has been finalized as of this filing date
of this report.

The Company plans to file with the St. Regis Tribe Gaming Commission on its
Gaming Enterprise Registration
Application form, the Company, its Distributor, if any, the Company's Trilogy
scratch tab game, dispenser,
communications, accounting and security specifications.  The Tribal Gaming
Commission has provided the Company
with its Temporary Gaming Registration form which states that the application
is granted providing the application is
complete and that the gaming application submitted to the St. Regis Gaming
Commission is contracted to the New York
State Racing and Wagering Board, Gaming Unit to process such applications. 
Thereafter, the Company could be
eligible to market its Trilogy dispensers and/or Trilogy tabs to the St. Regis
Tribe and the Tribe could be eligible to
market Trilogy scratch tab on its reservation. 

Upon St. Regis Tribal casinos marketing Trilogy scratch tabs from 100 Trilogy
Table Games and the Company adding
50 dispensers a month from operations for a total of 460 Trilogy Table games on
line by end of 12 months, the Company
anticipates The first full 12 months of TRILOGY scratch tab sales to generate
84.1 million dollars in gross revenues with
pre-tax operating earnings of 58.5 million dollars to the Company. 

The Company is presently in the final development stage of design of its Class
II designed Table game with  video
visual display  The Company's initial plans are to market its Patented/Licensed
Trilogy pull tab Progressive Mega Cash
jackpot scratch tabs to Indian gaming casinos.  Sales to Indian gaming casinos
are targeted to begin in the later part of
1998. 

The Company's 1 employee is the President of the Company, which is salary
approved but as of 9/30/97 he has elected
not to accept approved salary.

ITEM 2.                                                          LEGAL
PROCEEDINGS             None.

ITEM 3.                                                          CHANGES IN
SECURITIES          None

ITEM 4.                                                          CHANGES IN
SECURITY FOR REGISTERED SECURITIES          None.

ITEM 5.                                                          DEFAULTS UPON
SENIOR SECURITIES                        None.

ITEM 6.                                                          DECEASE IN
AMOUNT OUTSTANDING OF SECURITIES OR INDEBTEDNESS            None

ITEM 7.                                                          INCREASES IN
AMOUNT OUTSTANDING OF SECURITIES OR INDEBTEDNESS              

Name        # of Common     # of Preferred          Date    Consideration
Mike Maledon   7,300            00        1/8/98    Executive Services
Ron Brownell   8,000            00        1/8/98    $1.25 per share
SHG Holding Inc.                50,000    50        1/8/98  $1.25 per share
Robert Rettig  8,000            10        3/26/98   $1.25 per share
Andrew Alex    3,120            00        3/16/98   Legal services
John Doherty   1,120            00        3/16/98   Office Rent
Phyllis Albrecgt                5,000     00        3/16/98 Management services
Mike Maledon   50,000           00        3/16/98   Executive services
William Daniels                 2,500     00        3/16/98 Consulting fee
Total          135,040          60        

(See Notes to Financial Statements Equity section.).  These securities were
issued by the Company pursuant to a Private
placement agreement as having been issued to persons who had access to the
books and records of the Company and
who took the Company's securities for investment only and assurance to the
Company that investor had no present
intention of selling or otherwise disposing of said securities, except in
compliance with the Securities Act of 1933, as
amended.  These shares were issued by the Company in reliance upon exemption
provided in Section 4(2) of the
Securities Act of 1993, as amended,

ITEM 8.                                                          SUMMATION OF
MATTERS TO A VOTE OF SECURITY HOLDERS          None.

ITEM 9.                                                          OTHER
MATERIALLY IMPORTANT EVENTS           
The Company appointed Executive Registrar & Transfer Agency, Inc, 3145 W. Lewis
Ave. Suite 200,
Phoenix, Arizona 85009 as the designated transfer agent for the Company. 

ITEM 10.                                                         EXHIBITS AND
REPORTS ON FORM 10-Q           
    
                            Independent Auditors Compilation Report
          (I)  Balance Sheet 3/31/1998
          (II)      Statement of Cash Receipts and Disbursements for the 3
months ended 3/31/98
          (III)     Schedule Of Common Stock as of 3/31/1998
          (IV)      Notes To Financial Statements

No reports on Form 8-K have been filed during any quarter from 01/1/77 to
3/31/1998

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, hereunto duly
authorized
This report is dated this 15th day of September, 1998. 



Trilogy Gaming Corporation by _____________________________ Wayne Mullins, as
its President







                        TRILOGY GAMING CORPORATION
                       (A DEVELOPMENT STAGE COMPANY)
                            FINANCIAL STATEMENTS
                              MARCH 31, 1998



                             TABLE OF CONTENTS

                                                        Page No.       


ACCOUNTANTS' REPORT  . . . . . . . . . . . . . . . . . . . . .                1

FINANCIAL STATEMENTS

       Balance Sheet . . . . . . . . . . . . . . . . . . . . .                2

       Statement of Operations . . . . . . . . . . . . . . . .                3
 . . . . . .

       Statement of Changes in Shareholders' Equity. . . . . .                4

       Statement of Common Stock Issued. . . . . . . . . . . .                5

       Statement of Cash Flows . . . . . . . . . . . . . . . .                6

       Notes to Financial Statements . . . . . . . . . . . . .             7 -
11










                            ACCOUNTANTS' REPORT


To the Board of Directors and Shareholders
Trilogy Gaming Corporation
Phoenix, Arizona

We have compiled the accompanying balance sheet of Trilogy Gaming Corporation
as of March 31, 1998, and the related statements
of operations, changes in shareholders' equity, common stock issued and cash
flows for the three months then ended and for the period
from January 1, 1989 (date of inception of development) to March 31, 1998, in
accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified Public
Accountants.

A compilation is limited to presenting in the form of financial statements
information that is the representation of management.  We
have not audited or reviewed the accompanying financial statements and,
accordingly, do not express an opinion or any other form of
assurance on them.


Moffitt & Company, P.C.

September 1, 1998
                        TRILOGY GAMING CORPORATION
                       (A DEVELOPMENT STAGE COMPANY)
                               BALANCE SHEET
                              MARCH 31, 1998


                                  ASSETS

CURRENT ASSETS
       Cash                                                                    
  $              49,375

OTHER ASSETS
       Deferred tax assets (Note 3)                                            
            0

         TOTAL ASSETS                                                   $      
       49,375

                   LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES                                                            
            
   
       Deposit on stock                                                      $ 
        4,000

REDEEMABLE PREFERRED STOCK (NOTE 8)                                            
     0
       Non-cumulative, non-voting shares
          Par value $0.01 per share
          Authorized 5,000,000 shares
          Issued and outstanding - 6 shares                                    
                                

SHAREHOLDERS' EQUITY
       Capital stock
          Preferred stock, convertible, non-cumulative voting shares
            (Note 7)
            Par value $0.01 per share
            Authorized 5,000,000 shares
            Issued and outstanding - 3,690 shares                       $      
           37            
          Common stock, par value $0.001 per share
            Authorized 75,000,000 non-cumulative voting shares
            Issued and outstanding 2,407,527 shares                            
        2,407
       Paid in capital in excess of par value of stock                         
              1,304,076
       Retained earnings (deficit)                          ( 477,376)         
            
       Deficit accumulated during the development stage                        
     ( 783,769)

            TOTAL SHAREHOLDERS' EQUITY                                         
                 45,375

            TOTAL LIABILITIES AND SHAREHOLDERS'
              EQUITY                                                         $ 
       49,375
                        TRILOGY GAMING CORPORATION
                       (A DEVELOPMENT STAGE COMPANY)
                         STATEMENT OF OPERATIONS
              FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND
       THE PERIOD JANUARY 1, 1989 (DATE OF INCEPTION OF DEVELOPMENT)
                             TO MARCH 31, 1998

                                                                               
    January 1, 1989
                                                                               
        (Date of
                                                        Three                  
      Inception of
                                                      Months Ended             
        Development)
                                                        March                  
       to March 
                                                        31, 1998               
                 31, 1998         

REVENUE                                        $          0        $           
          0            
    
DEVELOPMENT COSTS                                      ( 65,911)               
                ( 783,769)

NET (LOSS)                                           $        ( 65,911)       $
                ( 783,769)

NET LOSS PER COMMON SHARE

       Basic                                         $         0.018           

       Diluted                                       $         0.011

AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING                                       

       Basic                                                     3,690,000

       Diluted                                                6,049,194


                        TRILOGY GAMING CORPORATION
                       (A DEVELOPMENT STAGE COMPANY)
                STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                    FOR THE THREE MONTHS MARCH 31, 1998



                                 Preferred Stock
                                  (Convertible)                      Common
Stock      
                              Shares              Amount                       
  Shares                        Amount          

BALANCE, JANUARY 1, 1998             3,690     $          37                  
2,309,527    $                    2,309
    

ISSUANCE OF COMMON
   STOCK                                                                       
                           
   
       For services rendered                   0                 0             
            50,000                            50
       For cash                                     0                  0       
                      48,000                       48
       Less commission paid                    0                 0             
                 0                             0
    

NET (LOSS) FOR THE THREE
   MONTHS ENDED
   MARCH 31, 1998                        0                 0                 0 
                           0

                                     3,690     $          37                  
2,407,527    $                    2,407






                   Paid in                                           Deficit
                   Capital                                         Accumulated
                  in Excess                  Retained                        
During the
                    of Par                   Earnings                       
Development
                Value of Stock               (Deficit)                        
Stage                



             $            1,193,673    $           ( 447,376)        $         
      ( 717,858)
    



                        62,450                    0                       0
                        59,953                    0                       0
                           ( 12,000)                   0                       
    0



                             0                    0                ( 65,911)

             $            1,304,076    $           ( 477,376)        $         
      ( 783,769)

                        TRILOGY GAMING CORPORATION
                       (A DEVELOPMENT STAGE COMPANY)
                     STATEMENT OF COMMON STOCK ISSUED
       THE PERIOD JANUARY 1, 1989 (DATE OF INCEPTION OF DEVELOPMENT)
                             TO MARCH 31, 1998


         Date            Number
        Shares                    of Shares                               Price
                    Total
        Issued                      Issued         Consideration              
Per Share                Consideration        

       01/01/89                         49,985,211 Balance at date of inception
         
                                            of development      
       03/01/96                            494,684 Balance after 100-1
                                            reverse stock split
       05/05/96                          1,596,893 Merger of International
                                            Lottery Productions LTD.
       03/27/96                             40,000 Cash                   $    
      1.25    $         50,000
       04/04/96                              8,000 Cash                        
      1.25              10,000
       07/08/96                             10,000 Cash                        
      1.25              12,500
       08/12/96                             78,750 Royalties                   
         
       08/16/96                             16,000 Cash                        
      1.25              20,000
       11/08/96                             12,000 Cash                        
      1.25              15,000
       11/14/96                              4,000 Cash                        
      1.25               5,000
       11/18/96                              8,000 Cash                        
      1.25              10,000
       12/02/96                             20,000 Cash                        
      1.25              25,000
       03/10/97                              8,000 Cash                        
      1.25              10,000
       06/18/97                              3,600 Commission                  
      1.25               4,500
       06/18/97                              2,000 Office rent                 
                     1.25                              2,500
       06/18/97                                600 Legal fees                  
      1.25                 750
       09/18/97                              3,000 Cash                        
      5.00              15,000
       11/06/97                              4,000 Cash                        
      2.50              10,000
       01/08/98                              8,000 Cash                        
      1.25              10,000
       03/01/98                             50,000 Services                    
      1.25              62,500
       03/24/98                             40,000 Cash                        
      1.25              50,000

                                2,407,527
                        TRILOGY GAMING CORPORATION
                       (A DEVELOPMENT STAGE COMPANY)
                          STATEMENT OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND
       THE PERIOD JANUARY 1, 1989 (DATE OF INCEPTION OF DEVELOPMENT)
                             TO MARCH 31, 1998

                                                                               
    January 1, 1989
                                                                               
        (Date of
                                                        Three                  
      Inception of
                                                      Months Ended             
        Development)
                                                        March                  
       to March 
                                                        31, 1998               
                 31, 1998         

CASH FLOWS FROM OPERATING ACTIVITIES:
       Net (loss)                                    $        ( 65,911)       $
                ( 783,769)        

          NET CASH (USED) BY OPERATING
             ACTIVITIES                                       ( 65,911)        
                ( 783,769)

CASH FLOWS FROM INVESTING ACTIVITIES:
       Deferred start up costs                            0                    
       ( 513,376)

          NET CASH (USED) BY INVESTING
             ACTIVITIES                                          0             
                ( 513,376)

CASH FLOWS FROM FINANCING ACTIVITIES:
       Proceeds from issuance of company stock                                 
110,501                     1,306,520
       Deposit on stock                                        4,000           
                   4,000

          NET CASH PROVIDED BY FINANCING
             ACTIVITIES                                        114,501         
                  1,346,520

NET INCREASE IN CASH                                     48,590                
                  49,375

CASH BALANCE AT BEGINNING OF PERIOD                                   785      
                               0

CASH BALANCE AT END OF PERIOD                  $         49,375          $     
                  49,375

SUPPLEMENTARY DISCLOSURE OF
   CASH FLOW

       Interest paid                                 $           0       $     
                     0

       Taxes paid                                                0             
                     0

NON CASH INVESTING AND FINANCING
   ACTIVITIES
       Issuance of company stock for services                      $           
         62,500        $              70,250
                        TRILOGY GAMING CORPORATION
                       (A DEVELOPMENT STAGE COMPANY)
                       NOTES TO FINANCIAL STATEMENTS
                               MARCH 31, 1998


             NOTE 1       SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

             Nature of Business

                          Trilogy Gaming Corporation was incorporated in the
State of Delaware for the primary business purpose of
             selling its Trilogy scratch tab/lotto type tickets on consignment
and administering the progressive jackpots and
             communication systems.

                          Accounting Estimates

                          Management uses estimates and assumptions in
preparing financial statements in accordance with generally
             accepted accounting principles.  Those estimates and assumptions
affect the reported amounts of assets and
             liabilities, the disclosure of contingent assets and liabilities,
and the reported revenues and expenses.  Actual
             results could vary from the estimates that were used.

                          Cash Equivalents

                          For purposes of the statement of cash flows, the
company considers all highly liquid debt instruments purchased
             with a maturity of three months or less to be cash equivalents.

                          Income Taxes

                          The company accounts for income taxes on an asset and
liability approach to financial accounting.  Deferred
             income taxes and liabilities are computed annually for the
difference between the financial statements and tax
             basis of assets and liabilities that will result in taxable or
deductible amounts in the future, based on enacted
             tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income.
             Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to
             be realized.  Income tax expense is the tax payable or refundable
for the period, plus or minus the change during
             the period in deferred tax assets and liabilities.

                          Net Loss Per Share

                          Net loss per common share is computed by dividing net
loss by the weighted average number of shares
             outstanding during the period.
                        TRILOGY GAMING CORPORATION
                       (A DEVELOPMENT STAGE COMPANY)
                       NOTES TO FINANCIAL STATEMENTS
                               MARCH 31, 1998


             NOTE 2       DEVELOPMENT STAGE OPERATIONS 

                          As of March 31, 1998, the company was in the
development stage of operations.  According to the Financial
             Accounting Standards Board of the Financial Accounting Foundation,
a development stage company is defined
             as a company that devotes most of its activities to establishing a
new business activity.  In addition, planned
             principle activities have not commenced, or have commenced and
have not yet produced significant revenue.

                          FAS-7 requires that all development costs be expensed
during the development period.  The company expensed
             $65,911 of development costs for the three months ended March 31,
1998 and $783,769 from January 1, 1989
             (date of inception of development) to March 31, 1998.

             NOTE 3       DEFERRED TAX ASSET

                          The deferred tax asset arises from the difference
between the accounting for development stage costs.  For
             financial statement purposes, development stage costs are expensed
as incurred.  For tax purposes, these
             expenses are capitalized and will be amortized over 60 months once
operations begin.

                          The components of the deferred tax asset are as
follows:

                  Deferred tax asset                          $                
  370,000
            
                  Less valuation allowance                                     
            370,000

                        Net deferred asset                          $          
                  0

             NOTE 4       PRIVATE PLACEMENT OFFERING

                          In 1997, the company conducted a private placement
through qualified investors.  The total proceeds received
             relating to the offering were $35,000.

                          In 1998, the company conducted an additional private
placement through qualified investors.  The private
             placement was for 98 units, priced at $10,000 per unit.  Each unit
is for:
                        TRILOGY GAMING CORPORATION
                       (A DEVELOPMENT STAGE COMPANY)
                       NOTES TO FINANCIAL STATEMENTS
                               MARCH 31, 1998


             NOTE 4       PRIVATE PLACEMENT OFFERING (CONTINUED)

                  5,000 common voting shares and either:

                                                           a.                 1
Series A warrant to purchase on or before June 30, 1999, 5,000 common voting
shares for
                                       the price of $3.00 per share and

                                            1 Series B warrant to purchase on
or before December 31, 1999, 5,000 common voting share
                      for the price of $7.00 per share or

                                                           b.                 1
redeemable preferred non-voting share

                          The net proceeds from this offering at March 31, 1998
is $48,000.

                          Generally Accepted Accounting Principles require that
the proceeds from the sale of common stock with
             warrants and or preferred redemption rights should be allocated to
the common stock, warrants and preferred
             stock based upon the fair market value of each financial
instrument.  Since the company is in the development
             stage, management believes that only the common stock has a market
value and has allocated all of the sales
             proceeds to the common stock.
   
NOTE 5       LICENSING AGREEMENT

                          The company has a licensing agreement with the
company's Chief Executive Officer for the exclusive right to
             use the officer's patents and trade marks for the Trilogy lotto
game.

                          The agreement provides that the Chief Executive
Officer will receive the following:
            
                                       A. 1,310,000 common voting shares of
stock
                                       B. 3,690 shares of convertible preferred
shares
                                       C. Minimum royalty payments of $100,000
beginning in the year 1999  

                          The term of the agreement is for one year plus
renewable one year options.

                        TRILOGY GAMING CORPORATION
                       (A DEVELOPMENT STAGE COMPANY)
                       NOTES TO FINANCIAL STATEMENTS
                               MARCH 31, 1998


             NOTE 6       BEARER ROYALTY CERTIFICATES

                          The company has issued 61 five year Trilogy Lotto
royalty interests.  The royalty units will receive a 6%
             minimum royalty payment for two years plus a five year royalty of
 .01% of pre tax income.  Payments begin
             the first year the company receives gross profits and royalty
earnings payments from each state lottery
             marketing the Trilogy Lotto game.
                         
NOTE 7       CONVERTIBLE PREFERRED STOCK
                         
                          As part of the licensing agreement described in
footnote number 5, the Chief Executive Officer received 3,690
             shares of convertible, non-cumulative voting preferred shares of
stock.  These shares are convertible at the rate
             of one preferred share for 1,000 common shares for a total of
3,690,000 common shares.  There is no expiration
             date on this option.

             NOTE 8       REDEEMABLE PREFERRED STOCK

                          Regulation S-X of the Securities and Exchange
Commission states that preferred stock subject to mandatory
             redemption requirements must be presented separately in the
balance sheet and not be included in the
             shareholders' equity section.  The non-cumulative, non-voting
shares have a redemption value of $10,000
             payable from 25% of the company's quarterly pre-tax earnings as a
preferred stock dividend.  When the
             preferred stock dividends paid under this formula equals $10,000
per unit, the preferred unit shares will be
             terminated on the books of the company.

                          At March 31, 1998, the company was contingently
liable to redeem $60,000 of preferred stock from 25% of
             pre-tax earnings.

NOTE 9       INCENTIVE QUALIFIED EMPLOYEE STOCK OPTION PLAN

                          The company has adopted an incentive qualified
employee stock option plan.  The plan is designed for key
             employees and will be administered by the Compensation Committee
of the Board of Directors and/or the
             company's Chief Executive officer.  The plan will provide that
employee options granted by the company are
             vested in the employee after services  have  been  performed or
after one year  of full  time employment and may
             be exercised after the options are vested and prior to the
termination date of the vested option.  The options are
             exercisable for $1.25 per share and each option shall be vested
for services performed for the company or after
             one year as a full time employee of the company.

                          The company has not granted any options as of March
31, 1998 or September 1, 1998.

NOTE 10      EXECUTIVE EMPLOYMENT AGREEMENTS

                          On May 1, 1998, the company entered into two
employment agreements with the Chief Executive Officer and
             the President.  The terms of the agreements commence on May 1,
1998 and end on December 31, 1998.  The
             agreements automatically renew annually on December 31 of each
year, unless canceled by the Board of
             Directors.

                          The annual salary of each executive is $104,000. 
However, the Board of Directors has the discretion to defer
             this salary until operating earnings are adequate.







NOTE 11      AUTOMOBILE OPERATING LEASE

                          The company has leased a 1998 Jeep Grand Cherokee. 
The lease began on March 31, 1998 and terminates on
             March 30, 2001.  The monthly lease payments are $398 plus Arizona
sales tax.
                         
                          Future minimum lease payments are as follows:

                  March 31, 1999       $            4,776
                  March 31, 2000                    4,776
                  March 31, 2001                    3,576

                                       $           13,128