UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

   _X_           QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended December 31, 1997
                                               -----------------

                                       OR

   ___            TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                       THE EXCHANGE ACT

                         Commission file number 0-27226
                                               ---------

                        SPINTEK GAMING TECHNOLOGIES, INC.
                        ---------------------------------
        (Exact name of small business issuer as specified in its charter)

          California                                      33-0134823
          ----------                                      ----------
 (State or other  jurisdiction                  (IRS EmployerIdentification No.)
of incorporation or organization)

901-B Grier Drive, Las Vegas, Nevada 89119               ( 702 )  263 - 3660
------------------------------------------              ----------------------
 (Address of principal executive offices)            (Issuer's telephone number)


Indicate by mark whether the issuer (1) filed all reports to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 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 ___


The number of shares of Common Stock, $0.002 par value,  outstanding on 
February 8, 1998 was 17,387,323.


<PAGE>
                        SPINTEK GAMING TECHNOLOGIES, INC.
                          (a development stage company)

                                   FORM 10-QSB
                                      INDEX

                                                                        Page No.
PART I.  FINANCIAL INFORMATION

         Item 1.   Consolidated Financial Statements


                  Consolidated Balance Sheets at December 31, 1997
                      and  June 30, 1997                                     3

                  Consolidated Statements of Operations -
                      Three Months Ended December 31, 1997,
                      Six Months Ended December 31, 1997 and
                               From Inception to December 31, 1997           4

                  Consolidated Statements of Cash Flows -
                      Three Months Ended December 31, 1997
                                Six Months Ended December 31, 1997 and
                                From Inception to December 31, 1997          5

                    Notes to Financial Statements                            7

         Item 2.  Plan of Operation                                          8

PART II.  OTHER INFORMATION
                                                                            13

         Item 1.  Legal Proceedings
                                                                            13

         Item 2.  Changes in Securities
                                                                            14

         Item 3.  Defaults on Senior Securities                             14

         Item 4.  Submission of Matters to a Vote of Security Holders       15

         Item 5.  Other Information                                         15

         Item 6.  Exhibits and Reports on Form 8-K                          15

         Signature Page                                                     16

                                      -2-
<PAGE>
PART I  FINANCIAL INFORMATION

ITEM 1.  Consolidated Financial Statements

                        SPINTEK GAMING TECHNOLOGIES, INC.
                          (a development stage company)
<TABLE>
<CAPTION>
                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except per share data)
                                   
                                                       DECEMBER 31,    JUNE 30,
                                                           1997          1997
                                                           ----          ----
                                                       (unaudited)
<S>                                                      <C>          <C>     
                                     ASSETS
     Current assets:       
       Cash                                               $    134     $   404
       Inventories, net                                        167         190
       Prepaid and other                                       624         484
                                                          --------     -------
            Total current assets                               925       1,078

       Furniture, fixtures and equipment - net                 164         131
       Licenses and patents                                  1,019       1,019
       Note receivable from related company                     37          88
       Other assets                                             28         141
       ------------                                       --------     -------
       Total assets                                       $  2,173     $ 2,457
                                                          ========     =======
     
                    LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:  
       Demand notes payable                               $     78     $     0
       Demand notes payable to stockholders
         and affiliated parties                                225         334
       Accounts payable                                        550         426
       Accrued liabilities                                     278         129
       Customer deposits                                        76
       Interest and dividends payable                          356         193
                                                           -------     -------
            Total current Liabilities                        1,563       1,082
                                                           -------     -------
     
     Commitments                                       
       
     Stockholders' equity:
       Preferred stock, no par value, 100,000 shares 
         authorized, 8,742 and 7,313 shares issued  
         and outstanding at December 31, 1997 and 
         June 30, 1997, respectively                         5,690       4,825
       Common stock, $.002 par value, 100,000,000  
         shares authorized, 18,504,652 and
         17,103,772 shares issued and outstanding
         at December 31, 1997 and June 30, 1997,
         respectively                                           37          34
       Additional paid in capital                            5,529       5,053
       Deficit accumulated during development stage        (10,617)     (8,508)
       Treasury stock - 1,317,329 shares at cost
         December 31, 1997 and June 30, 1997                   (29)        (29)
         -----------------------------------               -------     -------
            Total stockholders' equity                         610       1,375 
                                                           -------     ------- 
       
       Total liabilities and stockholders' equity          $ 2,173     $ 2,457
                                                           =======     =======
</TABLE>
                                      -3-
<PAGE>
                        SPINTEK GAMING TECHNOLOGIES, INC.
                          (a development stage company)
<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENT OF OPERATIONS
                      (in thousands, except per share data)
                                   (unaudited)
                                                                                            
                                       Three Months Ended             Six Months Ended           Cumulative
                                          December 31,                  December 31,            March 31,1995
                                    -------------------------     -------------------------     (Inception)To
                                       1996          1997            1996          1997       December 31, 1997
                                       ----          ----            ----          ----       -----------------
<S>
Revenues:                           <C>           <C>             <C>           <C>            <C>
  Sales                             $        0    $         0     $        0    $         0    $          0
  Cost of sales                              0              0              0              0               0
                                    ----------    -----------     ----------     ----------    ------------
     Gross profit                            0              0              0              0               0
                                    ----------    -----------     ----------     ----------    ------------
Operating expenses:          
  Selling, general &
     administrative                        655            921          1,192          1,605           7,529
  Research and development                 209            303            428            468           2,355
                                    ----------    -----------     ----------     ----------    ------------
     Total expenses                        864          1,224          1,620          2,073           9,884
                                    ----------    -----------     ----------     ----------    ------------
Operating Loss                            (864)        (1,224)        (1,620)        (2,073          (9,884)

Other income (expense):       
  Interest and other income                 95              3            126              6             168
  Depreciation & amortization              ( 6)           (11)          ( 11)          ( 20)           ( 59)
  Unrealized loss on
    marketable securities                    0              0              0              0            ( 83)
  Loss on sale of securities                 0              0              0              0            ( 96)
  Interest expense                        ( 22)           ( 9)         ( 513)          ( 21)           (664)
                                    ----------     ----------     ----------    -----------    ------------ 
Net loss                            $   (  797)    $    1,242)    $   (2,018)   $    (2,109)   $   ( 10,617)
                                    ==========     ==========     ==========    ===========    ============ 
          
Net Loss Per Share Of 
  Common Stock                      $    (0.08)    $    (0.09)    $    (0.22)   $     (0.14)   $      (0.95)
                                    ==========     ==========     ==========    ===========    ============ 
              
Weighted Average Common 
  Shares Outstanding                11,399,306     17,172,096      9,510,425     16,486,883      11,550,118
                                    ==========     ==========      =========     ==========      ==========
</TABLE>

                                      -4-
<PAGE>                                                 
                        SPINTEK GAMING TECHNOLOGIES, INC.
                          (a development stage company)                        
<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)
                                                                                             Cumulative
                                                     Six Months          Six Months         March 31, 1995
                                                       Ended               Ended            (Inception) To
                                                  December 31, 1996    December 31, 1996   December 31, 1996
                                                  ------------------  ------------------  -------------------
 
<S>                                                  <C>                <C>                 <C>
Cash flows from operating activities:
Net loss                                             $     (2,018)      $    (2,109)        $    (10,617)
Adjustments to reconcile net loss 
  to net cash used by operating activities: 
  Depreciation and Amortization                                12                20                   58
  Non-cash interest expense                                   395                                    475
  Allowance for inventory obsolescence                         89                14                  254
  Provision for bad debts                                      81                60                  120
  Loss on sale of securities                                                                          96
  Unrealized loss on marketable securities                                                            83
  Non-cash operating expenses for common stock                                   27                  645
  Royalty expenses used to reduce note
    receivable from related parties                            34                51                  127
  Changes in operating   
    assets and liabilities:      
    Decrease (increase) in assets:      
      Inventories                                            (169)             (154)               ( 877)
      Prepaid and other                                      (448)               75                ( 317)
    Increase (decrease) in liabilities:
      Accounts payable                                       (104)              124                  539
      Accrued liabilities                                    (113)              150                  279
      Interest payable                                       ( 70)                4                    9
      Customer deposits                                                          76                   76
                                                     ------------       -----------         ------------
Net cash used by operating activities                      (2,311)           (1,662)              (9,050)
                                                     ------------       -----------         ------------ 

Cash flows from investing activities: 
  Purchase of furniture, fixture
    and equipment                                             (49)              (53)                (200)
  Acquisition of licenses and patents                                                               (158)
  Proceeds from sale of securities                                                                   186
  Note receivable from related company                        ( 4)                                  (186)
                                                     ------------       -----------         ------------ 
Net cash used by investing activities                        ( 53)              (53)                (358)
                                                     ------------       -----------         ------------ 

Cash flows from financing activities: 
  Proceeds from (repayment of) demand notes
    payable to related parties                            ( 1,308)              470                  860
  Proceeds-advances from stockholders                                                              1,000
  Proceeds from issuance of convertible debentures          4,375                                  4,375
  Proceeds from issuance of common and treasury stock                                              1,452
  Proceeds from issuance of preferred stock                                     975                1,855
                                                     ------------       -----------          -----------
Net cash provided by financing activities                   3,067             1,445                9,542
                                                     ------------       -----------          -----------
Net increase in cash                                          703            (  270)                 134
Cash, beginning of period                                     121               404                    0
Cash, end of period                                  $        824       $       134         $        134
                                                     ============       ===========         ============
</TABLE>
                                      -5-
<PAGE>
                    SPINTEK GAMING TECHNOLOGIES, INC.
                      (a development stage company)       
<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)

                                                     Six Months          Six Months         March 31, 1995
                                                       Ended               Ended            (Inception) To
                                                  December 31, 1996   December 31, 1996   December 31, 1996
                                                  -----------------   -----------------   -----------------
 
<S>                                                  <C>                <C>                 <C>
Supplemental schedule of noncash investing
  and financing activities:
  Issuance of common stock for securities                                                   $        368
  Issuance of common stock for employment
    contracts and prepaid services                                                                    75
  Issuance of common stock exchanged for debt        $       440        $       500                1,092
  Issuance of common stock and treasury stock
   for advances from stockholders                                                                  1,000
  Issuance of common and treasury stock
    for services related to acquisition
    of public entity                                                                               1,014
  Issuance of common stock in lieu of cash for
    fees related to preferred stock transaction                                 110                  110
  Issuance of preferred stock in exchange for
     convertible debenture, net of 
     unamortized debt issuance costs                       4,829                                   4,829
  Issuance of common stock in exchange for
     preferred stock                                         243                                     912
  Purchase of furniture, fixtures and
    equipment through reduction in
    receivable from related parties                                                                   22
  Notes and interest payable to stockholders
    forgiven by stockholders, treated as
    additional paid-in capital                               335                                     335
  License and patent cost aquired through
    accounts payable                                                                                  12
  License and patent cost acquired by issuance
    of notes payable                                                                                 850
  Dividends payable preferred stock                        (  69)            (  159)              (  347)
 
Supplemental disclosure of cash flow information:
  
  Cash paid for interest                             $       100        $        11         $        164
  
</TABLE>
                                       -6-
<PAGE>
                        SPINTEK GAMING TECHNOLOGIES, INC.
                                AND SUBSIDIARIES
                        (a development stage enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.        The interim  financial data is unaudited;  however,  in the opinion of
          management, the interim data includes all adjustments, consisting only
          of normal recurring  adjustments necessary for a fair statement of the
          results for the interim  periods.  The financial  statements  included
          herein have been prepared by Spintek Gaming  Technologies,  Inc. ("the
          Company")  pursuant to the rules and regulations of the Securities and
          Exchange Commission. Certain information and note disclosures normally
          included in financial statements prepared in accordance with generally
          accepted accounting principles have been condensed or omitted pursuant
          to such rules and regulations,  although the Company believes that the
          disclosures  included  herein  are  adequate  to make the  information
          presented  not  misleading.   These  statements   should  be  read  in
          conjunction with the Company's Form 10-KSB,  as amended and filed with
          the  Securities and Exchange  Commission,  for the year ended June 30,
          1997.

2.    Patents, Licenses and Royalty Agreements

         On October 1, 1997,  Spinteknology,  Inc.  ("Spinteknology"),  a wholly
         owned  subsidiary  of  Spintek  Gaming,  Inc.,  a  Georgia  corporation
         ("Gaming") which is a wholly owned  subsidiary of the Company,  entered
         into  an   Interference   Settlement   Agreement   with  Bally   Gaming
         International, Inc./Alliance Gaming Corporation and filed same with the
         United States Patent and Trademark  Office in Washington,  D.C. General
         conditions of the agreement  acknowledged  Spintek's  ownership of coin
         weighing patent claims  associated  with detection of TECHNICIAN  FRAUD
         (i.e.,  "pilferage"  of coins from a slot's  hopper or from hopper fill
         bags) and  Bally/Alliance  ownership  of coin  weighing  patent  claims
         associated with detection of PLAYER FRAUD (i.e., slot player cheating).
         Also in the  settlement,  both  parties  have  agreed  to  grant to one
         another non-exclusive licensing of the coin weighing patent claims that
         they own, including the grant of those rights to affiliates.

         On July 30, 1997,  Spinteknology  received a patent for its proprietary
         slot machine coin weighing  technology from the Department of Trade and
         Industry,  Republic of South  Africa.  This patent  encompasses  hopper
         weighing  technology  used by Spintek to thwart  technician  and player
         fraud as well as drop box counting and weighing of coins.

         Spinteknology has other patent  applications  pending in Europe for its
         hopper weighing  technology.  These patent applications may conflict in
         five European  countries with patent  applications  filed by Azkoyen, a
         Spanish  company.  The Company is continuing to have  discussions  with
         Azkoyen in an attempt to resolve  this matter to the mutual  benefit of
         both parties.  Although  Management  believes the Company's  claims are
         valid and  intends to  vigorously  assert its  rights,  it is unable to
         estimate the outcome of any potential proceedings regarding this matter
         nor the ultimate financial effect it might have on the Company.

                                       7
<PAGE>
ITEM 2.  PLAN OF OPERATION
--------------------------

         The  Company  has been  conducting  what  have  been  considered  to be
         successful tests of its hopper weighing  technology  ("AccuHopper")  at
         various  casinos in Las Vegas,  Nevada and  Atlantic  City,  New Jersey
         during the past several months.  During the tests the product continued
         to be refined to meet the requests and needs of the  operators at those
         casinos  testing  the  product.  Management  believes  that the changes
         incorporated  as a result of input  from the tests  have  enhanced  the
         product.

         During the first quarter of fiscal 1998, the Company received  approval
         for its AccuHopper from the New Jersey  Division of Gaming  Enforcement
         and Casino Control Commission and in early November,  1997, the Company
         began a test of the product at an Atlantic City, New Jersey casino.  In
         January 1998,  that casino  indicated to Management that the system was
         working well and once the interface with their slot accounting software
         was completed,  that they would probably  initiate a purchase order for
         AccuHopper retrofit kits.

         AccuHopper  is capable of operating  on a stand alone basis,  either by
         means of hard wire or radio frequency transmission of data. Some of the
         casinos  participating  in the field tests of AccuHopper have indicated
         they would  consider  purchasing the system to operate on a stand alone
         basis if an  interface  was not  available  for their  slot  accounting
         software, while other casinos participating in the tests have indicated
         that they would prefer to have such an interface.  Management, with the
         assistance of two of the casinos  testing the system,  has succeeded in
         convincing  a major slot  accounting  software  company to  complete an
         interface  to  allow  the  data  received  from  the  AccuHopper  to be
         incorporated into their accounting reports.  That company has indicated
         that the  interface  should be  completed  by the end of March 1998 and
         Beta  tests are  scheduled  to be  conducted  during the month of April
         1998.  Management is in discussions with other slot accounting software
         vendors to encourage them to consider the completion of an interface to
         AccuHopper. Several of theses companies have indicated they are working
         towards developing an interface for AccuHopper.  Management, however is
         unable  to  control  when,  or if,  the  completion  of such  interface
         projects will occur, but is of the opinion that the first companies who
         are able to offer the interface  will have a  competitive  advantage in
         marketing their slot accounting systems.

         Management  is  encouraged by the results of the various field tests of
         AccuHopper,  the positive  comments it has received from  management at
         those  casinos  and  their  willingness  to  either  request  a  system
         interface from their slot accounting  software companies ot to consider
         purchasing the AccuHopper on a stand alone basis

         In December 1997 the Company received a purchase order from the Mohegan
         Sun Casino in Connecticut  for  approximately  260 AccuHopper  retrofit
         kits and the  software  to run the system on a stand  alone basis along
         with a substantial  deposit toward the purchase price. 

                                      -8-
<PAGE>
         Installation  of the units is  scheduled to begin on February 17, 1998
         and  should  be  completed  prior  to the end of the  Company's  third
         quarter which is March 31, 1998.

         In addition to working with various slot accounting  software companies
         to incorporate the AccuHopper  into their systems,  the Company is also
         in discussion with several of the slot machine manufacturing  companies
         to  encourage  them to  incorporate  the  AccuHopper  as an option  for
         factory  installation in their newly manufactured slot machines.  Based
         on discussions with those companies,  Management  believes that several
         of  them  are  currently   evaluating   the   feasibility   of  factory
         installation  of  AccuHopper  on their slot  machines.  To date IGT and
         Bally  Gaming are the only slot machine  manufacturers  to have license
         agreements with the Company for AccuHopper

         In January 1998, Spinteknology,  Inc. entered into a joint venture with
         Kinsale Developments Proprietary Limited, an Australian company to form
         a company named Spintek Gaming Pty Ltd.  ("SGPL") which will distribute
         the Company's  products in Australia,  New Zealand,  Macao,  Singapore,
         Hong Kong, China,  Indonesia,  Philippines,  South Korea Guam,  Brunei,
         Thailand, Noumea, Vanuatu, Taiwan, Laos, Cambodia,  Kampuchca, Vietnam,
         Samoa,   Fiji,   Nauru,   Kiribati   and   Tonga   (the   "Territory").
         Spinteknology,  a twenty percent joint venture participant in the joint
         venture,  will  receive a royalty of US$50 per unit sold by SGPL in the
         Territory in addition to twenty percent of the net profits of SGPL.

         Employees.  The  Company  has  recently  hired  additional  service and
         installation  support staff  personnel to assist with the ongoing field
         tests  and  to  undergo   training  in  anticipation  of  sales  to  be
         consummated  during the  fourth  quarter of fiscal  1998.  The  Company
         currently has 26 full time employees and, assuming sales materialize as
         expected,  anticipates that it will have between thirty and thirty-five
         full time employees by June 30, 1998.

         Gross Margins on Initial Sales.  Management has offered a discount from
         the listed  sales price for the  AccuHopper  to those  casinos who have
         assisted the Company in perfecting  AccuHopper  through field tests and
         to a few other casinos who have indicated they may be willing to be one
         of the first to  purchase  the  Company's  product.  As a result of the
         aforementioned  discounts  coupled  with  the  higher  initial  cost of
         product due to the initial  relatively  small  quantities  of inventory
         ordered, the Company will undoubtedly  recognize a smaller gross margin
         on its first few sales than can be expected on future  sales.  As sales
         volume increases, Management expects that the cost of its products will
         decrease as a result of  anticipated  volume  discounts  expected to be
         received from the Company's suppliers.

         Research and  Development.  Until  significant  sales of the AccuHopper
         begin  and  are  sustained,   Management  does  not  intend  to  commit
         significant  financial resources toward the research and development of
         the many non-gaming products it currently has pending.  During the past
         six months the Company has hired several  engineering staff to continue
         to develop  products that enhance and/or augment the  AccuHopper.  Such
         products  include,  but are not limited to, (1) a device to  accurately
         measure the  contents of a slot  machine  drop bucket  

                                      -9-

<PAGE>
          ("AccuDrop"); a device that monitors and measures the contents of fill
          bag storage  compartments on a casino floor; and, a mechanism to alert
          the slot floor people that the  contents of a slot  machine  hopper is
          too low,  thus  allowing  preventative  fills to be made before a time
          consuming  hopper empty condition  exists.  The Company filed and will
          continue to file patent  applications  both domestically and worldwide
          on  these   products  and  others  as  necessary.   Based  on  current
          engineering  operating forecasts  Management  anticipates that it will
          expend  approximately  $475,000 and $500,000  during the remaining six
          months of  fiscal  1998 and the  first  six  months  of  fiscal  1999,
          respectively towards research and development.


Results of Operation
--------------------

         From  inception  (March 31, 1995) to date, the Company has not realized
         any revenue  from the sale of its  products.  For the six months  ended
         December 31,  1997,  the Company  incurred net losses of  approximately
         $2,109,000 and negative cash flows from operating  activities of nearly
         $1,662,000,  as compared to net losses of approximately  $2,018,000 and
         negative  cash  flow from  operation  of about  $2,224,000  for the six
         months  ended  December 31, 1996.  Cumulatively,  for the  thirty-three
         months from  inception to December  31,  1997,  net losses and negative
         cash flows from operating activities were approximately $10,617,000 and
         about $9,151,000, respectively.

         For  the  six  months  ended  December  31,  1997,  operating  expenses
         increased  approximately  $453,000,  or (27%) as  compared  to the same
         period for the prior year. Research and Development  expenses increased
         approximately  $40,000,  while General and  Administrative  ("S G & A")
         expenses increased about $413,000.

         The S G & A increase was due to several factors. Primary among them was
         payroll and related expenses which increased approximately $150,000 for
         the  comparative  periods  due  mainly to added  staff to  support  the
         Company's  ongoing field tests and  additional  administrative  support
         personnel.  The next largest  increase in S G & A was  attributable  to
         legal and professional fees which increased approximately $100,000 over
         the same period from the prior year due to  additional  legal  expenses
         that were  incurred  in  conjunction  with  filing and  perfecting  the
         Company's various patents applications; added legal expenses associated
         with the  Company's  various  financing  transactions;  legal  expenses
         incurred as a result of the Company's  Joint Venture with an Australian
         company;   and,  finally  additional   expenses  incurred  for  various
         litigation.  The Company's  bonus plan,  which was  implemented in June
         1997 and accounted for the next largest S G & A increase over the prior
         period,  was  attributable  for  approximately  $76,000  as a result of
         accrued  expenses  that were based on the increase in the market cap of
         the  Company's  common  stock from June 30, 1997  through  December 31,
         1997.  Increases in travel,  trade show and advertising expense made up
         most of the  remainder  of the  increase  in S G & A  expenses  for the
         comparative periods. In July 1997 the Company hired a Vice President of
         Sales and  Marketing and  intensified  its efforts to sell its products
         not only in Nevada,  but throughout the remainder of the U S as well as
         abroad.
                                      -10-
<PAGE>
         The  increase  in  Research  and  Development  expenses  was  primarily
         attributable  to  an  initial  outlay  of  approximately  $100,000  for
         development  costs  paid  to  the  company  who  will  manufacture  the
         Company's new hopper weighing platform, a product that will augment the
         Company's  AccuHopper.  This added  expense was  partially  offset by a
         decrease of  approximately  $70,000 for inventory  obsolescence for the
         six months  ended  December  1996 as compared  to the six months  ended
         December  1997. The reduction in inventory  obsolescence  was primarily
         attributable to Management's  efforts to perfect a single product,  its
         hopper weighing technology, in fiscal 1998; whereas fiscal 1997 saw the
         Company  increasing  its  reserves  for  inventory  on hand for several
         different  products which Management had determined were ultimately not
         practical to commit the  financial  resources  necessary to continue to
         develop and market.

         Interest expense decreased by approximately $408,000 for the six months
         ended  December 31, 1997 when compared to the six months ended December
         31, 1996.  Such decrease was primarily the result of the elimination of
         amortization  of debt  discount and  issuance  costs as a result of the
         debenture  issued by the Company on July 16, 1996 having been converted
         to  preferred   stock  on  October  1,  1996.   The  Company   incurred
         approximately $395,000 in interest expense as a result of debt discount
         and issuance costs during the six months ended December 31, 1996.


Liquidity and Working Capital
-----------------------------

         The Company had a negative  working capital  position of  approximately
         $638,000 as of December  31,1997,  and to date,  absent of revenue from
         operations,  has  funded  itself  primarily  through  equity  and  debt
         transactions.

         On August 14,  1997,  the  Malcolm C.  Davenport  V Family  Trust ("the
         Trust") agreed to loan an additional  $500,000 to Spinteknology,  to be
         drawn as needed  pursuant to an  understanding  with the trustees.  The
         loan was secured by a pledge of the Company's  weighing  technology and
         as of  September  30,  1997,  the  Company  had drawn  down the  entire
         $500,000.  On October 1, 1997,  the Trust  elected to convert the note,
         plus accrued interest of approximately  $4,000 thereon,  into 1,400,880
         shares of the Company's  $0.002 par value common stock.  The conversion
         price of $0.36 per share reflects a 32% discount from the closing price
         of $0.53 per share on October 1, 1997. The shares issued as a result of
         this  conversion  were  issued  at a  discount  because  they  are  not
         registered, were issued with a restrictive legend and the Trust can not
         currently sell these shares in the market.

         On October 22,  1997,  the Company  completed a Regulation S Securities
         Subscription Agreement  ("Agreement") for 1,428 shares of its 4% Series
         A Preferred Stock ("Stock") in 

                                      -11-
<PAGE>
         the aggregate  amount of $1,428,000  with RBB Bank  Aktiengesellschaft
         ("RBB"),   an  offshore  bank  representing   investors   pursuant  to
         Regulation  S  promulgated  under the Act.  The Stock was  issued at a
         discount of 30%, the net proceeds of which,  after discount and before
         expenses, was $1,000,000 to the Company.

         Expenses  incurred  in  conjunction  with the  placement  of the  Stock
         totaled $134,000, which consisted solely of commissions of $110,000 and
         escrow fees of $24,000.  The Company  elected to pay the commissions by
         issuing 200,000 shares of its $0.002 par value common stock which bears
         a restrictive legend.

         At December 31, 1997, there were 8,741 issued and outstanding shares of
         preferred  stock,  all of which were in held by RBB. All such preferred
         stock plus any accrued and unpaid dividends thereon can be converted to
         common  stock at any time at the  discretion  of RBB and any  preferred
         stock not converted  prior to December 31, 1999 will  automatically  be
         converted on that date. The conversion to common stock will be based on
         an average of the closing  bid prices of the common  stock for the five
         days  ended  immediately  prior to the date of  conversion,  but not to
         exceed $3 per share.  All common  stock issued upon  conversion  of the
         preferred stock is subject to Registration Rights Agreements.

         As of January 31, 1998, RBB held 8,741 shares of preferred  stock.  The
         preferred stock plus unpaid dividends of approximately $376,000 at that
         date would have  converted  into  approximately  15,884,000  additional
         shares of common stock of the Company based on the average  closing bid
         price of the shares of the Company's  common stock for the five trading
         days ended January 30, 1998. Had such a conversion occurred,  RBB would
         have  held  approximately  17,422,000  shares  of  common  stock of the
         Company, or approximately 50% of the common shares that would have been
         issued and outstanding had such a conversion occurred.

         The holder of the preferred stock has the right to cause the Company to
         effect a reverse split of the common stock  outstanding  of the Company
         since the  five-day  average  bid price of such  stock did not attain a
         value of at least $3.00 per share by October  13, 1996  pursuant to the
         terms and  conditions  of  Subscription  Agreement  entered into by the
         Company with RBB on July 16, 1996. As of the date of this document, the
         holder has not caused the Company to reverse split its common stock.

         Even with the  receipt of the funds from the debt and equity  financing
         described  above,  the  projected  cost  to  finish  production  of its
         weighing technology,  combined with the lead time before cash flow will
         begin to be received from anticipated sales,  dictates that the Company
         secure the availability of additional debt or equity  financing.  As of
         February 12, 1998,  Management had received a tentative  commitment for
         $1,000,000 of additional funding and is currently  finalizing the terms
         regarding such funding with the lender.  Management is also negotiating
         with other sources to secure additional  funding,  however there can be
         no  assurances  that  additional  financing  can be  located.  If  such
         financing is obtained it could 

                                      -12-
<PAGE>
          involve the issuance of additional stock in the Company, or the rights
          to purchase additional stock in the Company.  The percentage ownership
          in the  Company  such stock would  represent  is unknown at this time.
          Should the Company  fail to secure  additional  financing,  or fail to
          begin to  generate  sufficient  revenues  to support  operations,  the
          Company  will be unable to continue as a going  concern.  In addition,
          should extensive litigation be required for any of the current pending
          matters  (see Part II,  Item 1 Legal  Proceedings),  or should  any of
          these  proceedings  result in an  unfavorable  outcome to the Company,
          either of these  matters could have a material  detrimental  effect on
          the Company.


PART II  OTHER INFORMATION

ITEM 1.  Legal Proceedings

          On  October  1,  1997,  Spinteknology  entered  into  an  Interference
          Settlement  Agreement with Bally Gaming  International,  Inc./Alliance
          Gaming  Corporation  and filed same with the United  States Patent and
          Trademark Office in Washington,  D.C. In settlement, both parties have
          agreed to grant to one  another  non-exclusive  licensing  of the coin
          weighing  patent  claims that they own,  including  the grant of those
          rights to affiliates.  "...  Bally  acknowledges  Spintek's  exclusive
          right,  priority and  entitlement  to  TECHNICIAN  FRAUD patent claims
          wherever  Spintek has patents or patent  applications  containing such
          claims....  Spintek acknowledges Bally's exclusive right, priority and
          entitlement  to PLAYER FRAUD patent claims  wherever Bally has patents
          or patent applications containing such claims."

          On September 25, 1996,  Unique  Entertainment,  a Nevada  corporation,
          filed a complaint  in the Clark County (Las  Vegas),  Nevada  District
          Court against Spintek for breach of contract and related  claims.  The
          plaintiff is an entertainment  agency. It alleges that on November 22,
          1995,  it and  Spintek  entered  into a written  contract  whereby the
          agency agreed to provide two magicians to perform on Spintek's  behalf
          at various gaming shows for a total of $80,000. The magicians never in
          fact  performed.  Spintek  has  filed  an  answer  denying  liability,
          specifically  asserting  that no Spintek agent or employee  signed the
          contract  and that no such  signature  was or  would  ever  have  been
          authorized by the Company.  Spintek further  contends that because the
          magicians  never in fact  performed,  its liability,  if any, would be
          extremely limited, and not the full contract price which the plaintiff
          seeks. To date, the plaintiff has conducted virtually no discovery and
          has done little to pursue the case.  It is  anticipated  that the case
          will be tried within the next six months.

          On  October  10,  1996,  Richard  M.  Mathis of Reno,  Nevada  filed a
          complaint in the Washoe County (Reno),  Nevada  District Court against
          Spintek; Spintek International, Inc. ("International");  and Lanier M.
          Davenport,  who,  until  October  18,  1996,  was  Chairman  and Chief
          Executive  Officer of the Company and is still the beneficial owner of
          more than 5% of the Company's  common stock.  In his suit,  Mr. Mathis
          contends  that he was forced by the Company and  Davenport to transfer
          to Davenport his ownership and control of the Company,
    
                                      -13-

<PAGE>
          and that,  with the Company's  assistance,  Davenport  defrauded  him,
          breached  fiduciary  affairs and demands  actual  damages in excess of
          $500,000  and punitive  damages in excess of  $500,000.  On January 6,
          1997,  the  Company  and  International  filed an answer  denying  any
          liability  to  Mr.  Mathis.  On  August  26,  1997,  the  Company  and
          International  filed a motion to dismiss,  which is currently  pending
          before the  Court.  A ruling on the motion is  expected  within  three
          months. If the motion is denied,  the Company intends to file a motion
          for summary judgement.

          On  February  14,  1997,  the Company  filed a complaint  in the Clark
          County (Las Vegas),  Nevada,  Eighth Judicial District Court,  against
          Michael D. Fort, a former  officer and  director of the  Company,  who
          resigned on February 7, 1997. The complaint  claims that Mr. Fort must
          return  $240,000 to Spintek that was paid to him in  anticipation of a
          change of control in the Company that did not actually occur. Mr. Fort
          filed  an  answer   denying   liability.   Mr.  Fort  also  has  filed
          counterclaims  that he be entitled to keep the $240,000 at issue.  The
          parties anticipate the beginning of discovery in February, 1998.

          The  Company  has  filed  suit  against  Sailfin   Investments,   Ltd.
          ("Sailfin"),  a  corporation  organized  under the laws of the Channel
          Islands,  seeking a  declaratory  judgement  that it has already  paid
          Sailfin in full for services  rendered in accordance with the terms of
          a  consulting  services  agreement.  The  Company  also seeks to force
          Sailfin to return  certain  shares of the Company's  common stock that
          were paid to Sailfin in accordance  with the terms of the agreement on
          the grounds that the services  performed  were so  inadequate,  that a
          failure of consideration occurred entitling the Company to a return of
          the stock. In the alternative to returning the shares of common stock,
          the  Company   alleges  that  Sailfin's   inadequate  and  substandard
          performance of its obligations under the agreement constitute a breach
          of contract and entitle the Company to recover the damages it suffered
          as the result of said breach.  Sailfin has answered the  Complaint and
          denied  liability.  Sailfin has also filed a  counterclaim  seeking to
          force the Company,  and its transfer  agent, to remove the restrictive
          legend  from its  shares of the  Company's  common  stock,  or seeking
          damages in the  alternative.  The  Company  has added Mr. Fort and Mr.
          James  Hennen,  a  former  officer  of  the  Company,   as  additional
          defendants  seeking to have Company  stock issued  pursuant to certain
          alleged agreements cancelled on the grounds,  among other things, that
          there was no proper corporate authority for the issuance of such stock
          as well as no  consideration  therefor.  The parties will now begin to
          engage in discovery.


ITEM 2.  Changes in Securities

Not applicable


ITEM 3.  Defaults upon Senior Securities

Not applicable

                                      -14-
<PAGE>
ITEM 4.  Submission of Matters to a Vote of Security Holders

Not applicable


ITEM 5.  Other Information

In January 1998,  Spinteknology,  Inc. entered into a joint venture with Kinsale
Developments  Proprietary Limited, an Australian company to form a company named
Spintek Gaming Pty Ltd. ("SGPL") which will distribute the Company's products in
Australia,   New  Zealand,  Macao,  Singapore,   Hong  Kong,  China,  Indonesia,
Philippines,  South Korea Guam, Brunei, Thailand, Noumea, Vanuatu, Taiwan, Laos,
Cambodia,  Kampuchca,  Vietnam,  Samoa,  Fiji,  Nauru,  Kiribati  and Tonga (the
"Territory").  Spinteknology,  a twenty percent joint venture participant in the
joint  venture,  will  receive a  royalty  of US$50 per unit sold by SGPL in the
Territory in addition to twenty percent of the net profits of SGPL.


ITEM 6. Exhibits and Reports on Form 8-K

(a)      Exhibits

         10.1     Spintek Gaming PTY LTD Shareholders Agreement
         10.2     Spintek Gaming PTY LTD Distribution Agreement
         10.3     Spintek Gaming PTY LTD Articles of Association
         11.1     Computation of earnings per share
         27.1     Financial Data Schedule.

(b)      Reports on Form 8-K

   No reports on Form 8-K were filed during the quarter ended December 31, 1997.

                                      -15-
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Section 13 of the Securities and Exchange Act of
1934,  the  Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

                        SPINTEK GAMING TECHNOLOGIES, INC.


                              By: /s/ GARY L. COULTER
                                  -----------------------
Date: February 12, 1998            Gary L. Coulter
                                   Chairman of the Board,
                                   Chief Executive Officer
                                   (Principal Executive Officer)

                              By: /s/ ROBERT E. HUGGINS
                                  -------------------------
Date: February 12, 1998            Robert E. Huggins
                                   Senior Vice President,
                                   Chief Financial Officer
                                   (Principal Financial and Accounting Officer)


                              By: /s/ MALCOLM C. DAVENPORT
                                  ----------------------------
Date: February 12, 1998            Malcolm C. Davenport V
                                   Director

                              By: /s/ PATRICK W. MCGRATH
                                  --------------------------
Date: February 12, 1998            Patrick W. McGrath
                                   Director


                                      -16-
<PAGE>
EXHIBIT 10.1

                             SHAREHOLDERS AGREEMENT


AGREEMENT dated _______________________________________  , 1998
BETWEEN  SPINTEKNOLOGY  INC, a Corporation formed under the laws of the State of
Georgia, United States of America ("Spinteknology")

     KINSALE  DEVELOPMENTS  PTY LTD ACN 007 715 568 a  Corporation  incorporated
     under the laws of South  Australia and having its registered  office at 118
     Greenhill Road, Unley, South Australia ("Kinsale")

AND  SPINTEK GAMING PTY LTD ACN 081 131 026 a Corporation incorporated under the
     laws of South  Australia and having its registered  office at 118 Greenhill
     Road, Unley South Australia ("Spintek")

RECITALS

A.       Spinteknology and Kinsale have promoted the formation of Spintek.

B.       The purpose of the formation of Spintek is to enable  Spintek to act as
         distributor in defined  territories of products  supplied to Spintek by
         Spinteknology.

C.       The  terms  and  conditions   under  which  Spintek   operates  as  the
         distributor  of  products  supplied by  Spinteknology  are set out in a
         Distribution  Agreement  dated 1998 between  Spinteknology  and Spintek
         ("Distribution Agreement").

D.       Spinteknology  and Kinsale  intend by this  agreement  to record  their
         rights and liabilities  with respect to Spintek and its operations,  in
         addition  to,  or in  substitution  for (as the  case  may  be),  their
         respective  rights and  obligations  as  prescribed  by the Articles of
         Association  of  Spintek,  and  Spintek  intends to give effect to this
         agreement to the exclusion of its Articles of Association to the extent
         that this agreement is inconsistent with the Articles of Association.

OPERATIVE PART

1.   Inclusive  of the  capital  subscribed  on the  incorporation  of  Spintek,
     Spinteknology and Kinsale will subscribe further capital to Spintek so that
     the issued and paid up capital of Spintek will be 100, 000 shares of $ 1.00
     each held as to 80% by Kinsale and 20% by Spinteknology.

2.   Spinteknology and Kinsale will each be entitled:-

         2.1.     to nominate, and cause to be appointed;

         2.2. to remove and cause to be replaced by another nominee;  at least 1
         Director of Spintek. The first nominated Directors will be Graham Bruce
         Hooper as the  nominee of Kinsale  and Gordon Dean Booth as the nominee
         of Spinteknology.

3.   In spite of the Articles of  Association  of Spintek,  a resolution  of the
     members of  Spintek  passed by a  majority  representing  81% of the issued
     shares in Spintek is required to give effect to the following:

      3.1.(subject  always to clause 2) the removal or  replacement of either of
          the first nominated Directors;

      3.2.any increase in the number of directors;

      3.3. the sale or encumbering of all of the substantive assets of Spintek;

      3.4.the  incurring of either a secured or unsecured  debt in excess of AUD
          $250,000.00   (or  any   substituted   limit   agreed  in  writing  by
          Spinteknology and Kinsale);

      3.5.the incurring of any salary package in excess of AUD  $150,000.00  per
          annum (or any substituted limit agreed in writing by Spinteknology and
          Kinsale) for any individual employee of Spintek;

      3.6.the lease of any  premises  or any plant or  equipment  on terms other
          than those which are competitive within a relative market;

      3.7.the winding up, dissolution,  restructuring of Spintek or any increase
          or reduction in the authorised capital of Spintek;

      3.8.the issue of any shares in excess of the 100,000 shares referred to in
          clause 1 to any existing or prospective shareholder of Spintek.

4.   In spite of the provisions of the Articles of  Association  of Spintek,  no
     transfer  any  shares in the  capital  of  Spintek  may be made  unless the
     following  procedure  is complied  with:- 

     4.1. the   shareholder   wishing  to  transfer   ownership   of  is  shares
          ("Proposer")  must  submit an offer to all of the  other  shareholders
          ("Offerees")  in which the Proposer  must nominate the price per share
          at which the Proposer's shares are offered for sale to the Offerees or
          at which the Proposer will purchase all of the Offerees' shares;

     4.2. the  Offerees  may  within 30 days of  receipt  of the offer  from the
          Proposer  purchase  all of the  shares  of the  Proposer  at the price
          specified in the offer;

     4.3. if the Offerees do not within that period of 30 days  purchase all the
          Proposer's  shares,  the Proposer  must  purchase all of the Offerees'
          shares at the nominated price;

     4.4. completion  of any sale and  purchase  of the shares  must be effected
          within 60 days after the date of the Proposer's  offer is submitted to
          the Offerees ;

     4.5. at completion  the purchaser  will pay the vendor the nominated  price
          for the shares being  transferred and the vendor will sign and deliver
          to the purchaser a transfer of the shares in registrable form, subject
          to stamp duty to be paid by the purchaser;

     4.6. if the vendor of the shares  neglects,  refuses or otherwise  falls to
          sign a transfer of the shares,  the secretary of Spintek is authorised
          by this  Agreement,  by which  power of  attorney  is  granted  to the
          Secretary,  to sign a transfer  of the shares on behalf of the vendor,
          and  subject  to the  appropriate  stamp  duty  being  applied  to the
          transfer, Spintek is authorised to receive the transfer into the Share
          Register  to  give  effect  to  the  transfer  of  the  shares  to the
          purchaser;
     

     4.7. the Proposer may offer the  Proposer's  shares for sale to a purchaser
          who is not then a shareholder of Spintek  ("Third  Party") at any time
          provided  that the  terms and  conditions  of the offer are set out in
          written form ("Third  Party  Offer") and are first  provided to all of
          the other  shareholders  who may within 30 days  after  receipt of the
          Third Party Offer elect to purchase the Proposer's shares on the terms
          and conditions set out in the Third Party Offer;

     4.8. if one or  more of the  other  shareholders  elects  to  purchase  the
          Proposer's  shares,  completion  of that  purchase will be effected in
          accordance with the procedure set out in subclauses 4.4, 4.5 and (only
          if the Proposer is the vendor) 4.6;

     4.9. If more  than one of the  other  shareholders  elect to  purchase  the
          Proposer's  shares  pursuant  to  sub-clause  4.8,  they  may do so in
          proportions  agreed  between them, and failing any agreement they must
          purchase  the  Proposer's  shares  equally,  and in no event  are they
          permitted to purchase fewer than all of the Proposer's shares referred
          to in the Third Party Notice;

    4.10. if a sale is effected by the Proposer to a Third Party,  completion of
          the purchase  must be effected  within 90 days after the date of issue
          of the Third  Party  Offer or, if the other  shareholders  elect,  but
          fall,  to purchase  the  Proposer's  shares,  within 60 days after the
          failure by the other  shareholder  or  shareholders  to  purchase  the
          Proposer's shares (as the case may be);

    4.11. a condition  of a sale of shares by the Proposer to a Third Party must
          be the  requirement  that the Third Party endorses and becomes a party
          to  this  Agreement  in  lieu  of or in  addition  to the  Propos4.12.
          transfers of shares may otherwise be effected pursuant to the Articles
          of Association of Spintek.  

5.   If  Spinteknology  and Kinsale permit or cause any other entity to become a
     shareholder of Spintek, they will cause that other entity to become a party
     to this agreement and to be bound by it.

6.   Kinsale  represents to  Sp'nteknology  that it is ultimately  controlled by
     Graham  Bruce  Hooper and that it will not permit the  registration  of any
     transfer of that ultimate control to any entity not ultimately  controlled,
     and which remains  ultimately  controlled,  by Graham Bruce Hooper  without
     first obtaining the approval of  Spinteknology  (which approval will not be
     unreasonably  withheld).  For the purposes of this  clause,  an entity or a
     related group of entities is  ultimately  controlled by Graham Bruce Hooper
     if he is, by reason of his association  with the entity or related group of
     entities,  able to direct the  decision  making  processes of the entity or
     related group of entities.

7.   In all other  respects  Spinteknology  and Kinsale adopt and will implement
     the  Articles of  Association  with  respect to the  administration  of the
     affairs of Spintek.

8.   All disputes  under this  agreement  which are not resolved by  negotiation
     will be subject to binding  arbitration  on the written  request of any one
     party to the other as the sole method of  resolution.  Arbitration  will be
     conducted in London, United Kingdom, in the English language under the then
     current   commercial   arbitration   rules  of  the  American   Arbitration
     Association.  judgment on any arbitration award, which may include an award
     of damages, may be entered in any court of competent jurisdiction.

EXECUTED as an Agreement.
SIGNED FOR AND ON BEHALF of SPINTEKNOLOGY INC.
in the presence of
/s/ GARY L. COULTER, President
------------------------------

SIGNED FOR KINSALE
DEVELOPMENTS PTY LTD
ACN 007 715 568
in the presence of
/s/ GRAHAM B HOOPER 
--------------------

SIGNED FOR SPINTEK GAMING
PTY LTD ACN 081 131 026
in the presence of
/s/ GRAHAM B HOOPER
-------------------

<PAGE>
EXHIBIT 10.2


DISTRIBUTION AGREEMENT
----------------------

AGREEMENT  dated  ________________________________,  1998 BETWEEN  SPINTEKNOLOGY
INC, a Corporation formed under the laws of the State of Georgia,  United States
of America ("Spinteknology")

 AND

SPINTEK GAMING PTY LTD ACN 081 131 026 a Corporation  incorporated  in the State
of South  Australia  and having its  registered  office at 118  Greenhill  Road,
Unley, South Australia ("Distributor")

RECITALS

A.       Spinteknology  has rights of control over certain  technology  which it
         believes  can be  employed  in the gaming  industry  to detect  certain
         thefts of coins or tokens from coin or token operated  gaming  machines
         ("Technology") .

B.       Spinteknology expects to manufacture and supply products, equipment and
         services incorporating the Technology ("Products").

C        .  Part  of the  Products  is  comprised  of  devices  manufactured  by
         Spinteknology  which  can be  installed  in  existing  gaming  machines
         manufactured by various gaming machine  manufacturers on site in gaming
         establishments  where  gaming  machines  are already in use  ("Retrofit
         Devices").

D.       Spinteknology  is also in the Process of the  development of components
         or devices (which will form part of the Products) which incorporate the
         Technology  and which  are  intended  to be  included  in the  original
         manufacture,  assembly  or  rebuilding  of gaming  machines  by various
         manufacturers of gaming machines prior to the sale of those machines to
         ultimate users ("Original Components").

E.       Spinteknology  intends by this Agreement to appoint the  Distributor as
         Spinteknology's  distributor of products  including  Retrofit  Devices,
         Original Components,  and any other devices or components incorporating
         the Technology or any improvements, enhancements or developments of the
         Technology  from time to time ("Future  Technology"),  all of which are
         included  in the  reference  to  Products  for  the  purposes  of  this
         Agreement.

F.       It is  intended  that  Spinteknology  will make any  Future  Technology
         available  to Spintek  for the  purposes of this  agreement  and to the
         extent that there are any additions or amendments  reasonably  required
         to this  agreement  as a  consequence,  Spinteknology  and Spintek will
         negotiate  in good  faith  to  effect  those  additions  or  amendments
         consistent with the spirit and intention of this agreement.

OPERATIVIE PART

1.        Spinteknology  and the  Distributor  agree that the Recitals are to be
          read with and form part of this Agreement.

2.       Spinteknology  appoints the Distributor as its exclusive distributor of
         Products in Australia, New Zealand, Macao, Singapore, Hong Kong, China,
         Indonesia,  Philippines,  South Korea, Guam, Brunei, Thailand,  Noumea,
         Vanuatu,  Taiwan,  Laos,  Cambodia,  Kampuchca,  Vietnam,  Samoa, Fiji,
         Nauru, Kiribati and Tonga ("Territory").

3.       If the  Distributor  does not take any  steps to  exploit  distribution
         opportunities  in any  one or more of the  countries  in the  Territory
         ("Unexploited  Countries") within 42 months of the Commencement of this
         agreement,  Spinteknology may in its discretion exclude the Unexploited
         Countries from the Territory by notice in writing to the Distributor.

4.       Distributor  will  use its  best  endeavours  to  exploit  distribution
         opportunities  in the Territory  during the term of this agreement.  If
         Spinteknology  forms the  reasonable  opinion that  Distributor  is not
         using  its  best  endeavours  to do so in any  part  of  the  Territory
         Spinteknology  may in writing  advise  Distributor  of that opinion and
         require  Distributor to remedy that deficiency within 12 months of that
         written  notice and if  Distributor  fails to do so  Spinteknology  may
         exclude that part of the Territory from the operation of this agreement
         by notice in writing to Distributor.

5.       Spinteknology represents, and the Distributor acknowledges:-

     5.1.      that the  Products  are  designed  for the  detection of theft of
               coins or  tokens by  persons  who have  authorised  access to the
               gaming  machine  hoppers  where the coins and  tokens  are stored
               ("Technician Fraud"); and

     5.2.      and that the  Products  are not designed to detect theft or other
               malfeasance by machine patrons ("Player Fraud").

6.   Spinteknology   represents  to  the   Distributor,   and  the   Distributor
     acknowledges:-

     6.1.      that Spinteknology claims only certain patent rights with respect
               to the detection of Technician  Fraud  ("Technician  Fraud Patent
               Claims"); and

     6.2.      that  patent  rights are  claimed by others  with the  consent of
               Spinteknology  with respect to  Technology to detect Player Fraud
               ("Player Fraud Patent Claims").

7.       The Distributor undertakes to Spinteknology--

     7.1.      that no  representations  will be made by the  Distributor in the
               course of marketing  the Products to the effect that the Products
               may be utilized in connection with the detection of Player Fraud;
               and

     7.2.      that sales contracts  obtained by the Distributor  will include a
               specific disclaimer of any Player Fraud Patent Claims.

8.       This  Agreement  does  not  operate  to  restrict  any  other  business
         operations  of the  Distributor,  except in the case where  those other
         business  operations  involve the distribution of items which are, on a
         reasonable  assessment,  in  competition  with  the  Products.  If  the
         Distributor  wishes to distribute  items which are in competition  with
         the Products in the course of its business  operations,  it will notify
         Spinteknology  and  request  Spinteknology's  consent  to  do  so.  The
         Distributor  will not sell or encourage the sale of competing  items to
         customers  who have  approached  the  Distributor  for the  purposes of
         purchasing the Products.

9.       This  Agreement will remain in force for 20 years from the date of this
         Agreement, and following those 20 years will continue from year to year
         unless  terminated by mutual  consent or by written notice by one party
         to the  other  90 days in  advance  of the end of any 1 year  extension
         beyond the initial term of 20 years.

10.      This  Agreement  may be  terminated  by  either  party in the case of a
         breach of a substantive  provision by notice in writing to the party in
         breach if the  party in  breach  has not  within  14 days  after  being
         notified  in  writing  of the breach of this  Agreement  remedied  that
         breach.

11.      Termination  of this  Agreement  for any reason will not  discharge any
         liability of  Spinteknology  or the Distributor to the other for sales,
         orders  or  contracts  made by the  Distributor  prior  to the  date of
         termination,   regardless  of  when  shipments  are  made  or  invoices
         rendered.

12. On termination of this Agreement the Distributor will: -

     12.1.     return  to  Spinteknology   any  of  the  Technology  and  Future
               Technology,  or  hardcopy  or  software  representations  of  the
               Technology and Future Technology,  which it has in its custody or
               control;

     12.2.     cause  its  name to be  changed  so as not to  include  the  name
               Spintek; and

     12.3.     relinquish  any  rights  with  respect  to the  use  of the  name
               Spintek.

13.      On termination of this Agreement  Spinteknology  is required to deliver
         and the  Distributor is required to accept only those Products  ordered
         by the  Distributor  from  Spinteknology  at or  prior  to the  date of
         termination.

14.      On  termination  of  this  Agreement  Spinteknology  has an  option  to
         re-purchase  from the Distributor any Products in the possession of the
         Distributor and unsold by the Distributor.  The re-purchase  price will
         be the same as the original purchase price invoiced by Spinteknology to
         the  Distributor  for those  Products.  If, or to the extent that,  the
         option  to   re-purchase  is  not  exercised  by   Spinteknology,   the
         Distributor  is at liberty to dispose of the Products in its possession
         in  the  ordinary  course  of  its  business,  during  which  time  the
         provisions of clause 12 will be suspended for a reasonable  period (not
         exceeding 6 months) to allow orderly disposal of the Products.

15.      The exclusive distribution rights granted to the Distributor under this
         Agreement do not preclude  Spinteknology or its other distributors from
         supplying  Original  Components to manufacturers of gaming machines for
         the purposes of installation  in gaming machines  outside the Territory
         provided  that  at all  material  times  Spinteknology  and  its  other
         distributors  are not aware that those  gaming  machines  are  intended
         subsequently to be delivered to ultimate users in the Territory.

16.      Spinteknology  undertakes  that  if  it  engages  in  the  business  of
         manufacturing  or distributing  gaming machines which include  Original
         Components,  the Distributor's  exclusive rights of distribution  under
         this  Agreement  will  extend to any of those  gaming  machines  in the
         Territory,  to the intent and with the effect that  Spinteknology  will
         not  market  any of  those  gaming  machines  for  installation  in the
         Territory except through the Distributor.

17.      The prices chargeable by Spinteknology to the Distributor for each item
         of the Products will be Spinteknology's direct cost of manufacture plus
         US$50. Any price change due to change in the direct cost of manufacture
         will only apply to orders placed by Distributor after it is notified in
         writing by Spinteknology of the price change.

18.      The  Distributor  may  establish,  and may vary from time to time,  the
         prices at which it sells the Products to its customers.

19.      The  Distributor   must  not  without  the  prior  written  consent  of
         Spinteknology-.- 

     19.1.     sell any Products outside the Territory; or

     19.2.     sell any Products  within the Territory  with knowledge that they
               are intended by the purchaser for use or distribution outside the
               Territory.   The   Distributor   will,   as  far  as   reasonably
               practicable,  obtain  from  purchasers  at the  point  of  sale a
               representation  as to where the  Products are intended to be used
               by those purchasers.

20.       Spinteknology  will  from  time to time at no cost to the  Distributor
          supply  to  the  Distributor  at  its  place  of  business  reasonable
          quantities  (as  required  by  the  Distributor)  of   Spinteknology's
          advertising  and  selling  literature,  samples,  displays,  drawings,
          engineering or other product data,  but not including  source codes or
          manufacturing  specifications,  ("Selling  Aids") as designed and made
          available  by   Spinteknology   for  the  purposes  of  assisting  the
          Distributor in the sale of the Products.

21.       The Distributor will use its best endeavours and judgment in utilising
          the Selling  Aids as  effectively  as  reasonably  practicable  in the
          ordinary course of its business, and will not knowingly be wasteful of
          the Selling Aids. 

22.  Spinteknology will provide the Distributor with
          reasonable access to Spinteknology's personnel for technical and sales
          assistance  by  telephone,  facsimile  or  other  electronic  means of
          communication.  Any  assistance  requested  by the  Distributor  which
          cannot be provided by telephone,  facsimile or other  electronic means
          of communication  will be provided by Spinteknology to the Distributor
          by  sending  personnel  to  sites  nominated  by  the  Distributor  on
          condition that the Distributor reimburses  Spinteknology for salaries,
          fringe  benefits,  travel,  lodging  and  meal  expenses  incurred  by
          Spinteknology  in respect of its relevant  personnel  allocated to the
          provision, and for the duration, of the assistance.  Spinteknology may
          require from the  Distributor  advance  deposits of expenses which are
          reasonably  estimated  to  exceed  US$5,000,  and will  determine  the
          schedule for on-site assistance.  

23.       Spinteknology undertakes that it will: -

     23.1.     provide the  Distributor  with  documents and  particulars of all
               inquiries  received by Spinteknology from within the Territory in
               respect of Products;

     23.2.     provide the Distributor with copies of any acknowledgments  given
               or made by Spinteknology in respect of inquiries for the Products
               from within the Territory;

     23.3.     provide  to  the   Distributor   sales,   product  and  technical
               information   (not  including   source  codes  or   manufacturing
               specifications), and any estimates, specifications and proposals,
               which may be  advantageous to the Distributor for the purposes of
               dealing with inquiries from within the Territory.

24.       Spinteknology will assign to Distributor the benefit of all warranties
          to which  Spinteknology  is  entitled  as  against  the  suppliers  or
          submanufacturers   of,  or  with  respect  to,  the  Products  or  any
          components of the Products.

25.       The  Distributor  has the right to assign to its customers the benefit
          of  any  warranties   which  are  assigned  by  Spinteknology  to  the
          Distributor  with  respect to the  Products or any  components  of the
          Products in accordance with clause 24.

26.       Spinteknology  has sole  responsibility  for the design,  development,
          supply,  production and  performance of Products and the protection of
          its trade name or names.

27.       The obligation of Spinteknology to effect shipments of Products to the
          Distributor:-

     27.1.     is  contingent on  Spinteknology  approving any order or contract
               submitted by the Distributor; and

     27.2.     is subject to the effect of strikes,  accidents,  embargos or any
               natural or unnatural cause, beyond the control of Spinteknology.

28.       Spinteknology  will cause Products to be shipped to the Distributor to
          be  available  at an  agreed  point of  departure  in the  country  of
          manufacture F.O.B.

29.       The  Distributor is responsible  for the shipment of Products from the
          country  of  manufacture  to  the  Distributor's  customers  or to the
          Distributor, as the case may be.

30.       The Distributor undertakes:-

     30.1.     that it will not without the written  authority of  Spinteknology
               commit Spinteknology to any obligation or liability;

     30.2.     that it will not use Spinteknology's  name or the name Spintek in
               any way not specifically authorised by this Agreement;

     30.3.     that it will  use its  best  endeavours  to  promote  the sale of
               Products  in  the  Territory  in  the  mutual   interest  of  the
               Distributor and Spinteknology;

     30.4.     that it will not  advertise  or promote  the sale of  competitive
               items more  actively  than it  promotes  the sale of  Products if
               permission is granted to distribute competitive items;

     30.5.     that  it  will  effect  full  liability  insurance  on all  motor
               vehicles,  trucks or other transportation or conveyance equipment
               used by the Distributor for the purposes of carrying its business
               into effect,  and will indemnify  Spinteknology in respect of the
               consequences  of any of the risks  covered by that  insurance (or
               that would have been covered if that  insurance had been obtained
               or if the insurance had no exclusion  for  deductible  amounts or
               coverage limitation);

     30.6.     that it will maintain reasonably adequate installation and repair
               capabilities, including the availability of personnel:-

          30.6.1.   to install Retrofit Devices at the customer's location;

          30.6.2.   to supervise installation by the customer's technicians;

          30.6.3.   to train the customer's  personnel in the routine  operation
                    and service of the Products;
         

          30.6.4.   to carry out  installations  and repairs in accordance  with
                    Spinteknology's instruction manuals and technical directives
                    from time to time;

          30.6.5.   to supply  replacement  parts  and  replacement  units  from
                    inventory  purchased from  Spinteknology  or manufactured in
                    accordance   with   Spinteknology's   technical  and  design
                    requirements to preserve the performance  characteristics of
                    the Products;

          30.6.6.   to maintain the capability of testing the Products to detect
                    defective  components  and to replace  components  which are
                    replaceable 

     30.7      that it will determine its own rate of charges for  installation,
               repair,  training  and other  services to  customers  and make no
               charge  to  Spinteknology   for  the  testing  of  components  to
               determine warranty liability;

     30.8      that it will bear its own costs and  expenses  incidental  to the
               operation  of its own  distribution  business  as an  independent
               contractor  including,   but  not  limited  to,  rent,  supplies,
               technical and clerical  assistance  employees,  sales  personnel,
               wages,  salaries  and  commissions,  telephone  costs,  licences,
               insurances and the like;

     30.9      that it will not make any  representations or give any guarantees
               on behalf of Spinteknology;

     30.10     that it will not endorse any Spinteknology  cheques or commercial
               papers or conduct any bank accounts in the name of Spinteknology;

     30.11     that it will  obtain  and keep on foot any  necessary  permits or
               licences for the  importation  of Products into the Territory and
               to its customer's locations;

     30.12     that it will comply with any regulations and obtain any approvals
               which may be  appropriate to the  incorporation  of Products into
               gaming machines of customers of the Distributor;

     30.13     that it will  indemnify  Spinteknology  in  respect of any claims
               arising from the  importation of any Products by the  Distributor
               in  violation  of import  restrictions  or the failure to pay any
               customs  charges or taxes and the  consequences of any failure by
               the  Distributor to cause the Products sold by the Distributor to
               be approved by any appropriate authorities for incorporation into
               gaming machines of the Distributor's customers.

31.       Spinteknology undertakes to the Distributor:-

     31.1.     that it is has no right or authority to commit the Distributor in
               any way  whatever  to any  liability  without  the prior  written
               consent of the Distributor,  or to use the Distributor's  name in
               any way  not  specifically  authorised  by  this  Agreement  (but
               nothing in this agreement limits Spinteknology's right to use the
               names  "Spintek"  or  "Spinteknology"  as it may  choose  without
               prejudicing the rights of Distributor under this agreement);

     31.2.     that it will  strive  diligently  to  maintain  and  enhance  the
               reputation,   usefulness  and  acceptance  of  the  Products  and
               services  connected  with the  Products,  and provide  reasonable
               assistance  to the  Distributor  in  promoting  the  sale  of the
               Products in the Territory.

32.       This Agreement is to be construed,  and all disputes  arising under it
          are to be  resolved,  according  to the  laws of the  Commonwealth  of
          Australia and the State of South Australia.

33.       If any provision of this Agreement  offends any laws within or outside
          Australia and which are  applicable to this  Agreement,  the offending
          provision  is to be severed  from the balance of the  Agreement  which
          will remain in full force and effect.

34.       This Agreement may be terminated by  Spinteknology  or the Distributor
          by notice  in  writing  to the  other  party in the event of the other
          party being wound up or being subjected to any form of  administration
          in insolvency.

35.       The failure of either party to enforce at anytime,  or for any period,
          the  provisions of this Agreement will not be construed as a waiver of
          any  provision or of a right of that party at any  subsequent  time to
          enforce any provision of this Agreement.

36.       Any notice  required to be given under this  Agreement may be given by
          confirmed   facsimile   transmission   as  follows:-  .  36.1.  if  to
          Spinteknology: telecopier number 17022638953;

     36.2.     if to the Distributor: facsimile number 61884317033;

37.       Written  notice may  otherwise be given by prepaid  post  addressed as
          follows:

     37.1.     if to Spinteknology:  90 I Grier Drive, Suite B, Las Vagas Nevada
               89119 United States of America;

     37.2.     if to the Distributor:  120A The Parade, Norwood, South Australia
               5067.

38.       Either party may by 3 days notice in writing to the other party notify
          the other party of any change to its number or address for the service
          of notices. 

39.       All disputes under this agreement not resolved by negotiation  will be
          subject to binding  arbitration on the written request of one party to
          the  other as the  sole  method  of  resolution.  Arbitration  will be
          conducted in London, United Kingdom, in the English language under the
          then current commercial  arbitration rules of the American Arbitration
          Association.  Judgment on an arbitration  award,  which may include an
          award  of  damages,   may  be  enforced  in  any  court  of  competent
          jurisdiction.

40.       Spinteknology  and the  Distributor  will each bear their own costs of
          and incidental to the preparation and execution of this Agreement.

EXECUTED as an Agreement.

SIGNED FOR AND ON BEHALF of
SPINTEKNOLOGY INC
in the presence of
/s/ GARY L. COULTER, President
------------------------------

SIGNED ON BEHALF of
SPINTEK GAMING 
PTY LTDACN 081 131 026
in the presence of
/s/ GRAHM HOOPER
----------------
<PAGE>
EXHIBIT 10.3
                                CORPORATIONS LAW
                           A Company Limited by Shares
                            MEMORANDUM OF ASSOCIATION
                                       of
                             SPINTEK GAMING PTY LTD

1        The name of the Company is SPINTEK GAMING PTY LTD ("the Company").

2        The liability of the members is limited.

3        The  authorised  capital of the Company is ten million  dollars ($
         10,000,000)  divided into ten million  (10,000,000)  shares of one
         dollar ($1.00) each.

     I, the person whose name,  address and occupation is subscribed  hereto, am
     desirous of being formed into a company in pursuance of this  Memorandum of
     Association  and I  respectively  agree to take the number of shares in the
     capital of the Company set opposite my name.

         Dated  20th December   1997

--------------------------------------------------------------------------------
NAME, ADDRESS & OCCUPATION      NO OF SHARES             SIGNATURE
OF SUBSCRIBER
--------------------------------------------------------------------------------
KINSALE DEVELOPMENT PTY LTD         1              THE COMMON SEAL OF
ACN 007 715 568                                    KINSALE DEVELOPMENT PTY LTD
of 118 GREENHILL ROAD                              ACN  007 715 568 is affixed
UNLEY SOUTH AUSTRALIA 5061   
                                                   in the presence of
                                                   /s/ GRAHM HOOPER
                                                   ----------------
  (SEAL APPEARS HERE)                              Director

                                                   /s/ PETER HOBBS
                                                   ---------------
                                                   Director/Secretary

<PAGE>
                                CORPORATIONS LAW
                          A Company Limited by Shares

                             ARTICLES OF ASSOCIATION
                                       of
                             SPINTEK GAMING PTY LTD

         1.       PRELIMINARY

          1.1  Definitions  In these  Articles,  unless  the  context  otherwise
               requires:  "Auditor"  means the auditor or auditors  for the time
               being of the Company. "Board" means the Board of Directors of the
               Company  provided that where there is only one Director,  "Board"
               means that Director;

               "Business  Day"  means a day which is not a  Saturday,  Sunday or
               public holiday in the State;

               "Company"  means this company  whatever its name may be from time
               to time;

               "Director"  means a director  for the time  being of the  Company
               (including Alternate Director but not an Associate Director);

               "Dividend"  means any  distribution  to  Members in  relation  to
               shares  as  a  dividend  or  interim  dividend  of  any  property
               (including, without limitation, money and paid up shares or other
               marketable  securities  of  the  Company  or of  any  other  body
               corporate) and includes any bonus;

               "Financial  Year"  means  year  ending on 30th June or such other
               reporting period (if any) which the Company lawfully  substitutes
               for same under the Law;

               "Law"  means the  Corporations  Law as it applies to the  Company
               from time to time;

               "Member" or  "shareholder"  or "holder" means a person whose name
               is entered in the Register as the holder of a share;

               "Member's Liability" means, in respect of a Member:

                    (a) all money due and payable by the Member to the  Company;
                    and

                    (b) all money (whether  payable or not) called or payable at
                    a fixed  time in  respect  of  shares  held by that  Member;
                    "Memorandum"  means the Company's  Memorandum of Association
                    as altered from time to time;

               "Money Due" means,  in respect of a call payment of the amount of
               which  is not made on the day  specified  for its  payment  under
               Article 6.4, the amount of money  payable in respect of that call
               plus, subject to Article 6.10:

                    (a)  interest on that amount at the  Prescribed  Rate,  from
                    that day until payment is made; and

                    (b) all costs and  expenses  incurred  by the  Company  as a
                    consequence of payment not being made on that day;

               "Office"  means the  registered  office  from time to time of the
               Company;

               "paid up" includes credited as paid up;

               "Prescribed Rate" means, in respect of any particular  Article in
               which  that  term  is  used,  10% per  annum  or any  other  rate
               prescribed  by the  Board  from time to time in  respect  of that
               Article;

               "Register"  means the  register of members  kept  pursuant to the
               Law;

               "related body corporate" means any body corporate which is deemed
               to be related to the Company under the Law;

               "Secretary"  means  a  person  appointed  as a  secretary  of the
               Company  from time to time  (including  any person  appointed  to
               perform the duties of a secretary temporarily);

               "State" means the State of South Australia;

               "Transmission Event" means:

                    (a) in  respect  of a Member  who is a natural  person,  the
                    death or  bankruptcy of the Member,  or the Member  becoming
                    mentally infirm or becoming a person who is, or whose estate
                    is,  liable  to be  dealt  with in any way  under  the  laws
                    relating to mental health; and

                    (b) in respect of a Member  which is a body  corporate,  the
                    dissolution  of the Member or the succession by another body
                    corporate to the assets and liabilities of the Member;

               "Voting  Member"  means  in  respect  of any  particular  general
               meeting a Member entitled to be present at that general  meeting,
               present  in any of the  ways  set  out in  Article  13.1  and not
               disqualified from voting on all business to be considered at that
               meeting; and

               "Voting  Share"  means any  issued  share in the  capital  of the
               Company that  confers a right to vote,  not being a right to vote
               that is exercisable only in limited circumstances as described in
               the definition of "voting share" in section 9 of the Law.

          1.2  Interpretation

               In these Articles, unless the context otherwise requires:

                    (a) a reference to any legislation or legislative  provision
                    includes any statutory  modification or re-enactment  of, or
                    legislative  provision  substituted  for, and any  statutory
                    instrument  issued under,  that  legislation  or legislative
                    provision;

                    (b) the singular includes the plural and vice versa;

                    (c) a word denoting, an individual or person includes a body
                    corporate,  firm,  association,  authority or government and
                    vice versa;

                    (d) a word denoting, any gender includes all genders;

                    (e) a  reference  to an  Article  is to an  article of these
                    Articles;

                    (f) a  reference  to any  agreement  or  document is to that
                    agreement or document  (and,  where  applicable,  any of its
                    provisions) as amended,  novated,  supplemented  or replaced
                    from time to time;

                    (g) an  expression  defined  in, or given a meaning  for the
                    purposes  of, the Law (except if defined in Article 1.1) has
                    the same  definition or meaning in these  Articles  where it
                    relates  to the same  matters  for which it is  defined,  or
                    given a meaning, in the Law;

                    (h) a  reference  to a person is also to the legal  personal
                    representative of that person;

                    (i) a reference  to a matter  being  written  includes  that
                    matter  being in any  mode of  representing  or  reproducing
                    words, figures or symbols in written form;

                    (j) where an expression  is defined,  another part of speech
                    or grammatical  form of that  expression has a corresponding
                    meaning;

                    (k)  a  reference  to  power  is  also  to   authority   and
                    discretion;

                    (l) headings are for  convenience  of reference  only and do
                    not affect interpretation;

                    (m) the  regulations  contained  in Table A in Schedule 1 to
                    the Law do not apply to the Company.

         2.   PROPRIETARY COMPANY

          2.1  The Company may have one or more Members.

          2.2  The  Company  is a  proprietary  company  limited  by shares  and
               accordingly:

                    (a) the number of its Members  (counting  joint holders of a
                    particular parcel of shares as one person,  and not counting
                    any  person  who  is an  employee  of  the  Company  or of a
                    subsidiary  of the Company or any person who was an employee
                    of the Company or of a  subsidiary  of the Company when that
                    person  became a member of the  Company)  is  limited to not
                    more than 50; and

                    (b) the Company must not engage in any  activity  that would
                    require the lodgement of a prospectus under Part 7.12 of the
                    Law or a corresponding law (save that the foregoing does not
                    apply to an offer  of  shares  to  existing  Members  of the
                    Company or employees  of the Company or a subsidiary  of the
                    Company).

     3.   SHARES

          3.1  Without prejudice to any special rights  previously  conferred on
               the holders of any existing shares or class of shares but subject
               to the Law,  shares in the Company  (whether  forming part of the
               original  capital or created on any increase in capital) shall be
               under the  control  of the Board  who may  allot,  issue or grant
               rights or options in respect of, or otherwise  dispose of, shares
               to such persons,  for such price, upon such conditions,.  at such
               times and with such preferred,  deferred or other special rights.
               privileges  or  restrictions,  whether with regard to  dividends,
               voting, return of capital,  payment of calls or other-wise and at
               a premium  or at par or at a  discount  as the  Board  determines
               provided  that  where any  shares of a class are  proposed  to be
               allotted or issued then such shares shall be first offered to the
               existing  holders of shares of the same class in  proportion,  as
               nearly as the circumstances  admit, to the number of the existing
               shares  of the  same  class  of  which  they  are the  registered
               holders.  The offer shall be made by notice specifying the number
               of shares offered and limiting a time within which the offer,  if
               not  accepted,  will be deemed to be declined  and may notify the
               offerees  that any offeree who wishes to take shares in excess of
               this proportion  should in his reply state how many excess shares
               he  wishes  to  take.  If any  offeree  does  not  claim  his due
               proportion,  the  unclaimed  shares  shall be used for or towards
               satisfying those claims for excess shares as are made (if at all)
               by other  offerees.  If any of the excess  shares shall not be so
               claimed,  the Board may dispose of those shares in such manner as
               they think most beneficial to the Company. The Board may likewise
               so dispose of any shares  which (by reason of the ratio which the
               shares bear to shares held by persons entitled to an offer of new
               shares)  cannot,  in the  opinion of the Board,  be  conveniently
               offered under this Article.

          3.2  The Board  shall  have the right to  settle  the  manner in which
               fractions of a share, however arising, are to be dealt with.

          3.3  Subject to the Law, the Company may issue any  preference  shares
               that are, or at the option of the Company are to be, liable to be
               redeemed.

          3.4  Where a share is  allotted  on terms that all or any of the issue
               price of that  share is  payable  by  instalments,  each of those
               instalments  must be paid when due by the  person  who is at that
               time the holder of that share.

          3.5  Where the Company receives an application for shares signed by or
               on behalf of the applicant  and the Company  allots shares to the
               applicant as a consequence,  the application is to be treated as:

                    (a) an agreement by the applicant to accept those shares;

                    (b) a request by the  applicant for the Company to place the
                    applicant's name in the register in respect of those shares;
                    and

                    (c) an  agreement  by the  applicant  that the  applicant is
                    bound by the Memorandum and these Articles.

          3.6
                    (a) The Company may exercise the power to pay  commission or
                    brokerage   conferred   by   section   204  of  the  Law  in
                    consideration  of  a  person   subscribing  or  agreeing  to
                    subscribe  for  shares  in  the  Company,  or  procuring  or
                    agreeing to procure subscriptions for shares in the Company.

                    (b) The  commission  or  brokerage  may be  satisfied by the
                    payment of cash or by the  allotment of fully or partly paid
                    shares or other  securities or partly by the payment of cash
                    and partly by the  allotment  of fully or partly paid shares
                    or other securities.

         4.     CERTIFICATES

          4.1  A Member is entitled  without payment to receive a certificate in
               respect of the shares  registered  in the  Member's  name but, in
               respect of a share or shares held jointly by several persons, the
               Company  is  not  bound  to  issue  more  than  one  certificate.
               Likewise,  the Company shall issue certificates to the holders of
               options.

          4.2  Where several  persons are jointly  entitled to any share, in the
               absence of any express  direction from them to the contrary,  the
               Company shall enter their names as members in the Register in the
               order in which their names appear on the  application  for shares
               or the  instrument or other evidence of transfer or the notice of
               death or  bankruptcy  given to the  Company  to  establish  their
               entitlement  to the share  provided  that nothing in this Article
               shall prevent the Company from differentiating  between the joint
               holders  of any share in any  respect  as  provided  for in these
               Articles.

          4.3  Delivery  of a  certificate  for a share  shall  be  effected  by
               delivering  it  personally  to the  holder or by  posting it in a
               prepaid  envelope   addressed  to  the  holder  at  the  holder's
               registered address or by delivering or posting the certificate in
               accordance with the written  instruction of the holder.  Delivery
               of a  certificate  for a share to one of several joint holders is
               sufficient delivery to all of them.

          4.4  The Board may  determine the number of shares to be issued in any
               one certificate.

          4.5  Every  certificate  for shares shall be issued in accordance with
               the Law.

          4.6  In the event that a  certificate  is stolen.  lost or  destroyed,
               upon  application  to  the  Company  by  the  holder  thereof  in
               accordance  with  section 1089 of the Law and payment of such fee
               as the Board requires.  the Board shall, subject to that section,
               issue a replacement certificate.

          4.7  In the event that a certificate for shares  previously issued has
               been worn out or defaced and has been  surrendered to the Company
               for  cancellation.  and such fee as the Board  requires  has been
               paid,  the  Company  shall  cancel  the  certificate  and issue a
               replacement certificate.


      5.       REGISTERS

          5.1  Joint Holders

               If two or more  persons are the  holders of a share,  that one of
               those persons whose name first appears in the Register in respect
               of that  share is to be treated as the sole owner of the share in
               relation to all matters  concerning  the Company  (including  the
               giving of notice) but not as concerns  the transfer of the share,
               right to vote, receipt of Dividends, delivery of certificates and
               the liability for instalments or calls.

          5.2  Trusts

                    (a) Except as required by law or otherwise required by these
                    Articles,  the Company  must treat the person  whose name is
                    entered  in  the  Register  in  respect  of a  share  as the
                    absolute  owner of that share and is not bound to  recognise
                    (whether or not it has notice):

               (i) that a person holds any share on trust; or

               (ii) any equitable, contingent, future or partial interest in, or
               unit of any share.

                    (b) Shares held by a trustee,  may,  with the consent of the
                    Board,  be  marked  in  the  Register  in  such  a way as to
                    identify  them as being held subject to the relevant  trust,
                    but nothing in this Article  5.2(b)  limits the operation of
                    Article 5.2(a).

            5.3     Register Closure

                    Subject to the Law, the Register and the transfer  books may
                    be  closed  at  any  time  and  for  any  period  the  Board
                    determines.


         6.       CALLS ON SHARES

          6.1  In accordance  with the terms of issue of a share,  the Board may
               make calls on a Member in  respect of any or all money  unpaid on
               the share held by him (whether in respect of nominal value of the
               share or by way of  premium)  unless and to the  extent  that the
               terms of issue of the share  make  that  money  payable  at fixed
               times.

          6.2  The Board may do either or both of the following:

                    (a) make a call payable by instalments; and

                    (b) revoke or postpone any call.

          6.3  Each call is  treated  as having  been made at the time the Board
               resolves to make the call.

          6.4  A Member  subject to a call must pay the amount in respect of the
               call at the time and  place  specified  in a notice  given by the
               Company to the Member  which was given not less than 10  Business
               Days before the time specified in it for payment of the call.

          6.5  In addition to all other remedies of the Company,  for as long as
               the amount in respect of a call is due and  payable and not paid,
               the Member,  in respect of any share held by the  Member,  is not
               entitled  to receive any  Dividend,  or be present at, be counted
               among the  quorum  for,  or vote,  whether in person or by proxy,
               attorney or representative, at a general meeting of the Company.

          6.6  The joint holders of a share are jointly and severally  liable to
               pay any calls made in respect of the share.

          6.7  The Board  may make  arrangements  on the  issue of shares  for a
               difference  between the holders of those  shares in the amount of
               and times for payment of calls in respect of those shares.

          6.8  If the terms of issue of a share provide for any amount  (whether
               in respect of nominal  value or by way of premium  and  including
               without  limitation,  any  instalment)  to be  payable at a fixed
               time:

                    (a) that  amount  is  payable  at that time as if a call had
                    been duly made in  respect of it under  Articles  6.1 to 6.4
                    specifying  that time as the time for  payment of a call for
                    that amount; and

                    (b) all the other provisions of these Articles in respect of
                    calls  apply  mutatis  mutandis  on that basis and "call" in
                    these Articles is to be interpreted accordingly.

          6.9  If an  amount  payable  in  respect  of a call is not  paid on or
               before the day  specified  for its payment,  the person from whom
               that  amount  is due must pay the Money  Due in  respect  of that
               call.

          6.10 The Board may waive the  payment  of all or any part of the Money
               Due in  respect of a call which  relates  to  interest  costs and
               expenses.

          6.11 If on the trial or hearing,  of an action for the recovery of the
               Money Due for call it is proved that:

                    (a) the  resolution  of the  Board  making  the call is duly
                    recorded in the books of the Company;

                    (b) the Member  sued is entered in the  Register as a holder
                    of the share in respect of which the call was made; and

                    (c)  notice  of  the  call  was  given  to  that  Member  in
                    accordance  with these  Articles,  proof of those matters is
                    sufficient and conclusive proof of the debt without it being
                    necessary  to prove any  other  matter  (including,  without
                    limitation, the appointment of the Directors).

          6.12  The Board may:

                    (a) accept from a Member a sum representing all or a part of
                    any amount unpaid in respect of a share  although no part of
                    that amount is then the subject of a call;

                    (b)  authorise the payment by the Company of interest on any
                    sum so accepted,  until that sum becomes payable at any rate
                    (not exceeding the Prescribed Rate) agreed between the Board
                    and the Member; and

                    (c) except where otherwise agreed between the Member and the
                    Company, repay the sum or any part of it,

                    but that sum does not by its being paid and accepted  confer
                    any  right  to  participate  in  profits  and  must  not  be
                    considered  in  ascertaining  the  amounts  of  Dividend  or
                    surplus in winding up or  distribution  attributable to that
                    share.

         7.       FORFEITURE OF SHARES

          7.1  If an  amount  payable  in  respect  of a call is not  paid on or
               before the day  specified  for its payment,  the Board may at any
               time until the amount (including  interest and costs and expenses
               incurred  by the Company by reason of the  non-payment)  is paid,
               give the relevant Member a notice which:

                    (a) requires the Member to pay the Money Due;

                    (b)  specifies a date  (which is at least 10  Business  Days
                    after the date of the  notice) by which and a place at which
                    payment of the Money Due must be made; and

                    (c) states that if payment is not made on or before the date
                    and at the  place  specified,  the  share to which  the call
                    relates is liable to be forfeited.

          7.2  If the  requirements  of a notice given under Article 7.1 are not
               satisfied,  the share in  respect  of which the  notice was given
               may, at any time  before the  payment  required by the notice has
               been  made,  be  forfeited  by the  Board by  resolution  to that
               effect.

          7.3  Forfeiture  of a share under  Article 7.2 includes all  Dividends
               declared in respect of the forfeited  share but not actually paid
               before forfeiture.

          7.4  Where a share is  forfeited  under  Article 7.2, the Company must
               promptly give notice of the  forfeiture to the Member holding the
               share  immediately  before  the  resolution  of the Board for its
               forfeiture  was passed,  and the  forfeiture  (together  with its
               date) must be promptly entered in the Register.

          7.5  A share  forfeited  under  Article  7.2  immediately  becomes the
               property  of the  Company  and the Board may  sell,  re-allot  or
               otherwise dispose of the share in such manner as the Board thinks
               fit, and in the case of re-allotment,  with or without any amount
               paid up on the share by any former holder being  credited as paid
               up.

          7.6  The  forfeiture  of a share under Article 7.2 may be cancelled by
               the Board on any terms and  conditions  it determines at any time
               before the share is disposed of under Article 7.5.

          7.7  Where the Board is entitled to forfeit a share under Article 7.2,
               it may  accept  the  surrender  of that  share on any  terms  and
               conditions  it  determines  and a  share  so  surrendered  may be
               disposed of in the same way as a share  forfeited  under  Article
               7.2.

          7.8  A person who held a share which has been forfeited  under Article
               7.2 ceases to be a Member in respect of the forfeited  share, but
               remains  liable  to pay to the  Company  the  Money  Due and this
               liability  only ceases when the Company  receives  payment of all
               the Money Due.

          7.9  The Board may elect not to enforce payment,  in whole or in part,
               of amounts owing to the Company under Article 7.8.

          7.10 A  written  statement   declaring  that  the  person  making  the
               statement  is a  Director  or  Secretary  and  that a  share  was
               forfeited on a date specified in the statement in accordance with
               these Articles is sufficient evidence of the facts set out in the
               statement  as against all persons  claiming to be entitled to the
               share and of the title of the Company to dispose of the share.

          7.11 The Company may effect a transfer in respect of a share forfeited
               under  Article  7.2 in  favour  of a  person  to whom it is sold,
               re-allotted   or  disposed  of  and  receive  the   consideration
               furnished  for that  share and  register  the  transferee  as the
               holder of the share.

          7.12 The net proceeds of any sale, re-allotment or disposal of a share
               under Article 7.5 or Article 7.7 (after  payment of all costs and
               expenses  incurred)  must be  applied  in or  towards  payment or
               satisfaction of the Money Due and any residue must be paid to the
               person  liable  referred  to in  Article  7.8 or as  that  person
               directs.

          7.13 Once a transfer under Article 7.11 has been  effected,  the title
               of  the  transferee  is  not  affected  by  any  irregularity  or
               invalidity  relating to the forfeiture or the sale,  re-allotment
               or  disposal  of the share and the remedy of any person is solely
               in damages and only against the Company.

      8.       LIEN

          8.1  The Company has a first and paramount  lien on each share for all
               money (whether  presently  payable or not) called or payable at a
               fixed time in respect of that share.

          8.2  The Company  has, in  addition to the lien  described  in Article
               8.1,  a first and  paramount  hen on each share  registered  in a
               Members  name in respect of all money owed to the  Company by the
               Member (including money payable by reason of Article 8.3).

          8.3  Where at any time the law of any jurisdiction imposes or purports
               to impose any  immediate,  future or  possible  liability  on the
               Company, or empowers or purports to empower any person to require
               the  Company  to make any  payment,  on  account  of a Member  or
               referable  to a share  held  by that  Member  (whether  alone  or
               jointly)  or a  Dividend  declared  in respect of a share held by
               that Member, the Company:

                    (a) is fully indemnified by that Member from that liability;

                    (b) may  recover as a debt due from the Member the amount of
                    that liability together with interest at the Prescribed Rate
                    from the date of payment by the  Company  (if the payment is
                    made) to the date of repayment by the Member; and

                    (c) may refuse to  register a transfer  of any share by that
                    Member until the amount of the Member's  Liability  has been
                    paid to the Company,  and nothing in this Article in any way
                    prejudices  or affects any right or remedy which the Company
                    may otherwise have (including, without limitation, any right
                    of set off).

          8.4  The  liens  described  in  Articles  8.1  and 8.2  extend  to all
               Dividends  (if any)  payable  in  respect of the share and to the
               proceeds of sale of the share.

          8.5  The Board may, at any time, exempt a share from the provisions of
               Articles 8.1and 8.2 to the extent and on any terms and conditions
               that it determines.

     `    8.6  Where:

                    (a) the Company has a lien on a share;

                    (b) the sum in respect of which the lien exists is presently
                    payable;

                    (c) the Company has given notice to the Member registered in
                    the  respect  of the share  requiring  payment of the amount
                    which is  presently  payable  in  respect  of which the lien
                    exists, and specifying a date (which is at least 10 Business
                    Days  after the date of the  notice) by which and a place at
                    which payment of the amount must be made; and

                    (d) the  requirements  of the  notice  given  under  Article
                    8.6(c) are not fulfilled,

                    the Company  may sell the share as if it had been  forfeited
                    under Article 7.2 and the provisions of Articles 7.5 to 7.13
                    inclusive apply as if the Member's  Liability were the Money
                    Due.



         9.       SHARE CAPITAL AND VARIATION OF RIGHTS

          9.1  Authorised Capital

               The  authorised  capital of the  Company is ten  million  dollars
               ($10,000,000) divided into ten million (10,000,000) shares of one
               dollar ($1.00) each.

          9.2  Alteration of Capital

               The  Company  may from  time to time by  ordinary  resolution  in
               general meeting, do any or all of the following:

                    (a) increase its share capital by the creation of new shares
                    of such amount as it thinks expedient;

                    (b)  consolidate  and divide all or any of its share capital
                    into shares of a larger amount than its existing shares;

                    (c)  sub-divide  all or any of its shares  into  shares of a
                    smaller amount than its existing  shares but so that, in the
                    sub-division, the proportion between the amount paid and the
                    amount (if any) unpaid on each share of a smaller  amount is
                    the same as was the case of the share  from  which the share
                    of a smaller amount is derived; and

                    (d)  cancel   shares  that,  at  the  date  of  passing  the
                    resolution, have not been taken or agreed to be taken by any
                    person or that have been  forfeited and reduce the amount of
                    its share capital by the amount of the shares so cancelled.

          9.3  Additional Rights

               Where shares are consolidated and divided under Article 9.2(b) or
               subdivided  under  Article  9.2(c),  the  Company  may by special
               resolution  determine  that,  as  between  the  shares  resulting
               therefrom,  one or more of those  shares has some  preference  or
               special  advantage  as  regards  dividends,  capital,  voting  or
               otherwise over or compared with one or more others.

          9.4  Reduction of Capital

               Subject to the Law,  the  Company  may,  by  special  resolution,
               reduce its share capital,  any capital  redemption reserve or any
               share premium account in any way.

          9.5  Buy-back Authorisation

               Subject  to  the  Law  the  Company  may  buy  shares  and  other
               securities  in  itself  on  such  terms  and  at  such  times  as
               determined by the Directors.

          9.6  Variation of Rights

               If at any time the  issued  shares  are  divided  into  different
               classes.  the rights  attached to any class of shares (unless the
               terms of issue of that class otherwise  provide) may,  whether or
               not the  Company  is being  wound up, be varied  with  either the
               consent in writing of the holders of 75% of the issued  shares of
               that class, or the sanction of a special  resolution  passed at a
               separate meeting of the holders of shares of that class, and. for
               the purposes of this Article, the following provisions apply:

                    (a) in relation to any separate  meeting,  of the holders of
                    shares in a class,  the  provisions of these  Articles which
                    relate to general  meetings apply as far as they are capable
                    of  application  and  changed as  necessary  except that any
                    holder  of  shares  of that  class  present  in person or by
                    proxy, attorney or representative may demand a poll; and

                    (b) the rights  conferred  upon the holders of the shares of
                    any class shall,  unless otherwise expressly provided by the
                    terms of issue of the shares of that class, be deemed not to
                    be varied by the creation or issue of further shares ranking
                    equally with the first-mentioned shares.

         10.      TRANSFER OF SHARES

          10.1 Instrument of Transfer

               Subject to these  Articles,  a Member may  transfer all or any of
               the Member's shares by instrument in writing in registrable  form
               or, subject to the Law, by any other means the Board approves.

          10.2 Proper Instrument

               A  transfer  may  only be  registered  by the  Company  where  an
               instrument  satisfying  Article  10.1 is delivered to the Company
               and the instrument:

                    (a) is duly stamped, if necessary;

                    (b) is executed by the transferor and the transferee, except
                    where  execution by either  transferor  or transferee is not
                    required by law or is deemed by law to be effected;

                    (c)  (except   where   otherwise   permitted  by  law),   is
                    accompanied by the certificate for the shares the subject of
                    the transfer  together with any other evidence the Board may
                    require  to prove  the title or right of the  transferor  to
                    transfer the shares; and

                    (d) relates only to shares of one class.

          10.3 Transferor remains Member

               The  transferor of a share remains the holder of that share until
               the  transfer is  registered  and the name of the  transferee  is
               entered in the Register in respect of that share.

          10.4 Retention of Instruments

               On  an  instrument  of  transfer  or a  purported  instrument  of
               transfer being delivered to the Company, property to and title in
               that  instrument  (but not the shares the  subject of it) pass to
               the  Company  which is  entitled  as against  all  persons to the
               possession of the instrument.

          10.5 Powers of Attorney

               Where a power of attorney  granted by a Member is lodged with, or
               produced or exhibited  to, the Company and that power of attorney
               confers  power  on the  attorney  to  transfer  any or all of the
               Member's  shares,  the Company is entitled to assume,  as against
               the Member,  that the power  remains in full force and effect and
               may be  relied  on by the  Company  until  the  Company  receives
               express notice in writing at its registered office of either:

                    (a) the revocation of the power of attorney; or

                    (b) the death of the Member.

          10.6 Restrictions on Transfer

               Subject to any other restrictions  agreed by the shareholders and
               the Company,  the  following  provisions  apply in respect of the
               transfer of shares:

                    (a)  In  every  case  of  a  proposed   transfer  of  shares
                    ("relevant  shares")  the person  proposing  to transfer the
                    relevant shares ("proposing transferor") must give notice in
                    writing   ("transfer   notice")  to  the  Company  that  the
                    proposing   transferor  desires  to  transfer  the  relevant
                    shares.  The  notice  must  specify  the sum  the  proposing
                    transferor  fixes as the fair value and will  constitute the
                    Company as the proposing  transferor's agent for the sale of
                    the  relevant  shares at the price so fixed or at the option
                    of the purchasing  Member at the fair value to be determined
                    by an  Accountant  in  accordance  with Article  10.6(c).  A
                    transfer notice which includes several shares operates as if
                    it was a  separate  notice  in  respect  of  each  share.  A
                    transfer notice is not revocable except with the approval of
                    the Board.

                    (b) If the Company,  within 3 calendar  months from the date
                    of receipt by the  Company  of a  transfer  notice,  finds a
                    Member  willing  to  purchase  all  of the  relevant  shares
                    ("purchasing Member") and gives notice to that effect to the
                    proposing transferor, the proposing transferor will be bound
                    on  payment  of the  fair  value  fixed in  accordance  with
                    Article  10.6(a) or Article 10.6(c) to transfer the relevant
                    shares to the purchasing Member.

                    (c) In case any  difference  arises  between  the  proposing
                    transferor and the purchasing Member as to the fair value of
                    a share then an Accountant to be nominated by the Company on
                    the  application of either party will certify in writing the
                    sum which in the Accountant's  opinion is the fair value and
                    that  sum will be  deemed  to be the  fair  value  and in so
                    certifying the  Accountant  will act as an expert and not as
                    arbitrator and accordingly the Commercial Arbitration Act, 1
                    986 will not apply.

                    (d) If in any case the  proposing  transferor,  after having
                    become  bound,  makes default in  transferring  the relevant
                    shares the Company may receive the  purchase  money and will
                    cause the name of the purchasing Member to be entered in the
                    Register  as the  holder  of the  shares  and will  hold the
                    purchase money in trust for the proposing transferor subject
                    to the Company's receipt of the certificate for the relevant
                    shares.  The receipt of the Company for the  purchase  money
                    will be a good discharge to the purchasing  Member and after
                    the  purchasing  Member's  name  has  been  entered  in  the
                    Register   the  validity  of  the   transaction   cannot  be
                    questioned by any person.

                    (e) If the Company does not,  within 3 calendar months after
                    being served with a transfer  notice,  find a Member willing
                    to purchase  all of the  relevant  shares and give notice to
                    the proposing  transferor,  the proposing  transferor may at
                    any  time  within  3  calendar  months  afterwards  sell and
                    transfer the relevant  shares to any person  approved by the
                    Board at any price.

                    (f) In spite of anything to the  contrary  contained in this
                    Article 10.6,  the shares  specified in any transfer  notice
                    given to the  Company  must be offered in the first place to
                    the  registered  holders of shares of the same class  (other
                    than to the  proposing  transferor)  and,  except  as  later
                    provided,  as nearly as may be in proportion to the existing
                    shares  of that  class  of  which  they  are the  registered
                    holders respectively,  and the offer must in each case limit
                    the time within which the offer,  if not  accepted,  will be
                    deemed to be declined and may notify the registered  holders
                    of  shares  of  the  same  class   (except   the   proposing
                    transferor)  that any  registered  holder  of shares of that
                    class who wishes to take  shares in excess of that  holder's
                    proportion  should in the reply state how many excess shares
                    the holder wishes to take. If any of the registered  holders
                    of shares of that  class does not claim  that  holder's  due
                    proportion, the unclaimed shares will be used for or towards
                    satisfying those claims for excess shares as are made (if at
                    all) by other registered  holders of share of that class. If
                    any  shares  are not  capable  without  fractions  of  being
                    offered to the registered holders of shares of that class in
                    proportion  to their  existing  holdings  the shares will be
                    offered to the registered  holders in the manner  determined
                    by lots to be drawn by or under the  direction of the Board.
                    In the event that the  registered  holders of shares of that
                    class do not  claim  any of the  shares  of the  same  class
                    offered  to them,  the  excess  shares of that class will be
                    offered in the second place to the registered holders of the
                    other   classes  of  shares   (other   than  the   proposing
                    transferor)  and the  provisions of this Article 10 relating
                    to the offer in the first place to the registered holders of
                    shares of the one class will apply  mutatis  mutandis to the
                    offer in the  second  place  to the  registered  holders  of
                    shares of the other classes.

         11.      TRANSMISSION OF SHARES

          11. 1   Death of a Member

                    (a) In the case of the death of a Member,  the only  persons
                    the  Company  will  recognise  as  having  any  title to the
                    Member's shares are:-

               (i) the personal  representative of the deceased Member where the
               deceased was a sole holder; and

               (ii) the  survivor or  survivors  where the  deceased was a joint
               holder.

                    (b)  Nothing  contained  in Article  11.1 (a)  releases  the
                    estate of a deceased Member from any liability in respect of
                    a share,  whether that share was held by the deceased solely
                    or jointly with other persons.

          11.2      Registration on Transmission

                    (a)  A  person  who  becomes   entitled  to  a  share  as  a
                    consequence of the  occurrence of a Transmission  Event may,
                    upon producing the  certificate for the share and such other
                    evidence  as the Board may  require to prove  that  person's
                    entitlement,  be  registered  as the  holder of the share by
                    signing  and  serving  on the  Company a notice  in  writing
                    stating  that  election  or  may  (subject  to  Article  10)
                    transfer such share.

                    (b) Where two or more  persons are  jointly  entitled to any
                    share in  consequence of a  Transmission  Event,  they will,
                    upon being  registered as the holder of the share,  be taken
                    to be joint holders of the share.

        12.       GENERAL MEETINGS

          12.1 In addition to any other general  meeting held by it, the Company
               may (but without being  obliged so to do) hold a general  meeting
               to be called the "Annual General  Meeting" at least once in every
               calendar  year. A general  meeting  other than an Annual  General
               Meeting is to be called an "Extraordinary General Meeting".

          12.2 Any Director may whenever he thinks fit convene a general meeting
               of the  Company and  general  meetings  shall be convened on such
               requisition or in default may be convened by such requisitionists
               as provided by the Law.

          12.3 Subject to the  provisions  of the Law as to special  resolutions
               and  agreements  to short  notice of  meetings,  at least 14 days
               notice of a general meeting must be given to the persons entitled
               to receive that notice.

          12.4 A notice of a general  meeting  must specify (in addition to such
               matters as may be required by the Law):

                    (a) the place, day and time of the meeting; and

                    (b) the general  nature of the business to be  transacted at
                    the meeting,

          12.5 The accidental  omission to give notice of a general  meeting to,
               or the  nonreceipt  of notice of a general  meeting  by, a person
               entitled  to  receive  that  notice  does  not   invalidate   any
               resolution passed at that general meeting.

          12.6 Where notice of a general meeting  convened by the Board has been
               given,  the Board may by notice given to all persons  entitled to
               be given  notice of the general  meeting,  postpone or cancel the
               general meeting or relocate the general meeting, to a new venue.

          12.7 Except as otherwise provided by these Articles, the chairman of a
               -general meeting at which a quorum is present:

                    (a)  may  with  the  consent  of  the  meeting  by  ordinary
                    resolution; and

                    (b)  must,  if  so  directed  by  the  meeting  by  ordinary
                    resolution,  adjourn the meeting  from time to time and from
                    place to place.

          12.8 The only business which may be transacted at an adjourned general
               meeting is business  which was left  unfinished  from the general
               meeting which was adjourned.

          12.9 No notice need be given of an adjourned general meeting or of the
               business to be  transacted  at it except if a general  meeting is
               adjourned  for more than 21 days,  in which  case,  notice of the
               adjourned  meeting  must be  given  as if it were  notice  of the
               original meeting.

         13.      PROCEEDINGS AT GENERAL MEETINGS

          13.1 Representation of Members

               A Member may attend a general  meeting at which he is entitled to
               be present,  in any of the following  ways (if  applicable to the
               Member)

                    (a) in person;

                    (b) by proxy;

                    (c) by attorney; or

                    (d) by a representative  appointed in respect of the general
                    meeting under section 249(3) of the Law;

               provided that the Chairman of a general  meeting,  or his nominee
               may refuse to admit to the meeting, or may eject from the meeting
               any person:

                    (e) who is in  possession  (without the  Chairman's  express
                    permission) of any recording or photographic device; or

                    (f) who  behaves  or  threatens  to behave  in a  disorderly
                    manner or to  disrupt  the  meeting,  as  determined  in the
                    Chairman's discretion.

          13.2  Quorum

                    (a) No  business  may be  transacted  at a  general  meeting
                    unless a quorum  is  present  at the time  when the  meeting
                    proceeds to business.

                    (b) If the Company has two or more Voting Members,  a quorum
                    is present for a general meeting, where two natural persons.
                    each of whom is or represents under Article 13.1(a),  (b) or
                    (c) a different Voting Member, are present.

                    (c) If the  Company  has  only one  Member,  the  quorum  is
                    constituted by that Member.

          13.3  Failure of Quorum

               If a quorum is not present within 15 minutes of the time notified
               for a general meeting:

                    (a)  where  the  meeting   was   convened  by  reason  of  a
                    requisition of Members - the meeting is dissolved; and

                    (b) in any other case:

               (i) the meeting stands  adjourned to the day, time and place that
               the Board may  determine  and  notify  to the  Members  or, if no
               determination  is made, the same day in the next week at the same
               time and place; and

               (ii) at the adjourned meeting,  if a quorum is not present within
               15 minutes of the time  notified for the meeting,  the meeting is
               dissolved.

          13.4  Chairman

               While a person holds office as Chairman of Directors, that person
               shall preside as chairman at general meetings. During any absence
               or vacancy in that  office,  the person (if any) who holds office
               as Deputy  Chairman  of  Directors  shall  preside as chairman at
               general meetings.

         13.5  Chairman Absent

               Where a general meeting is held and either no person specified in
               Article  13.4 is present  within 15 minutes of the time  notified
               for the  meeting,  or that person is present but is  unwilling or
               unable to be the chairman of the general meeting,:

                    (a) the  Directors  present may elect one of their number to
                    be the chairman of the general meeting; and

                    (b) if there is no Director  present or those present at the
                    meeting,  are  unable  or  unwilling  to chair  the  general
                    meeting, the Voting, Members present must elect one of their
                    number to be the chairman of the general meeting.

          13.6 Responsibilities of Chairman

               The chairman of a general  meeting is responsible for the general
               conduct  of  the  meeting  and  for  this  purpose  may,  without
               limitation:

                    (a) make rulings;

                    (b) in  addition  to other  powers to  adjourn,  adjourn the
                    meeting  without  the  concurrence  of  the  meeting  if  he
                    determines  it is desirable  for the orderly  conduct of the
                    meeting; and

                    (c)  determine   conclusively  any  dispute  concerning  the
                    admission, validity or rejection of a vote.

          13.7 Method of Voting

               Every  resolution  put to a vote  at a  general  meeting  must be
               determined by a show of hands unless a poll is properly  demanded
               either before or on the  declaration of the result of the vote on
               a show of hands.

          13.8 Demand for Poll

               In addition.  to the  provisions in this regard  contained in the
               Law, a demand for a poll may be made by:

                    (a) the chairman of the general meeting; or

                    (b) any one or more natural persons present each of whom is,
                    or  represents  under  Articles  13.1(b),   (c)  or  (d),  a
                    different  Voting  Member who are  together  entitled  to at
                    least 10% of the  total  voting  rights  of all the  Members
                    having the right to vote at the meeting; or

                    (c) any one or more natural persons present each of whom is,
                    or  represents  under  Articles  13.1(b),   (c)  or  (d),  a
                    different  Voting  Member who  together  hold  shares in the
                    Company  conferring  a right to vote at the  meeting,  being
                    shares on which an  aggregate  sum has been paid up equal to
                    at least  10% of the  total  sum  paid up on all the  shares
                    conferring that right.

          13.9 No Poll on Chairman

               A demand for a poll may not be made in respect of the election by
               the general meeting, of the chairman of the meeting.

          13.10 Effect of Demand for Poll

               The  demand  for a poll does not  prevent  the  continuance  of a
               general  meeting for the  transaction  of any business  except in
               respect of the resolution for which the poll is demanded.

          13.11  Votes on Show of Hands

               Where a resolution is determined by show of hands:

                    (a) a  declaration  by the  chairman of the general  meeting
                    that the resolution has been carried,  carried  unanimously,
                    carried without dissent, carried by a particular majority or
                    lost is conclusive  evidence of the fact so declared without
                    proof of the  number  or  proportion  of  votes  cast for or
                    against that resolution; and

                    (b) an entry  in the book  containing  the  minutes  of that
                    general  meeting  recording  that  declaration is conclusive
                    evidence  of the fact  that the  declaration  was made as so
                    recorded.

          13.12 Conduct of Poll

               If a poll is properly demanded for a resolution:

                    (a) if the resolution is for the  adjournment of the general
                    meeting, the poll must be taken immediately at the place and
                    in the manner that the  chairman  of the meeting  determines
                    and declares to the meeting;

                    (b) in all other  cases,  the poll must be taken at the time
                    and place and in the manner that the chairman of the general
                    meeting determines and declares to the meeting;

                    (c) the result of the poll,  as disclosed by the chairman of
                    the general  meeting at which the result is  declared,  is a
                    resolution  of the  general  meeting  at  which  the poll is
                    demanded; and

                    (d) an entry  in the  book  containing  the  minutes  of the
                    general  meeting at which the result is  declared  recording
                    that declaration is conclusive evidence of the fact that the
                    declaration was made as so recorded.

          13.13   Resolutions Determined by Majority

               Both on a show of hands and on a poll, an ordinary  resolution is
               passed if the proportion  that the number of votes cast in favour
               of that resolution bears to the total number of votes cast on the
               resolution is greater than one half.

          13.14    No Casting Vote of Chairman

               If there is an equality  of votes,  whether on a show of hands or
               on a poll,  the chairman of the meeting will not have a second or
               casting  vote,  and the  proposed  resolution  is to be  taken as
               having been lost.

          13.15    Effect of Resolution Signed by All Members

                    (a) If the  Company  has more  than one  Member  and all the
                    Members of the Company  have signed a document  containing a
                    statement that they are in favour of a prescribed resolution
                    in terms  set out in the  document,  a  resolution  in those
                    terms  shall be  deemed  to have  been  passed  at a general
                    meeting of the Company held on the day on which the document
                    was  signed and at the time at which the  document  was last
                    signed by a Member or, if the Members signed the document on
                    different  days,  on the day on  which,  and at the  time at
                    which,  the document was last signed by a Member and where a
                    document is so signed:

               (i) the Company shall be deemed to have held a general meeting at
               that time on that day; and

               (ii) the document  shall be deemed to constitute a minute of that
               meeting.

                    (b)  Paragraph  (a) does not apply in relation to a document
                    unless the document has been signed by each person who was a
                    Member of the Company at the time when the document was last
                    signed.

                    (c) For the purposes of this Article 13.15:

               (i)  2  or  more  separate  documents  containing  statements  in
               identical  terms  each of which is  signed  by 1 or more  Members
               shall  together be deemed to  constitute 1 document  containing a
               statement  in  those  terms  signed  by  those   Members  on  the
               respective days on which they signed the separate documents; and

               (ii) a prescribed  resolution is a resolution that is required or
               permitted by the Law or the  Memorandum  or these  Articles to be
               passed at a  (2eneral  meeting  of the  Company  and  includes  a
               resolution  appointing  an officer or auditor or  approving of or
               agreeing  to any act,  matter  or thing  but does not  include  a
               resolution  of  which  special  notice  is  required  or  that is
               required to be passed by a majority other than a simple majority.

                    (d) Any  document  that is attached to a document  signed as
                    mentioned  in  paragraph  (a) and is signed by the Member or
                    Members  who signed  the  last-mentioned  document  shall be
                    deemed to have been laid  before the  Company at the general
                    meeting referred to in that paragraph.

                    (e) Nothing in this Article 13.15 affects or limits any rule
                    of law  relating  to the  effectiveness  of  the  assent  of
                    Members  of a company  given to a  document,  or to any act,
                    matter or thing,  otherwise than at a general meeting of the
                    company.

          13.16    Resolution Where Company has Only One Member

               Notwithstanding,  anything  contained  in these  Articles  to the
               contrary:

                    (a) If the  Company  has  only  one  Member  and the  Member
                    records the Member's  decision to a particular  effect,  the
                    recording  of the  decision  counts  as the  passing  by the
                    Member of a resolution to that effect.

                    (b) A record made for the purposes of paragraph  (a) must be
                    made in  writing  and  also has  effect  as  minutes  of the
                    passing of the resolution

         14.      ENTITLEMENT TO ATTEND AND VOTE

          14.1     Entitlement to Notice and to Attend

               Subject  to these  Articles  and any terms of issue of any share,
               each  Member  and each  Director  is  entitled  to notice of each
               general  meeting,  and to be present and to speak at that general
               meeting,  and the Auditor  (if any) must be given  notice of each
               general meeting.

          14.2     Entitlement to Vote

               Subject to these Articles, the Law arid the terms of issue of any
               share:

                    (a) on a show of hands,  each  natural  person  present at a
                    general   meeting  who  is  a  Voting  Member  or  a  proxy,
                    representative or attorney  appointed by a Voting Member has
                    one vote; and

                    (b) on a poll,  each  natural  person  present  at a general
                    meeting has a number of votes calculated as the aggregate of
                    the following:

               (i) the number of fully paid shares held by the person;

               (ii) the number of fully paid  shares in respect of which  Voting
               Members  holding those shares have appointed the person as proxy,
               representative or attorney;

               (iii) the aggregate  (or if that is not a whole number,  the next
               highest  whole  number) of the amounts  calculated  in respect of
               each partly paid share held by the person as the  fraction of the
               total of the issue price  (being  nominal  value and  premium) of
               that share that is actually paid; and

               (iv) the aggregate  (or if that it not a whole  number,  the next
               highest whole number) of the amounts calculated on the same basis
               as paragraph  (iii) above in respect of each partly paid share in
               respect  of which  the  Voting  Member  holding  that  share  has
               appointed the person as proxy, representative or attorney.

          14.3     Vote of Transmittee

               A person  entitled to  transmission  of a share under  Article 11
               who,  at least 48 hours  before the time  notified  for a general
               meeting (or an  adjourned  meeting),  satisfies  the Board of his
               right to that share,  may vote at that general meeting in respect
               of that share as if the person were the registered  holder of the
               share.

          14.4     Joint Holders' Votes

               Where a share is held by more than one person (including, for the
               purposes   of  this   Article,   the   several   legal   personal
               representatives of a deceased Member):

                    (a) each of those  persons  may  tender a vote in respect of
                    the share  either in person or by proxy,  representative  or
                    attorney,  as if the  person  were  the sole  holder  of the
                    share; but

                    (b) if two or more of  those  persons  tender  a vote on any
                    resolution,  the only vote which is to be counted in respect
                    of that  share is the vote  tendered  by the most  senior of
                    those persons (seniority being  conclusively  ascertained by
                    the  order  of  names  in  respect  of  that  share  in  the
                    Register).

          14.5     Proxies, Attorneys and Representatives

                    (a) A proxy, attorney or representative may be, but need not
                    be, a Member of the Company.

                    (b) A proxy, attorney or representative may be appointed for
                    all general meetings, or for any number of general meetings,
                    or for a particular general meeting

                    (c)  An  instrument   appointing  the  proxy,   attorney  or
                    representative,  may be in any usual  form or any other form
                    that the Board approves.

                    (d)  Unless  otherwise   provided  in  the  instrument,   an
                    instrument  appointing a proxy,  attorney or  representative
                    will be taken to confer authority:-

               (i) to agree to a meeting being  convened by shorter  notice than
               is required by the Law or by these Articles;

               (ii) to agree to a  resolution  being  proposed  and  passed as a
               special  resolution  at a meeting of which  less than  twenty-one
               (21) days notice has been given;

               (iii)  even   though  the   instrument   may  refer  to  specific
               resolutions and may direct the proxy,  attorney or representative
               how to vote on those resolutions:-

               to vote on any amendment moved to the proposed resolutions and on
               any  motion  that  the  proposed  resolutions  not  be put or any
               similar motion; and

               to vote on any procedural  motion,  including any motion to elect
               the chairman, to vacate the chair or to adjourn the meeting;

               (iv) to speak to any  proposed  resolution  on which  the  proxy,
               attorney or representative may vote; and

               (v) to demand or join in  demanding a poll on any  resolution  on
               which the proxy, attorney or representative may vote.

                    (e) A Member may not appoint  more than one proxy,  attorney
                    or representative to vote in respect of the Member's shares.

                    (f) An  appointment of a proxy,  attorney or  representative
                    must be in writing and

               (i) in the case of a natural person, signed by the appointor,

               (ii) in the case of a body  corporate,  executed under the common
               seal of the appointor;

               (iii) signed by the duly authorised attorney of the appointor; or

               (iv) in the case of joint holders, be signed by all such holders

                    (g) An  instrument  of proxy  which is valid  and  effective
                    except  that no  appointee  is  specified  in respect of the
                    shares of the  relevant  Member is to be  treated as validly
                    appointing  the chairman of the general  meeting to which it
                    relates in respect of all of the shares of that Member.

                    (h) Where a Member in a valid instrument appointing a proxy,
                    representative  or attorney directs the appointee to vote in
                    a specified way in respect of a particular  item of business
                    at the relevant general meeting:

               (i) the appointee  must cast or abstain from casting (as the case
               may be) a vote on that item of business; and

               (ii) the appointee must, on a poll, cast the votes as to which he
               has a direction by reason of the  instrument in  accordance  with
               that direction,

               but,  if in  respect  of any  vote in  respect  of  that  item of
               business,  the Member does not in the instrument indicate how the
               appointee  is to cast that  vote,  the  appointee  may  cast,  or
               abstain from casting, that vote as the appointee determines.

                    (i) Any appointment of a proxy or attorney or representative
                    is effective, in respect of a particular general meeting if,
                    and  only  if,  the  following,   instruments  are  actually
                    received  (which  includes   receipt  of  a  copy  of  those
                    instruments  by  legible  facsimile   transmission)  by  the
                    Company at the  Office (or  another  place  notified  by the
                    Board) at least 24 hours  before the time  notified for that
                    meeting,  (or such  lesser  period as may be resolved by the
                    Board):

               (i) in the case of a proxy, the instrument of proxy and. if it is
               executed by an  attorneys  the  relevant  power of attorney or an
               office  copy  or  notarially  certified  copy  of  the  power  of
               attorney;

               (ii) in the case of an  attorney,  the  power of  attorney  or an
               office  copy  or  notarially  certified  copy  of  the  power  of
               attorney; and

               (iii)  in the  case  of a  representative,  a  certificate  under
               section 249(6) of the Law, or other evidence  satisfactory to the
               Company.

                    (j) Where the Company has received an instrument of proxy in
                    respect  of a share from a Member  the  appointment  made by
                    that  instrument is and remains valid and effective,  except
                    that where the Company subsequently receives:

               (i) a power of attorney or office  copy or  notarially  certified
               copy of a power of attorney  entitling the attorney to attend and
               vote at the meeting, the appointment is revoked;

               (ii)  intimation  in  writing  either  of the  revocation  of the
               appointment  under the instrument of proxy or of the death of the
               Member, the appointment is revoked; and

               (iii)  another  instrument of proxy from the Member in respect of
               that share, the instrument of proxy bearing the later date (or if
               the instruments bear the same date, the instrument later received
               by the Company) is an intimation in writing of the  revocation of
               the appointment under the other instrument.

                    (k) If a Member is present at a general meeting in either of
                    the ways specified in Articles  13.1(a) or (d), and a person
                    appointed  by that  Member  as  proxy  or  attorney  is also
                    present at that  meeting,  that  person is not  entitled  to
                    exercise the rights  conferred by the instrument of proxy or
                    power of attorney while the Member is present.

          14.6     Ruling on Entitlements and Votes

                    (a) An  objection  may be  raised  with  the  chairman  of a
                    general meeting as to the qualification of a purported voter
                    or  the  admission  or  rejection  of a vote  by any  person
                    present and  entitled  (or  claiming to be entitled) to vote
                    but that  objection may be made only at the general  meeting
                    or adjourned  meeting at which the purported voter wishes to
                    vote or the vote  objected to is given or  tendered  and, in
                    relation to that objection:

               (i) the decision of the chairman is final and conclusive; and

               (ii) a vote not disallowed as a result is valid and effective for
               all purposes.

                    (b) This Article  applies to any  objection as to the use or
                    legibility   of  a  facsimile   transmission   copy  of  any
                    instrument referred to in Article 14.5(i).

                    (c) The Secretary, in his absolute discretion,  may waive or
                    reduce any period of time  referred to in Articles  14.3 and
                    14.5(i).

         15.      DIRECTORS

          15.1     Number of Directors

                    (a) The number of the  Directors  shall be not less than one
                    nor (subject to Article 15.1(b)) more than nine:

                    (b) The Company may from time to time by ordinary resolution
                    increase or reduce the maximum number of Directors permitted
                    under Article 15. l (a). :

          15.2     First Director or Directors

               The  first  Director  or  Directors  (as the case  may be)  shall
               appointed by the subscriber or  subscribers  (as the case may be)
               to the Memorandum.

          15.3     No Retirement

               It shall not be  necessary  for the  Directors  or any of them to
               retire at an annual or other interval of time.

          15.4     Qualification of Directors

               A Director need not be a Member.

          15.5     Appointment of Director

               The Company may from time to time by ordinary  resolution appoint
               an  additional  Director or  Directors  but so that the number of
               Directors  does not at any time  exceed  the  maximum  number set
               under Article 15. 1 (a).

          15.6     Casual Vacancy

               The Board may at any time  appoint  any person as a  Director  to
               fill a casual  vacancy or as an addition to the Board but so that
               the number of  Directors  does not any time  exceed  the  maximum
               number set under  Article  15.1(a) and any  Director so appointed
               automatically  retires at the next general meeting of the Company
               and is eligible for  re-appointment  by that general meeting (and
               if  not   re-appointed   that  retirement  takes  effect  at  the
               conclusion of that general meeting).

          15.7     Removal of Director

                    (a) The Company may (in addition to any powers  conferred by
                    the Law) by  ordinary  resolution  remove a Director  (other
                    than  an  Alternate  Director)  and  may  also  by  ordinary
                    resolution appoint a person as a replacement Director.

                    (b) Nothing in Article 15.7(a)  deprives a person so removed
                    of compensation or damages payable to such person in respect
                    of the  termination of the person's  appointment as Director
                    or of any appointment terminating with that as Director.

          15.8     Vacation of Office

               The  office of a  Director  automatically  becomes  vacant if the
               Director:

                    (a) becomes an insolvent under administration;

                    (b) is not  permitted by the Law (or an order made under the
                    Law) to be a Director;

                    (c)  becomes of  unsound  mind or a person  whose  person or
                    estate  is  liable  to be dealt  with in any way under a law
                    relating to mental health;

                    (d)  is  removed  as a  Director  under  the  Law  or  these
                    Articles;

                    (e) either by himself or by an Alternate  Director appointed
                    by him  fails to attend  three  consecutive  Board  meetings
                    without leave of absence from the Board; or

                    (f) resigns or retires either by reason of these Articles or
                    by notice in writing to the Company.

          15.9     If Only One Director

                    (a) If a person who is the only Director and the only Member
                    of the Company:

               (i) dies; or

               (ii) cannot  manage the Company  because of the  person's  mental
               incapacity;

               and  a  personal   representative  or  trustee  is  appointed  to
               administer  the  person's   estate  or  property,   the  personal
               representative or trustee may appoint a person as the director of
               the Company.

                    (b) If:

               (i) the office of the Director is vacated under Section 224(l)(c)
               of the Law because of the bankruptcy of the Director; and

               (ii) the person is the only  Director and also the only Member of
               the Company; and

               (iii) a  trustee  in  bankruptcy  is  appointed  to the  person's
               property;

               the trustee may appoint a person as the Director of the Company.

                    (c) A  person  who has a power  of  appointment  under  this
                    Article15.9 may appoint himself or herself as Director.  16.
                    DIRECTORS' REMUNERATION

          16.1 The  Directors  shall  be paid by way of fees for  services  such
               remuneration  as may be  determined  from  time  to  time  by the
               Company by ordinary resolution;

          16.2 All Directors' fees shall be deemed to accrue from day to day;

          16.3 The Directors may also be paid an allowance for  travelling,  and
               other  expenses  properly  incurred  by  them  in  attending  and
               returning from meetings of the Directors or any committee- of the
               Directors  or general  meetings  of the Company or  otherwise  in
               connection with the exercise of their powers and the discharge of
               their duties or the business of the Company.

         17.      DIRECTORS' INTERESTS

          17.1 Section  231 of the Law  does  not  apply  to a  Director  of the
               Company  who is the only  Director  of the  Company  and the only
               Member  of the  Company,  and the  following  provisions  of this
               Article 17 are to be read and applied subject thereto.

          17.2 No Director shall be disqualified by his office from  contracting
               or  entering  into any  arrangement  with the  Company  either as
               vendor,  purchaser  or otherwise  nor shall any such  contract or
               arrangement  entered into by or on behalf of the Company in which
               any Director  shall be in any way interested be avoided nor shall
               any Director so contracting  or entering into any  arrangement or
               being so  interested  be liable to account to the Company for any
               profit  realised by any such contract or arrangement by reason of
               such   Director   holding   that  office  or  of  the   fiduciary
               relationship  thereby  established but, subject always to Article
               17. 1, every Director shall observe the provisions of Section 231
               of the Law relating to the  declaration  of the  interests of the
               Directors in contracts or proposed  contracts with the Company or
               of any  office or  property  held by the  Directors  which  might
               create  duties or  interests  in  conflict  with their  duties or
               interests as Directors.

          17.3 Subject  to the  provisions  of  the  Law no  Director  shall  be
               disqualified from voting in respect of any contract,  arrangement
               or transaction in which he may be interested  either  directly or
               indirectly  otherwise  than as a shareholder of the Company and a
               Director  interested  as  aforesaid  is to be counted in a quorum
               notwithstanding   his  interest  and  a  Director  interested  as
               aforesaid may (if  authorised  in that behalf in accordance  with
               these  Articles)  affix the seal of the Company to and/or sign or
               countersign  any  document  or  instrument  giving  effect  to or
               evidencing  or  in  any  way  relating  to  any  such   contract,
               transaction  or  arrangement  as  aforesaid  notwithstanding  his
               interest  provided that,  subject  always to Article 17.1.  every
               such Director  shall observe the provisions of Section 231 of the
               Law.

          17.4 A Director may hold any other office or place of profit under the
               Company  (except that of Auditor) in conjunction  with his office
               of Director and on such terms as to  remuneration or otherwise as
               the Board shall  approve.  A Director may be or become a director
               of or hold any other  office or place of profit under any company
               promoted by the Company or in which it may be interested  whether
               as a vendor or  shareholder  or  otherwise  and no such  Director
               shall be accountable  for any benefits  received as a director or
               member of or holder of any other  office or place of profit under
               such company.  The Board may exercise the voting powers conferred
               by the shares in any company held or owned by the Company in such
               manner in all  respects as the Board  thinks fit  (including  the
               exercise  thereof  in favour  of any  resolution  appointing  the
               Directors  or any of them  directors of such company or voting or
               providing  for the payment of  remuneration  to the  directors of
               such  company) and any Director of the Company may vote in favour
               of the  exercise  of  such  voting  rights  in  manner  aforesaid
               notwithstanding  that he may be or be  about  to be  appointed  a
               director  of such  other  company  and as  such is or may  become
               interested  in the  exercise  of such  voting  rights  in  manner
               aforesaid.

               The  Directors  or any of them may lend  money to the  Company at
               interest  with or without  security  or may for a  commission  or
               profit  guarantee  the  repayment  of any money  borrowed  by the
               Company and underwrite or guarantee the subscription of shares or
               securities  of the Company or of any company in which the Company
               may be interested  without being disqualified in respect of their
               or his office and without  being liable to account to the Company
               for any such commission or profit.

        18.     ALTERNATE DIRECTORS

               Subject  to  these  Articles  and to the  prior  approval  of the
               proposed  appointee  by a majority of the other  Directors,  each
               Director has power from time to time to appoint any person to act
               as an Alternate  Director in the Director's place,  whether for a
               stated  period or periods or until the  happening  of a specified
               event or from time to time,  whenever  by  absence  or illness or
               otherwise  the  Director  is  unable  to  attend  to  duties as a
               Director.  The  appointment is to be in writing and signed by the
               Director  and a copy of the  appointment  is to be  given  by the
               appointing Director to the Company by forwarding or delivering it
               to the Office.  The  appointment  takes effect  immediately  upon
               receipt  of  the   appointment  at  the  Office.   The  following
               provisions apply to any Alternate Director:

          18.1 The  Alternate  Director may be removed or suspended  from office
               upon  receipt  at the Office of written  notice,  letter,  telex,
               facsimile  transmission  or other form of  visible  communication
               from the Director by whom the Alternate Director was appointed to
               the Company;

          18.2 The Alternate  Director is entitled to receive notice of meetings
               of the  Board  and to  attend  and  vote at the  meetings  if the
               Director by whom the  Alternate  Director  was  appointed  is not
               present;

          18.3 The  Alternate  Director is  entitled to exercise  all the powers
               (except the power to appoint an Alternate  Director)  and perform
               all the duties of a Director, insofar as the Director by whom the
               Alternate  Director was  appointed had not exercised or performed
               them;

          18.4 Without  prejudice  to the right to  reimbursement  for  expenses
               pursuant to Article 16.2, the Alternate  Director is not,  unless
               the  Board   otherwise   determines,   entitled  to  receive  any
               remuneration as a Director from the Company;

          18.5 The office of the  Alternate  Director is vacated  upon the death
               of, or vacation of office by the  Director by whom the  Alternate
               Director was appointed;

          18.6 The  Alternate  Director  is  not to be  taken  into  account  in
               determining  the number of  Directors  pursuant to Article 15. 1;
               and

          18.7 The   Alternate   Director   is,  while  acting  as  a  Director,
               responsible to the Company for the Alternate  Director's own acts
               and  defaults  and is not to be  deemed  to be the  agent  of the
               Director by whom the Alternate Director was appointed.

         19.      MANAGING DIRECTOR

          19.1 The Board may from time to time  appoint one of the  Directors to
               be the  Managing  Director  either  for a fixed term (but not for
               life) or  without  fixing a term and on any terms and  conditions
               that it determines.

          19.2 The appointment of the Managing Director terminates if:

                    (a) the  Managing  Director  ceases  for any  reason to be a
                    Director; or

                    (b) the Board  revokes the  appointment  (which it is hereby
                    empowered to do).

          19.3 The Board may fix the remuneration of the Managing Director.

          19.4 The  Board  may,  from  time to  time  and  upon  any  terms  and
               conditions  and  subject to any  restrictions  that it  considers
               appropriate:

                    (a) confer on the Managing Director any or all of the powers
                    of the Board  (which  powers  may be  conferred  so as to be
                    concurrent  with,  or to the exclusion of, the powers of the
                    Board); and

                    (b)  withdraw  or alter any of the powers  conferred  on the
                    Managing Director under Article 19.4(a).

         20.      POWERS OF THE BOARD

          20.1 Except as otherwise  required by the Law or any other  applicable
               law or another provision of these Articles:

                    (a) the  business  of the  Company  is to be  managed by the
                    Board; and

                    (b) the Board may exercise  each and every  right,  power or
                    capacity of the Company, to the exclusion of the, Company in
                    general meeting and the Members.

          20.2
                    (a) The Board by power of attorney may appoint any person to
                    be an attorney of the  Company  for the  purposes,  with the
                    powers  (being  powers of the  Board),  for the  period  and
                    subject to the conditions determined by it.

                    (b) Any such  power of  attorney  may,  without  limitation,
                    contain any provisions for the protection and convenience of
                    persons  dealing with the attorney as the Board  determines,
                    and  authorise  the  attorney to delegate  any or all of the
                    powers vested in him by it.

         21.      PROCEEDINGS OF THE BOARD

          21.1     Mode of Meeting,

               The  Board  may  meet  in  person  or  by   telephone   or  other
               instantaneous  means of  conferring  for the dispatch of business
               (or by any  combination of those means) and adjourn and otherwise
               regulate its meetings as it determines.

          21.2     Quorum

                    (a) Save where there is only one  Director  of the  Company,
                    the quorum of Directors  required to be present at a meeting
                    of the Board  necessary for the  transaction  of business at
                    the  meeting  shall  be  whichever  is  the  greater  of two
                    Directors  or not less  than half the  number  of  Directors
                    holding  office at the time.  A Director  must not leave the
                    meeting without having,  previously  obtained the consent of
                    the  chairman  of  the  meeting  and  will  be  conclusively
                    presumed to have been present and to have formed part of the
                    quorum at all times during the meeting  unless that Director
                    has previously obtained such consent.

                    (b) For the purposes of this  Article and Articles  21.4 and
                    21.10,  a Director  is treated as present at the  meeting by
                    telephone or other  instantaneous means of conferring if the
                    Director is able to hear the entire  meeting and be heard by
                    all others attending the meeting.  A Director must not leave
                    the meeting by deliberately disconnecting his - telephone or
                    other  instantaneous  means of  conferring,  without  having
                    previously  obtained  the  consent  of the  chairman  of the
                    meeting,  and will be  conclusively  presumed  to have  been
                    present  and to have  formed part of the quorum at all times
                    during the  meeting  unless  that  Director  has  previously
                    obtained such consent.

          21.3  Notice of Meeting

               Notice of each meeting of the Board,  which must specify the time
               and the place of the meeting but need not state the nature of the
               business to be transacted:

                    (a)  must be  given  to  each  Director  and  his  Alternate
                    Director  (if  any);  and (b) may be given by  telephone  or
                    facsimile message,

               but  the  non-receipt  of any  notice  of a Board  meeting  by a.
               Director or his  Alternate  Director does not affect the validity
               of the convening of the meeting.

          21.4  Place of Meeting

               Where  a  meeting  of the  Board  is held  solely  or  partly  by
               telephone or other instantaneous means of conferring, the meeting
               is to be  treated  as held at the  place at which at least one of
               the Directors present at the meeting is physically  located as is
               agreed by those Directors present at the meeting.

          21.5   Period of Notice

               The Board may  determine the period of notice for each meeting of
               the Board which, until otherwise determined,  is not less than 24
               hours.

          21.6  Convening of Board Meeting

               A Director  may at any time,  and the  Secretary  must on request
               from a Director, convene a meeting of the Board.

          21.7 Appointment of Chairman

               The Board shall elect one of the Directors to be Chairman and may
               elect  another  to be Deputy  Chairman  and shall  determine  the
               period for which each of those Directors is to hold that office.

          21.8 Chairman of Board Meetings

               Where a meeting of the Board is held and:

                    (a) a Chairman has not been appointed  under article 21.7 or
                    the  Chairman is not  present  within 15 minutes of the time
                    appointed  for the holding of the meeting or is unwilling to
                    act; and

                    (b) a Deputy  Chairman has not been appointed  under Article
                    21.7 or the Deputy Chairman is not present within 15 minutes
                    of the time  appointed  for the holding of the meeting or is
                    unwilling to act,

                    the Directors present at the meeting may choose one of their
                    number to be chairman of that meeting.

          21.9   Majority Decisions

               Every  question  and  resolution  dealt  with at a meeting of the
               Board is to be decided by a  majority  of votes of the  Directors
               present and voting on the question or resolution.

          21.10   Votes of Directors

               Subject to these Articles:

                    (a) each Director  present at a meeting of the Board has one
                    vote on every question or resolution at that meeting;

                    (b) if a Director is also an Alternate  Director entitled to
                    be present and to vote at the meeting, that Director has one
                    further vote for each other Director in respect of whom that
                    Director is present; and

                    (c) if there is an  equality  of  votes on any  question  or
                    resolution,  the  chairman of the meeting may not exercise a
                    casting vote in addition to any other vote he may have.

          21.11   Exercise of Powers by Board

               A power of the  Board  unless  and  while  it has been  conferred
               exclusively  under  Article  19.4 or  Article  20.2 or  delegated
               exclusively to a committee of the Board under Article  21.12.  is
               exercisable only:

                    (a) by  resolution  at a  meeting  of the  Board  at which a
                    quorum is present: or

                    (b) by a resolution of the Directors under Article 21.14.

          21.12    Delegation to Committee

               The  Board  may  delegate  any  of  its  powers  to  a  committee
               consisting  of not less  than one  Director  and  which  may also
               include  any  other  persons  determined  by the  Board  and  may
               terminate, withdraw or alter such delegation or withdraw or alter
               any powers conferred on the committee at any time.

          21.13   Committee Powers and Meetings

               Where a committee is created by the Board under Article 21.12:

                    (a) that committee must exercise the powers  delegated to it
                    under Article 21.12 in accordance with any directions of the
                    Board;

                    (b) a power so delegated  when exercised by the committee in
                    accordance with Article  21.13(a) is treated as exercised by
                    the Board;

                    (c) the members of the  committee  may elect a chairman from
                    among the members;

                    (d) where a meeting of a committee is held and:

               (i) a chairman  has not been elected in  accordance  with Article
               21.13(c); or

               (ii) the chairman so elected is not present at the meeting within
               15 minutes of the time  appointed  for the holding of the meeting
               or is unwilling to act,

               the  members of the  committee  present at the meeting may choose
               one of their number to be chairman of the meeting;

                    (e) the  committee  may meet in  person or by  telephone  or
                    other  instantaneous means of conferring for the dispatch of
                    business (or by any  combination of those means) and adjourn
                    and otherwise regulate its meetings as it may determine;

                    (f) the presence of not less than half of the members of the
                    committee,  at  least  one of whom  must be a  Director,  is
                    necessary  to  constitute  a  quorum;  no  business  may  be
                    transacted unless a quorum is present.

                    (g) the  committee  meetings are  otherwise  governed to the
                    Greatest  extent  practicable  by the  provisions  of  these
                    Articles  which  regulate the meetings and procedures of the
                    Board.

          21.14  Written Resolution of Directors

                    (a) If each of the Directors entitled to receive notice of a
                    meeting  of the  Board and to vote on a  resolution  signs a
                    document  to the effect he or she is in favour of or opposed
                    to or abstains with respect to the resolution  (the terms of
                    which are set out in the  document)  and a majority of those
                    Directors state that they are in favour of that  resolution,
                    a resolution  in those terms is for all purposes  treated as
                    having been passed at a duly  convened  meeting of the Board
                    held on the date and at the time when the  document was last
                    signed by a Director.

                    (b) For the purpose of Article 21.14(a):

               (i) two or more  separate  documents in  identical  terms each of
               which is  signed  by one or more  Directors  are  treated  as one
               document;

               (ii) the signature by an Alternate  Director of a document is not
               required if the Director who appointed  that  Alternate  Director
               has signed the document;

               (iii) the  signature by the  Director who  appointed an Alternate
               Director of a document is not required if that Alternate Director
               has signed the document; and

               (iv) a telex,  facsimile  transmission or other document produced
               by mechanical or electronic means under the name of a Director or
               Alternate Director (as the case may be) with the authority of the
               Director or Alternate  Director (as the case may be) is deemed to
               be a document  in writing  signed by the  Director  or  Alternate
               Director (as the case may be).

          21.15  Resolution or Declaration Where Company Has Only One Director

                    (a) If the Company has only one  Director  and the  Director
                    records the Director's  decision to a particular  effect the
                    recording  of the  decision  counts  as the  passing  by the
                    Director of a resolution to that effect.

                    (b) A record made for the purposes of paragraph (a) also has
                    effect as minutes of the passing of the resolution.

                    (c) If the Company has only one  Director  and the  Director
                    records the Director's  declaration to a particular  effect,
                    the recording of the  declaration  counts as the making of a
                    declaration  to  that  effect  made  at  a  meeting  of  the
                    Company's Directors.

                    (d) A  declaration  has  effect as minutes  that  record the
                    making of the declaration.

                    (e) A record made for the purposes of  paragraph  (a) or (c)
                    must be made in writing.

          21.16    Validity of Acts of Directors

               Each act,  resolution or thing  performed,  passed or done by, or
               with the  participation  of, a person  acting  as a  Director  or
               member of a committee  in respect of whom it is later  discovered
               there was some  defect in  appointment  to, or  continuation  in,
               office of that person or that the person was  disqualified or not
               entitled to perform,  vote on or do the act, resolution or thing,
               is as valid  and  effective  as if that  Director  or  member  of
               committee had been validly  appointed,  had validly  continued in
               office, had not been disqualified and was entitled so to perform,
               vote or do.

         22.      ASSOCIATE DIRECTORS

          22.1     The Board may:

                    (a) appoint any person to be an Associate Director;

                    (b) determine the term of  appointment,  powers,  duties and
                    remuneration of that person as an Associate Director;

                    (c) vary any determination so made; and

                    (d) terminate or suspend any  appointment  of a person as an
                    Associate Director.

          22.2  No Associate Director, by virtue of appointment as such, is:

                    (a) a Director;

                    (b) entitled to attend Board meetings without invitation;

                    (c) to be counted in determining if a quorum is present at a
                    Board meeting; or

                    (d) entitled to vote on any question at any Board meeting.

        23.      SECRETARY

                  The Board may:

          23.1     appoint any person to be a Secretary of the Company;

          23.2 determine   the  term  of   appointment,   powers,   duties   and
               remuneration of that person as a Secretary;

          23.3 vary any determination so made; and

          23.4 terminate or suspend any appointment of a person as a Secretary.

        24. COMPANY ADMINISTRATION

          24.1 Minutes to Be Made

                    (a) The Board must cause minutes to be made of:

               (i) the names of the Directors present at each Board meeting;

               (ii) the names of the committee  members  present at each meeting
               of a committee appointed under Article 21.12;

               (iii) the proceedings of each general meeting  (subject always to
               Articles 13.15 and 13.16);

               (iv) the  proceedings  of each Board meeting  (subject  always to
               Article 21.15); and

               (iv) the  proceedings  of each  meeting of a committee  appointed
               under Article 21.12.

                    (b) The Board must cause all minutes made under  Article 24.
                    1 (a) to be  entered  in the  relevant  minute  book  of the
                    Company.

                    (c) The minutes of a meeting,  made under Article 24. 1 (a),
                    if  appearing  on their face to be signed by the chairman of
                    the meeting or the chairman of the next succeeding,  meeting
                    of the relevant  body,  are  sufficient  but not  conclusive
                    evidence  without  proof of any further facts of the matters
                    stated in them.

          24.2    Common Seal

                    (a) The  Board  must  provide  for the safe  custody  of the
                    common seal.

                    (b) The common seal may only be used with the  authority  of
                    either:

               (i) the Board; or

               (ii) a committee  appointed  under  Article  21.12  empowered  to
               authorise the use of the common seal.

                    (c) Subject to Article  24.2(d),  an  instrument  is validly
                    executed  under the common  seal  where the  common  seal is
                    affixed to it in the presence of:

               (i) a Director; and

               (ii)  another  person who is either a Director,  a Secretary or a
               person appointed by the Board for the purpose,

               and each of those  persons  signs the  instrument  to attest  the
               affixing of the common seal.

                    (d) Where  there is only one  Director of the Company who is
                    also the only  Secretary of the Company,  an  instrument  is
                    validly  executed  under the  common  seal where it has been
                    witnessed by that  Director and the Director  states next to
                    his or her signature that he or she witnesses the sealing in
                    the  capacity of sole  Director  and sole  Secretary  of the
                    Company.

                    (e) The  Company  may have,  for use in any place out of the
                    State  or  Territory  where  the  common  seal  is  kept,  a
                    duplicate  common seal (known as the official  seal for that
                    place)  whose  impression  must be  identical to that of the
                    common seal but with the name of the place where it is to be
                    used added.

                    (f) The  Company  may by  instrument  under the common  seal
                    authorise  any  person  either  generally  or  in  specified
                    circumstances  to affix the  official  seal for a particular
                    place in that place to any  instrument  to which the Company
                    is a  party  and  determine  any  manner  required  for  the
                    affixing by that person of that official seal in that place.

                    (g) Where an official  seal is affixed to an  instrument  in
                    the place to which it relates by a person  authorised and in
                    the  circumstances  authonised for that person under Article
                    24.2(f) in the manner described in Article 24.2(f) (if any),
                    that instrument is to be treated for all purposes as having-
                    been validly  issued under the common  seal.  

         25.   ACCOUNTS, AUDIT AND RESERVES

          25.1      Accountancy Records

               The Board must cause:

                    (a)  the  Company  to keep  the  accounting  records  and to
                    prepare the financial statements required by the Law; and

                    (b) The  accounts  to be sent to  Members  and  laid  before
                    general meetings of the Company as required by the Law.

          25.2     Audit

               The Board must cause the accounts of the Company to be audited by
               the Auditor (if any) as required by the Law.

          25.3     Accumulation of Reserves

               The Board may do any or all of the following  with the profits of
               the Company  before  declaring  any  Dividend to the Members from
               them:

                    (a) set aside any sum the Board determines as reserves to be
                    applied,  in the discretion of the Board, for any purpose it
                    considers to be appropriate  and use any sum so set aside in
                    the  business  of the  Company  or  invest  any  such sum in
                    investments  (which  the  Board may vary and deal with as it
                    determines) which the Board determines; and

                    (b) carry  forward  any  amount  from  them  which the Board
                    considers  ought not to be distributed as dividends  without
                    transferring those amounts to a reserve.

         26.      DIVIDENDS AND OTHER DISTRIBUTIONS
          26.1     Declaration of Dividends and Interim Dividends The Board may:

                    (a) declare and authorise the distribution  from the profits
                    of the Company a dividend to be  distributed  to the Members
                    according  to  their   respective   rights  and   interests,
                    determine  the property to  constitute  the dividend and fix
                    the time for distribution; and

                    (b) authorise the  distribution to the Members of an interim
                    dividend  if and to the extent it appears  justified  by the
                    position  of  the   Company,   determine   the  property  to
                    constitute the dividend and fix the time for distribution.

          26.2     No Interest on Dividends

               No Dividend  (whether in money or  otherwise)  bears  interest as
               against the Company.

          26.3     Obligation to Distribute

               Where  the Board  declares  a  Dividend  under  Article  26.1 the
               obligation  of the Company to make the  distribution  only arises
               where the Dividend is declared under Article  26.1(a),  the Board
               fixes the time for distribution and that time has arrived and, if
               the  Dividend  is a  distribution  of  money,  no debt  arises in
               respect of the Dividend until that time.

          26.4     Payment of Dividend in Specie

               Without  limitation to Article 26.1,  where the Board declares or
               authorises the  distribution  of a Dividend by a distribution  of
               money it may also decide that all or any part of that Dividend be
               paid  and  satisfied  by  the  distribution  of  specific  assets
               (including,   without   limitation,   paid  up  shares  or  other
               securities of the Company or of any other body corporate).

          26.5     Capitalisation of Profits or Reserves

               The Board may capitalise any amount available for distribution as
               a Dividend  and,  having  applied the amount in either or both of
               the following  manners,  distribute that amount to the Members in
               the same  proportions  as the Members would have been entitled to
               if distributed as a Dividend:

                    (a) in  paying  up any  amounts  unpaid  on  shares  already
                    issued; and

                    (b) in  paying up in full  (both as to par and any  premium)
                    unissued shares.

          26.6     Use of Share Premium Reserve

               The Board may apply any amount to the credit of any share premium
               account in any of the ways permitted by the Law.

          26.7     Calculation and Apportionment

               Except  to the  extent  that the  terms  of  issue of any  shares
               provide  otherwise,  each  Dividend is payable in respect of each
               share in  proportion  to the amount of total  issue price for the
               time being paid up on that  share,  and may be declared at a rate
               per annum in respect of a specified period.

          26.8     Amounts Paid on Shares

               For the purposes of Article 26.7,  amounts credited as paid up on
               a share  are  treated  as  having  been  paid up on the share but
               amounts  paid or credited as paid in advance of a call being made
               are not treated as having been paid up on the share.

          26.9     Deductions from Dividends

               The Board may deduct from any Dividend which is a distribution of
               money  payable  to a Member  any money  presently  payable by the
               Member as such to the  Company  whether  on  account of a call or
               otherwise.

          26.10    Retention of Dividends

               The Board may retain any Dividend in respect of which the Company
               has a lien and:

                    (a) if the Dividend is a distribution of property other than
                    money,  realise that property so that it is  represented  by
                    money; and

                    (b) apply the Dividend in or towards the satisfaction of the
                    debts or liabilities in respect of which the lien exists.

          26.11    Declaration of Profits

               For the purpose of Article 26.1, the  declaration of the Board as
               to the amount of the  profits of the Company and as to the amount
               of those profits available for distribution is conclusive.

          26. l2   Settlement of Difficulties

               The Board may settle any difficulty  that may arise in respect of
               any distribution  under Articles 26.1 to 26.10  (inclusive) as it
               considers  desirable  to adjust the rights of all parties and, in
               particular, may (without limitation):

                    (a) round or disregard any fractional entitlement;

                    (b) set the value of each asset to be distributed;

                    (c) determine  that money be paid to any Member instead of a
                    particular distribution;

                    (d) vest any property in trustees for any Member;

                    (e) issue any fractional certificate required;

                    (f)  authorise  a person to make on  behalf  of all  Members
                    entitled   to  a   distribution   of  shares   following   a
                    capitalisation  under  Article  26.5 an  agreement  with the
                    Company  which will be  effective  against  and bind all the
                    Members concerned for the Company to issue to them, credited
                    as fully paid, the shares the subject of the distribution or
                    for the Company to apply the sum capitalised proportionately
                    in paying up shares already issued to them; and

                    (g)  appoint a person to  execute  as agent or  attorney  on
                    behalf  of  each  Member   entitled  to  a  Dividend  to  be
                    distributed  otherwise  than  as  money  any  instrument  of
                    transfer or other  document  necessary to vest in the Member
                    full legal and  equitable  title to the property the subject
                    of the Dividend.

          26.13    Entitlement to Dividend Pending Registration

               The right to any Dividend declared on a share does not pass until
               the  transfer of that share has been  registered  and the name of
               the transferee is entered in the Register.

          26.14    Retention of Transmittee Dividends

               The Board may retain any Dividend to be distributed in respect of
               a share  which is subject  to Article  11.1 until the name of the
               person entitled to be registered under that Article is entered in
               the Register as the holder of that share:

          26.15    Joint Holders' Entitlement to Dividend

               Where a share is held by more than one  person,  any one of those
               joint holders may give an effective receipt for any Dividend,  in
               relation to that share.

          26.16    Dispatch and Payment of Dividends

               Any  Dividend  distributed  as money  may be paid by  cheque  and
               notification  of anv  Dividend  may be  dispatcher  to the Member
               through the post directed:

                    (a) to the address of the Member (or, in the case of a share
                    held by more than one person, the address of the first-named
                    of those joint holders) as shown in the Register: or

                    (b) to any other address that the Member directs in writing.

          26.17    Unclaimed Dividend

               All Dividends declared but unclaimed may

                    a) in the case of Dividends not to be  distributed as money,
                    be realised into money; and

                    b) in any case,  be invested  for the benefit of the Company
                    until  claimed or until  required to be dealt with under any
                    applicable law dealing with unclaimed money.

         27.      NOTICES

          27.1     Service of Notices by Company

               A notice  required or permitted  under these Articles to be given
               by the Company to any Member or other  person may be given either
               by  serving  it on the  person  personally  or by  sending  it by
               prepaid post,  telex or facsimile  transmission  to the person at
               the address of the person.

                    (a) if the  person is a Member,  subject  to  Article  27.2,
                    shown in the Register; and

                    (b) if the person is not a Member, supplied by the person to
                    the Company for the giving of notices.

          27.2     Overseas Member's Address

               A Member  whose  address as shown in the  Register  is not within
               Australia  may give notice to the Company  specifying  an address
               within  Australia  which is to be  treated  for the  purposes  of
               Article 27.1 as the address of that Member shown in the Register.

          27.3     Postal Notices to Overseas Members

               Where  the  Company  proposes  to send a notice  to a  Member  by
               pre-paid post and the notice is to be sent outside Australia, the
               notice must be sent by airmail.

          27.4     Notices to Joint Holders

               Where a share is held by more than one person,  a notice required
               to be given to those  persons  as joint  holders of that share is
               effectively  given when given to the one of those  persons  whose
               name first appears in the Register in respect of that share.

          27.5     Notices When Member Dies

               Any  notice  or  document   given  in  accordance   with  Article
               27.1notwithstanding  that  the  share in  respect  of which it is
               given is then  subject  to  Article  11.1,  is to be  treated  as
               validly given to all persons entitled to be registered in respect
               of the share and all persons who claim through such person.

          27.6     Binding on Others

               Any person entitled to a share (whether by transfer, operation of
               law or otherwise) is to be treated as having duly received  every
               notice in  respect  of that  share  which  was duly  given to the
               person from whom that person derives that entitlement  before the
               person  entitled is entered in the  Register as the holder of the
               share.

          27.7     Signature of Notice

               The  signature  to any notice given by the Company may be written
               in any way.

          27.8     Service by Post

               Where a notice is given by post,  that  notice is treated as duly
               given  where the  notice is  contained  in a  properly  addressed
               envelope  or wrapper in respect of which  proper  postage is paid
               and  which is  posted  and is  treated  as  given  on the  second
               Business Day after it was posted.

          27.9     Service by Telex or Facsimile

               Where a notice is given by telex or facsimile transmission,  that
               notice is treated as duly given where the notice is  addressed in
               accordance   with  Article  27.1  and  transmitted  by  telex  or
               facsimile  transmission  to that  address  (whether it is in fact
               received or not) and is treated as duly given:

                    (a) in the  case of a telex,  on the day  after  the  sender
                    receives the answer back of the addressee; and

                    (b) in the  case  of a  facsimile  transmission,  on the day
                    following, transmission of the notice.

          27.10    Counting of Days

               Where  a  specified  period  (including,  without  limitation,  a
               Particular  number of days) is  required to elapse or expire from
               or after  the  giving of a notice  before an action  may be taken
               neither the day on which the notice is given nor the day on which
               the action is to be taken may be counted in reckoning the period.

          27.11    Certificate of Director or Secretary

               If a Director or Secretary signs a certificate  that a notice was
               given in the manner set out in the certificate,  that certificate
               is conclusive  evidence of the accuracy of the matters set out in
               it.

         28.      INSPECTION AND SECRECY

          28.1     No Right to Inspect

               No Member is entitled to require  discovery of, inspection of, or
               any information concerning the affairs of the Company,  except as
               provided by the Law or as permitted by the Board.

          28.2     Board May Permit Inspection

               Subject to the Law,  the Board may  determine  whether any of the
               books,  accounts  and other  information  of the Company is to be
               available for inspection by Members and, if so, the extent, time,
               place and conditions of inspection so permitted.

          28.3     Obligation of Secrecy

               Except in the proper  course and  performance  of his duties,  as
               required by law or as required by the Board, every officer of the
               Company must keep strictly secret all transactions and affairs of
               and all information concerning the Company, and if so required by
               the Board, sign a declaration accepting the obligation of secrecy
               and  undertaking  not to  disclose  any  information  within  his
               knowledge the subject of that obligation to any person.

         29.      WINDING UP

          29.1     Power of Board

               The Board may  authorise the  presentation  of a petition for the
               winding up of the Company by the Court.

          29.2     Distribution if Insufficient Assets

               Subject to the terms of issue of a share, if the Company is wound
               up and the assets  available for  distribution  among the Members
               (in that  capacity)  are  insufficient  to repay  all the paid up
               capital,  those  assets  will  be  distributed  so  that,  to the
               greatest possible extent,  the amount  distributed to a Member in
               respect of each share is  proportional to the capital amount paid
               up (or which at the  commencement of the winding up ought to have
               been  paid up) on that  share  compared  with the  total  paid up
               capital of the Company.

          29.3     Distribution of Surplus Assets

               Subject to the terms of issue of a share, if the Company is wound
               up and after  distribution  of assets  to repay  paid up  capital
               there remain assets available for distribution to the Members (in
               that capacity), those assets, will be distributed so that, to the
               greatest possible extent,  the amount  distributed to a Member in
               respect of each share is  proportional to the capital amount paid
               up (or which at the  commencement of the winding up ought to have
               been  paid up) on that  share  compared  with the  total  paid up
               capital of the Company.

          29.4     Distribution in Specie

               If the Company is wound up and a special  resolution is passed by
               the Company in general meeting  authorising  that it be done, the
               liquidator  may  distribute to the Members all or any part of the
               assets  to be  distributed  to them in specie  (whether  they are
               property of the same kind or not) and for that purpose may, if so
               authorised by the special resolution:

                    (a) set the value of each asset to be  distributed  that the
                    liquidator considers fair; and

                    (b)  determine  how the  distribution  is to be carried  out
                    (including by allocating  the assets) as between the Members
                    or different classes of Members,

               but so that no Member must accept any shares or other property in
               respect of which there is any liability.

          29.5     Vesting in Trustee

               If so authorised by a special resolution passed by the Company in
               general  meeting,  the  liquidator of the Company may vest all or
               any part of the  assets to be  distributed  to the  Members  in a
               trustee on terms of trust for the  benefit of the  Members as the
               liquidator considers appropriate.

         30.      INDEMNITY AND INSURANCE OF DIRECTORS AND OTHERS

          30.1    In this Article the expression "to the relevant extent" means:

                    (a) to the extent the Company is not  precluded  by law from
                    doing so; and

                    (b) to the extent and for the amount  that the  Director  is
                    not  otherwise   entitled  to  be  indemnified  and  is  not
                    otherwise actually indemnified, including an indemnity under
                    any insurance policy or contract.

          30.2 Each  present  and  former  Director  of  the  Company  shall  be
               indemnified  out of the  assets of the  Company  to the  relevant
               extent against any liability incurred by that Director as such in
               the  discharge  of the  duties  of the  Director  to the  Company
               unless:

                    (a) the liability arises out of conduct  involving a lack of
                    good faith; or

                    (b)  the  liability  is to the  Company  or a  related  body
                    corporate.

          30.3 Each  present  and  former  Director  of  the  Company  shall  be
               indemnified  out of the  assets of the  Company  to the  relevant
               extent  against any liability for costs and expenses  incurred by
               that Director as such in defending any proceedings, whether civil
               or criminal, in which judgment is given in favour of the Director
               or in which the Director is acquitted,  or in connection with any
               application  in relation to those  proceedings in which the court
               grants relief to that Director under the Law.

          30.4 Nothing  in  this   Article   shall   prevent  the  Company  from
               indemnifying:

                    (a) a  present  or former  Director  against  any  liability
                    incurred by that  Director in the discharge of the duties of
                    the Director to any related body corporate; or

                    (b) a present  or former  Secretary,  executive  officer  or
                    employee of the Company  against any  liability  incurred by
                    that person in the discharge of the duties of that person to
                    the Company,

               to the extent that the Company is not precluded by law from doing
               so and  otherwise  upon such  terms and  conditions  as the Board
               deems fit.

          30.5 To the extent that the Company is not precluded by law from doing
               so, the Company may effect and  maintain  and pay the premiums in
               respect of an  insurance  policy or contract  which,  inter alia,
               insures  a  present  or  former  Director,  Secretary,  executive
               officer or employee of the Company against liability  incurred by
               that person in the  discharge of the duties of that person to the
               Company or a related body corporate.

         31.      SUBMISSION TO JURISDICTION

               Each Member and each present and past  eligible  officer (as that
               expression  is defined in Section 180 of the Law)  submits to the
               non-exclusive  jurisdiction  of the Supreme Court of the State of
               South  Australia,  the Federal  Court of Australia and the Courts
               which may hear appeals from those Courts.

         32.      PROHIBITION AIND ENFORCEABILITY

          32.1 Any provision of, or the  application  of any provision of, these
               Articles  which is  prohibited  in any place  is, in that  place,
               ineffective only to the extent of that prohibition.

          32.2 Any provision of, or the  application  of any provision of, these
               Articles  which is void,  illegal or  unenforceable  in any place
               does not affect the validity,  legality or enforceability of that
               provision in any other place or of the  remaining  provisions  in
               that or any other place.

         33.      INTERPRETATION OF ARTICLES

               Where any  matter  arises in the  conduct  of the  affairs of the
               Company which is not provided for in these  Articles or where any
               difficulty arises in respect to the interpretation or application
               of any  Article  the  Board  shall  determine  the  course  to be
               adopted.

         34.      GENERAL AUTHORISATION

               Where the Law  authorises or permits a company to do any thin- if
               so  authorised  by its  articles of  association,  the Company is
               authorised by this Article to do that thing.











         I, the subscriber hereto whose name,  address and occupation is set out
         below, being the subscriber to the Memorandum of Association,  agree to
         the foregoing, Articles of Association.

         DATED 20th December 1997

         NAME OF SUBSCRIBER       ADDRESS          SIGNATURE
         ------------------       -------          ---------
         KINSALE DEVELOPMENTS PTY LTD
         118 GREENHILL ROAD       THE COMMON SEAL OF
         ACN 007 715 568          UNLEY SA  5061   KINSALE DEVELOPMENTS PTY LTD
                                                   ACN 007 715 568 is affixed
                                                   In the presence of
                                                   /s/ GRAHM HOOPER
                                                   Director

                                                   /s/ PETER HOBBS
                                                   Director/Secretary

<PAGE>
<TABLE>
EXHIBIT 11.1
Computation of 
<CAPTION>
                                                                                                Cumulative
                                       Three Months Ended            Six Months Ended          March 31,1995
                                          December 31,                 December 31,            (Inception)To
                                        1996           1997            1996           1997     December 31, 1997
<S>
Computation of Loss Per Share       <C>            <C>             <C>           <C>            <C>
Net loss                            $    (  797)   $   ( 1,242)    $  ( 2,018)   $   ( 2,109)   $   ( 10,617)
Preferred Stock Dividends                (   68)       (    85)       (    68)       (   159)       (    347)
Net Loss with Preferred Stock
  Dividends                         $    (  865)   $   ( 1,327)    $  ( 2,086)   $   ( 2,268)   $   ( 10,964)
 
Loss Per Share                      $     (0.08)   $     (0.09)    $    (0.22)   $     (0.14)   $      (0.95)
              
Weighted Average Common 
  Shares Outstanding                 11,399,306     17,172,096      9,510,425     16,486,883      11,550,118

</TABLE>