EXHIBIT 10.7


                 FIRST AMENDMENT TO INDUSTRIAL REAL ESTATE LEASE


PARTIES:          PALO CRISTI AIRPARK III, L.L.C., (LANDLORD)
                  PREMIUM CIGARS INTERNATIONAL, LTD. (TENANT)


DATE:             February 26, 1998

         The parties have heretofore  entered into a real estate lease agreement
entitled  Industrial  Real Estate Lease (Single  Tenant Net Form) dated February
25, 1998 for  Landlord's  Project  located at 15849 N. 77th Street,  Scottsdale,
Arizona ("Lease").

         THE PARTIES HEREBY AGREE AS FOLLOWS:

In the event the provisions of this First Amendment conflict with the Lease, the
provisions of this First Amendment shall prevail. All other terms and conditions
of the Lease to remain the same,  and except as expressly  amended  hereby,  the
provisions of the Lease are hereby reaffirmed.

1. COMMENCEMENT DATE: Landlord will make every reasonable effort to complete the
Property  substantially in accordance with Exhibit B in order for Tenant to take
early  occupancy by April 15, 1998. In the event the Property is not complete to
the extent that Tenant can move in and conduct its  business,  and Tenant is not
responsible for the delay, Landlord will grant Tenant one (1) day free Base Rent
for each day of delay beyond April 15, 1998.

2. PENALTY: In addition to the free Base Rent outlined above in Section 1.05(a),
Landlord  agrees to pay Tenant a penalty of $500.00 per day in the event  Tenant
is not able to occupy the Property by May 5, 1998.  Said penalty is for each and
every date after May 5, 1998 until  such time that  Project  Architect  issues a
Certificate of Substantial  Completion.  It is expressly  understood by Landlord
and Tenant that events beyond the control of Landlord or acts of God could delay
the  Occupancy  Date.  In the event that  unavoidable  delays  occur  beyond the
control of Landlord,  the aforementioned  penalty will be extended  accordingly.
Landlord and Tenant further agree that work between Tenant and other parties are
not a party of the Lease,  normal  punchlist items and exterior  covered carport
erection are expressly excluded from this penalty clause.

3. INSURANCE. Pursuant to Section 3.03(b) Tenant shall have the right to approve
insurance  coverage  obtained  by Landlord  prior to  issuance of the  insurance
policy.  Said approval to be granted within three (3) business days from time of
presentation for review by Landlord's insurance representative and such approval
shall not be unreasonably withheld. In the event
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Tenant rejects Landlords  selected  insurance  carrier and coverage,  the Tenant
shall be required to provide  comparable  coverage on the Property and liability
risk naming Landlord as co-insured  simultaneously with disapproving  Landlord's
selected insurance package.

4. LATE CHARGES AND INTEREST ON PAST DUE  OBLIGATIONS.  Landlord agrees to waive
provisions  for late  charges  in  Section  4.05 of the Lease and  increase  the
interest on past due  obligations  specified in Section  4.06 to twenty  percent
(20%) per annum.

5.  LANDLORD'S  OBLIGATIONS TO REPAIR.  In the event that it becomes  Landlord's
responsibility  under  Section  6.03 to perform  repairs of the  Property,  such
action  will be  commenced  within 5 business  days  after  notice in writing by
Tenant of such  event.  Every  effort  will be made to  expedite  all repairs or
alterations  and Landlord will assist Tenant in  protecting  Tenant's  inventory
wherever  possible.  Landlord and Tenant further agree that all roof  warranties
and HVAC  warranties will also list Tenant as beneficiary and that Tenant agrees
to provide  quarterly  preventative  mechanical  service and  maintenance  while
Landlord assumes the responsibility for roof maintenance.  In the event Landlord
does not  respond  to  Tenant's  written  notice of repair  obligation  within 5
business  days,  Tenant may, at its option,  make such repairs and bill Landlord
for reasonable reimbursement.

6.  SUBSTANTIAL  OR TOTAL  DESTRUCTION.  Pursuant to Section 7.02,  Landlord and
Tenant agree that if the damaged Property cannot be substantially rebuilt within
60 days, Tenant may elect to cancel its Lease obligations excluding any remedies
Landlord may have against Tenant for any previously existing Default.

7. RIGHT OF FIRST REFUSAL.  At any time during the term of this Lease,  Landlord
shall have the right to sell the leased  premises to any third party,  provided,
however,  that Tenant shall have the right of first  refusal  during the term of
the  Lease  to meet any  bona  fide  offer to  purchase  on the same  terms  and
conditions of such offer.  Tenant's right of first refusal may be exercised only
if  Tenant  is  not  in  default  in the  performance  of any of the  covenants,
conditions  and  agreement  required to be  performed by Tenant under this Lease
subject to all  applicable  cure  periods.  Upon receipt of a bona fide offer to
purchase the premises  which  Landlord  desires to accept,  Landlord  shall give
written  notice  thereof to Tenant,  which  shall  include the name of the third
party offeror and the terms and conditions of its offer to purchase,  and Tenant
shall have fifteen  (15) days after  receipt of such notice to meet the terms of
the offer.  In the event  Tenant  fails to enter into an  agreement to match the
third party offer within such fifteen (15) day period, Landlord shall be free to
sell the leased  premises  to the third party in  accordance  with the terms and
conditions of its offer and Tenant's right of first refusal shall  terminate and
be of no further  force or effect.  If the  Landlord  substantially  revises the
price or payments terms of such bona fide offer to purchase, Tenant shall have a
right of first refusal as to such revised terms. If Tenant fails to exercise its
right of first  refusal and the premises are sold to the third party,  the third
party shall acquire the premises subject to the Lease, without Tenant's right of
first refusal,  which shall continue until the expiration or termination  hereof
in accordance  with its term.  In the event tenant  exercises its right of first
refusal and purchases the premises, the Lease shall terminate at the closing and
Tenant shall be credited any refunds prepaid in advance.
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8.  RIGHT OF  CANCELLATION.  Landlord  and  Tenant  acknowledge  that each has a
significant  invested  interest in  occupying  the Project by April 15, 1998 and
free Base Rent penalty  clauses have  already  been  included  elsewhere in this
Agreement. In the event that Landlord cannot obtain a Certificate of Substantial
Completion from the Project Architect by June 1, 1998, Tenant is not responsible
for the delay and no avoidable  delays  beyond the control of the Landlord  have
extended the time allowed for completion of the Tenant  improvement  outlined on
Exhibit B and Exhibit C, Tenant may, at its sole discretion,  notify landlord in
writing of its intent to cancel the Lease.  From the date of the written notice,
Landlord shall have ten (10) business days to complete said improvements  before
cancellation.  Tenant  agrees to waive its  Security  Deposit and hold  Landlord
harmless for any other claims.

IN WITNESS  WHEREOF,  the parties have executed this First  Amendment as of this
26th day of February 1998.

"LANDLORD"                                   "TENANT"

Palo Cristi Airpark II, L.L.C.,              Premium Cigars International, LTD.,
an Arizona limited liability company         an Arizona corporation


By:  /s/ Scott P. LeMarr                     By:  /s/ John Greenwell
   -------------------------------              --------------------------------
Scott P. LeMarr                                John Greenwell, President and CEO
President of Palo Cristi Investments, Inc.
Managing Member
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