STARGATE ENTERTAINMENT INC, 20FR12G/A, 2000-02-29

STARGATE ENTERTAINMENT INC
20FR12G/A, 2000-02-29
MISCELLANEOUS AMUSEMENT & RECREATION

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-FR12G /A-2

[X] Registration statement pursuant to Section 12(b)or (g) of the Securities
Exchange Act of 1934 or [ ] Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 or [ ] Transition Report pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934

For the transition period from ------------ to ---------------------

STARGATE ENTERTAINMENT, INC.

------------------------------
(Exact name of Registrant as specified in its charter)

Turks and Caicos Islands, British West Indies

------------------------------------------------
(Jurisdiction of incorporation or organization)

202-338 West 8th Avenue

Vancouver, B.C., Canada V5Y 3X2

Telephone: (604) 871-0887

------------------------------------
(Address and telephone number of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class: NONE Name of each exchange on which registered: NONE

Securities registered or to be registered pursuant to Section 12(g) of the Act:
Title of each class: COMMON STOCK

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 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 No X

Indicate by check mark which financial statement item the Registrant has elected
to follow: Item 17 Item 18 X

<PAGE>

PART I

=======
General

- -------
For purposes of this registration statement, all references to dollar amounts
are expressed in U.S. dollars unless otherwise specified.

Introduction

- ------------
StarGate Entertainment, Inc. (the "registrant") was incorporated under the laws
of the Turks and Caicos Islands, British West Indies, on March 17, 1999. Its
purpose is to engage in the business of Internet gaming/wagering. Registrant has
acquired a non-exclusive license to a proprietary software technology
for on-line gaming and non-gaming entertainment.

On March 31, 1999, Registrant completed a public offering of its Common Stock to
non-U.S. residents pursuant to a registration statement under Regulation D, Rule
504, filed with and made effective by the New York Department of Law. Registrant
is a foreign private issuer, as that term is defined in Rule 405 under the
Securities Act of 1933, as amended.

Background

- ----------
Registrant has not yet commenced full business operations. Registrant has
completed all of its software development, has printed CD's and has activated
its web site; however, Registrant has not yet commenced live play and has not
yet accepted any bets. Accordingly, Registrant has not yet generated any
sales revenues. Registrant estimates that live play operations will
commence in or about March/April, 2000 . Registrant's on-line gaming
facilities are intended to provide a large assortment of on-line gaming and
non-gaming entertainment that is accessible from the World Wide Web (WWW)
providing an entertainment facility that is accessible from anywhere in the
world via the Internet with an operational rate structure that is significantly
below existing land or sea/river based casinos. Registrant has established a
technology partnership and acquired the rights to its gaming software from
Starnet Communication International Inc., a NASDAQ OTC BB listed company
(Symbol: SNMM). The on-line services offered by Registrant will also include
secured e-commerce, various types of casino games, chat lounges, theater, sports
book, lotteries, bingo and horse racing.

Company Profile

- ----------------
Founded by a group of entrepreneurs in 1999, Registrant is one of many on-line
companies entering the on-line gaming industry.

On March 18, 1999, Registrant acquired, by assignment, a non-exclusive
license for the rights to Internet casino software and related proprietary
technology from Ken Ng, an officer, director and shareholder of Registrant.
Consideration for assignment of the non-exclusive license from Mr. Ng
was $1, plus costs incurred of $25,000. The non-exclusive license is
for a 1-year period and will be automatically renewed indefinitely for
additional 1-year terms, unless Registrant gives notice of termination at least
45 days prior to the end of any 1-year period, or the licensor gives notice of
termination at least six (6) months prior to the end of any 1-year period,
excluding the first year of the agreement. In the event of termination,
Registrant would be required to acquire other software to continue operations.

<PAGE>

There are currently several other software licensors offering similar gaming
software on similar terms.

Future payments required under the terms of the non-exclusive license
agreement are:

- - $10,000 U.S. per month for 5 consecutive months, beginning 90 days from
acceptance of the first wager using the licensed software;

- - A monthly fee based on a percentage of the net monthly revenues, ranging from
25% of the first $300,000 U.S. down to 12.5% for amounts over $5,000,000 U.S.
The fees are subject to a minimum payment of $25,000 per month and will commence
180 days after acceptance of the first wager using the licensed software; and

- - Upon achieving net monthly revenues of $1,000,000 U.S. in any one month,
Registrant is to post an irrevocable letter of credit in the amount of $100,000
U.S.

The non-exclusive licensing agreement, which Registrant acquired by
assignment from Mr.Ng. calls for Starnet to provide site development, site
engineering, web site development, all technical equipment and services,
licenses, credit card and other gaming financial services, 24-hour operational
support and maintenance, play management and training. Through its agreement
with Starnet, Registrant intends to be able to offer on-line gaming to millions
of people worldwide.

Registrant's "StarGate" on-line gaming software is real time, user friendly,
secure e-commerce, quick response time, interactive and provides the player with
a sense of virtual reality. The StarGate games will include Red Dog, Roulette,
Pai Gow Poker, Sic Bo, Baccarat, Craps, Pachinko, Slots, Video Poker, Blackjack
and various others.

Major Markets and Anticipated Sources of Revenues

- -------------------------------------------------
Registrant anticipates its major markets will be Asian and European visitors to
its on-line gaming web site. Registrant intends to initially target foreign
markets in the Philippines and Australia, both of which allow on-line gaming.
Registrant has obtained the requisite license to operate an Internet casino and
sportsbook operation in Antigua. It is anticipated that revenues will be
generated from those on-line customers using the gaming facilities and also from
distribution and use of a CD distributed to those requesting a CD- version of
the gaming software.

Customer Care and Secured Credit Card Transactions

- --------------------------------------------------------
Registrant has recently completed a software billing solution to meet the
specific needs of an on-line gaming operator. Its customer service center and
secured credit card transaction solutions are similar to those of premier
on-line gaming companies worldwide. Registrant's software allows access customer
service and individual gaming records only by the individual subscribers who
will be required to provide a user name and password. The site will be secured
by a firewall, which is a device used to block unwanted network traffic
while allowing other traffic to pass, and other access protection
requirements which are included in Registrant's software billing program.

<PAGE>

There are no other key aspects of our software or our business, in general,
that need to be completed before commencing operations. Registrant is prepared
to commence operations.

Starnet has, pursuant to the License Agreement, obtained all necessary permits
and made the necessary arrangements with credit card companies and a bank to
commence operations, including acquiring merchant numbers to process
Registrant's on-line transactions.

History of Company Development

- ---------------------------------
<TABLE><CAPTION>
<S> <C>
February 1999 Management Team founded

March 1999 Began research and development into Internet gaming market

March 1999 Began research into various Internet software companies

March 1999 Completed negotiations and obtained a joint venture/
non-exclusive license agreement
</TABLE>

StarGate On-Line Gaming Software Features and Benefits

- ------------------------------------------------------------
Features:

StarNet's turnkey package to Registrant includes the ability to provide on-line
Gaming. Overall, there are four main components of this software program:

1. Design, licensing, installation, and testing of the StarGate on-line
gaming hardware and software. The on-line hardware and software will
operate in conjunction with StarNet's on-line gaming software.

2. StarNet will design the StarGate web site.

3. Registrant will manage its own customer base, including the creation of
accounts, through a WWW browser.

4. Customer access to StarGate's On-Line Interactive Entertainment Center.
The On-Line Interactive Center will allow customers to apply for an
on-line personal account which, after approval, will allow the customer
to deposit the amount which they wish to wager via a credit card
transaction.

Benefits:

Since StarNet integrates hardware, software, database access and financial
services (secured e-commerce transaction) into a single package, Registrant will
enjoy support, operability and flexibility of all components. Other benefits of
the program include:

1. Flexibility in entertainment plans - The StarNet system is designed to
provide flexibility and customization in setting a variety of
entertainment plans. With this platform, Registrant can develop its own
promotions and pricing structures.

<PAGE>

2. Utilize StarGate's Customer Service Center interface - The Customer
Service Center allows Registrant to manage its customer base without the
need to develop and implement its own interfaces.

3. Generate reports - Allows StarGate to generate reports summarizing the
activity of its customer base.

4. Provide value-added services to customers - Via the World Wide Web (WWW),
StarGate customers can access their own wager/credit information 24-hours
a day through StarGate's On-Line Interactive Center.

Customer Service Center

- -------------------------
Customers may access the StarGate Customer Service Center and speak to a live
person for customer care and account balance purposes. The Customer Service
Center will perform the following functions:

Track individual Gaming Detail Records (GDRs)

Format and store the GDRs in a central database

Update the account balance of users and make that information available to
the users

The Customer Service Center will allow Registrant's customer service reps to do
the following:

Activate and deactivate accounts

Process secured credit card transactions/re-charge accounts

Generate reports

Access and view (but not change) entertainment plans

Customer On-Line Interactive Center

- --------------------------------------
The Customer On-Line Interactive Center can be accessed by StarGate customers to
check their balance and GDR via the World Wide Web. This On-Line Interactive
Center allows the customer to access the same information available through the
Customer Service Center, without speaking to a live person.

Network Management

- -------------------

Registrant will be in direct competition with other sites licensed by
StarNet, which contain substantially similar software; however, Registrant does
not believe there will be any conflict of interest between StarNet and any of
its licensees, because StarNet's services are computerized and handled
electronically and through telephone lines and the Internet, which do not
distinguish among users.

Remote Management and Configuration:

The StarGate network, which will be physically located in St. John's, Antigua,
is monitored remotely in real time 24 hours a day, 7 days a week from
Registrant's Network Operations Center (NOC) in Vancouver, B.C., Canada.

<PAGE>

Registrant intends to have approximately 4 employees in its Vancouver office,
where its management resides. All personnel in Antigua will be supplied by
StarNet's administrative offices and all costs associated with administration of
the network operations in Antigua will be borne by StarNet, who will in turn be
paid a percentage of Registrant's winnings, consistent with the StarNet license
agreement.

Support of Collection and Traffic Statistics:

As described above, the Customer Service Center will allow Registrant's customer
reps to track the Gaming Detail Records (GDRs) of its customer base using
ReportGen, Registrant's report-generating software. ReportGen allows a user to
access his/her account on the WWW to retrieve information such as when the user
last played, what the user's deposit(s) on hand are, what the user's net
winnings(losses) are, etc. In addition, the StarGate software program will allow
access to network traffic statistics via an Administrative Center that may be
accessed through the WWW allowing Registrant to conduct marketing surveys.

Competition

- -----------
The Internet gaming/wagering market has already been established by a number of
offshore companies and services operating outside the U.S. As the industry
continues to emerge and grow, new competitors continue to enter the market. The
technology is continuously being upgraded and enhanced, and some gaming services
companies are openly seeking investors and shareholders through public offerings
on their Internet Web sites.

Registrant is entering the Internet gaming/wagering market in its early
development stages and it is difficult to predict its potential competitors,
other than established offshore services which are already operating outside the
U.S. In addition to the Antigua operators, which include all of the StarNet
Licensees, some of the other competitors are:

Sports International, a Caribbean-based company which allows on-line
betting on major U.S. and international sporting events.

WagerNet, a company run by a Las Vegas native and set up in Belize,
Central America. WagerNet's focus is also on sports betting, but it serves
primarily as a match-making service. It matches individuals who want to wager on
the same event, initiates contact and takes a small percentage of the wager for
a service fee.

Caribbean Casino, a company operating from St. Maarten, a popular tourist
destination in the Caribbean. The owner is a Canadian and the services cover
more traditional casino-style gaming.

Lichtenstein International Lottery, a European organization which offers
international access to lottery-style betting via the Internet.

Virtual Vegas, an entertainment Web site that attempts to capture the
essence of the Vegas Strip. This site is already popular despite the fact that
real money is not involved in the betting process. The firm is well positioned
and ready should U.S. laws change and permit on-line betting within U.S.
borders.

<PAGE>

ODS (On Demand Services) Technologies, a U.S. firm already involved in a
legal application of on-line betting. The firm has teamed up with the famous
Churchill Downs Racetrack and a local cable provider to test off-track betting
in the home. Races, odds and relevant information is broadcast into homes via
the cable lines and bets are placed over the phone.

Generally, the gaming prices and services of virtually all gaming software are
substantially the same. Registrant believes it is competitive in both price and
services, but feels it may have a competitive edge over other sites by offering
what it believes are better visual graphics, quicker download time of a game,
quicker turnaround time for payment of winnings and enhanced security.

Registrant does not have flexibility in setting its net entertainment plans and
must choose software and gaming programs designed and provided by StarNet. The
content restrictions imposed by the StarNet license and software may limit the
ability of Registrant to compete with non-StarNet licensees and on-line
operators using other gaming software.

Government Regulation

- ----------------------
The U.S. government has conducted an electronic gambling study to consider the
effects of electronic gambling on society. They are also concerned about the tax
evasion that could result from on-line wagering. Potential government regulation
would serve to regulate virtual casinos and tax both the casino and the winner.
At this time, it is impossible to predict how or if the current U.S. laws
relative to on-line gaming/wagering will be changed. There can be no assurance
that the U.S. government will ever approve on-line gaming/wagering in the U.S.
or that, if approved, Registrant will be able to successfully compete in the
market. In fact, the U.S. Congress is expected to propose legislation to
prohibit Internet gambling during the session which commenced January 1999. In
the event Internet gaming is approved in the U.S., Registrant would evaluate the
laws, rules and regulations required to conduct such operations and determine at
that time whether to enter the U.S. Market.

Until there is a resolution regarding Internet gambling in the U.S., Registrant
intends to conduct all of its Internet gaming operations offshore in foreign
jurisdictions, where it will fully comply with all laws, rules and regulations
of each jurisdiction. Registrant will limit its business to non-U.S. locations
by utilizing a feature of the StarNet software system which blocks Internet
protocol addresses from the U.S., verifies the age and billing addresses of
credit card users and restricts sending gambling winnings to a U.S. address.

Registrant has determined that it is legal to accept wagers in the
Philippines and Australia, where Registrant intends to focus its marketing
efforts. Registrant intends to accept wagers from the Philippines and Australia.
Registrant is currently researching the laws, rules and regulations of other
target countries regarding the legality of accepting on-line wagers, including
Hong Kong, Malaysia, Indonesia, Thailand, Japan, Italy, Spain, France, Germany
and the United Kingdom

Office Facilities

- ------------------
Registrant's executive offices are located at 202 - 338 West 8th Avenue,
Vancouver, B.C., Canada V5Y 3X2.

<PAGE>

Employees

- ---------
At the present time, Registrant has 4 full-time employees at its office
facilities in Vancouver, B.C., Canada. Its employees currently include certain
executive officers who devote their time as needed to Registrant's business.

Risk Factors

- -------------
In addition to the other information in this Registration Statement, the
following factors should be considered carefully in evaluating Registrant and
its proposed business operations.

High Risk - Registrant is in its organizational and development stages and any
investment in the Common Stock of Registrant involves a high degree of risk. A
prospective investor should, therefore, be aware that in the event Registrant is
not successful in its proposed business plans, any investment in the Common
Stock of Registrant may be lost and Registrant may be faced with the possibility
of liquidation. In the event of liquidation, existing stockholders will, to the
extent that assets are available for distribution, receive a disproportionately
greater share of the assets in relation to their cash investment in Registrant,
than would any new investors, in that holders of Common Stock of Registrant are
entitled to share on a pro rata basis in the assets, if any, of Registrant that
would be available for distribution.

Start-up Company; Uncertainty of Future Profitability - Although Registrant has
been incorporated and in existence since March 17, 1999, it has not yet had any
earnings or commenced full business operations; accordingly, there can be no
assurance that it will be successful in its proposed business plans. Registrant
faces all the risks inherent in a relatively new business and there can be no
assurance that Registrant's activities will be successful and/or result in any
profits.

Internet Gaming May Not be Permitted in U.S. Locations - Citizens of some or all
jurisdictions in the United States may not be allowed to participate in
Registrant's proposed Internet gaming business because of legislative debate
regarding the applicability of interstate gambling laws, rules and regulations
to Internet gaming. The legality of gambling has heretofore been considered a
matter of state concern and each state has regulated its own laws, rules and
regulations regarding gaming and wagering. In the event Internet gaming and
wagering is ruled illegal in the various pending lawsuits, states may disallow
Internet gaming and wagering in any and all states where gambling is illegal. As
a result, Registrant's business would be limited to only those states where
gambling is legal, assuming such states have not proscribed Internet gambling.

Furthermore, and very significantly, legislation has been introduced in the
U.S. Congress, seeking to prohibit all Internet gambling in the U.S. The
legislation, as currently proposed by various legislators, would punish with
fines and imprisonment, both the person placing the bet and the person accepting
the bet. If the legislation is enacted into law, Registrant's business would
be limited only to locations outside the U.S.

The inability to conduct any Internet gaming operations in the U.S. may have a
substantial negative impact on the potential revenues which Registrant may be
able to generate from its operations. However, since Registrant will be
marketing and focusing its operations only in Asia and Europe, the status of
Internet gambling in the U.S. is not of primary concern to Registrant at this
time.

<PAGE>

Possible Termination of Gaming Software License - Registrant acquired all of
the rights, title and interest in and to its gaming software from Ken Ng, an
officer and director of Registrant since inception. Pursuant to the terms of the
Assignment Agreement, Registrant purchased the Software License Agreement with
Softec Systems Caribbean Inc. from Mr. Ng in exchange for a one- year employment
contract and reimbursement of the sum of $25,000. Mr. Ng. entered into the
Softec License Agreement on March 17, 1999. The term of the Agreement is a
period of one year, until March 17,2000, and is automatically Renewed
indefinitely unless Registrant gives written notice of termination at Least 45
days prior to the end of any one-year period. However, pursuant to the
Agreement, Softec may also terminate the Agreement as a result of certain
breaches by Registrant. In the event Softec terminates the Agreement, Registrant
would no longer be able to use the licensed software and its business operations
and financial condition could be severely adversely affected.

Year 2000 Computer Problems - Registrant is heavily engaged in and dependent on
computer technology. Many existing computer programs use only two digits to
identify a year in the date field, e.g., "98" instead of "1998". These programs
were designed and developed without considering the impact of the upcoming
change in the century, i.e., Year 2000. If not corrected, many computer
applications could fail or create erroneous results in the Year 2000. The
Securities and Exchange Commission ("SEC") has issued Staff Legal Bulletin No. 5
indicating the Year 2000 problem affects virtually all companies and
organizations. Registrant has made a preliminary assessment of the Year 2000
issues as they relate to its online software gaming programs and operating
systems and has determined that it does not presently have any material Year
2000 issues which could adversely affect its business, operations (including
operating systems) and/or financial condition. Some Year 2000 issues could
affect Registrant's relationships with customers, suppliers and other parties
with whom it does business. Registrant intends to investigate Year 2000
remediation programs and/or contingency plans, but has not yet done so. A
material consideration in this regard is the cost of such remediation program
and/or contingency plans.

Government Regulations - Internet gaming is a new and emerging technology and,
as such, no specific laws have yet been set forth by the U.S. Government
regulating the industry, although efforts are underway to enact legislation to
prohibit Internet gambling in the U.S. Moreover, future legislation and
regulations could be imposed in the industry at any time causing additional
substantial expense, capital expenditures, restrictions and delays in, or
perhaps total prohibition of the commencement of Registrant's proposed business
plans. The extent to which future legislation and/or regulations might affect
Registrant cannot be predicted and there is no assurance that Registrant will be
able to market its technology in any jurisdiction which does not allow gaming.
As a result, Registrant's profitability may be adversely affected and its
proposed business operations may be severely limited. Although Registrant is
unaware of on-line gaming restrictions in countries other than the U.S., if such
restrictions exist or are implemented, Registrant's operations and profitability
may be adversely impacted.

Internet Security Concerns - Security on the Internet has always been a concern
to companies which conduct business via the World Wide Web; however, with money
now exchanging hands in Internet transactions, it is an even greater concern.
The potential for viruses which can virtually destroy a system is a distinct
possibility and hackers now have the potential technology to wreak havoc on any
business operation. Unsecured transactions on the Internet are subject to

<PAGE>

inspection by just about anyone who knows how to access the information
regarding them. As credit card or checking account numbers are being exchanged,
the window of opportunity for theft is wide open. Registrant will attempt to
obtain the highest security measures for its StarGate site, however, there can
be no assurance that it will not fall prey to any of the aforementioned
potential disasters.

Industry Conditions; Economic Factors - The success of Registrant's proposed
business operations is highly dependent upon the condition of the interactive
gaming industry. The economic viability of that market, in turn, is highly
dependent on, among many other factors, new laws, political issues and general
economic conditions. During periods of economic downturn or slow economic
growth, coupled with eroding consumer confidence or rising inflation, use of
Registrant's technology could be severely negatively impacted. Such factors
would likely have an immediate material adverse effect on Registrant's
operations and/or profitability.

Dependence On Additional Financing/Risk of Unavailability; Possible Additional
Dilution - Assuming full implementation of Registrant's proposed business plans,
the continued operations of Registrant will be dependent upon its ability to
generate revenues from operations and/or obtain further financing, if and when
needed, through borrowing from banks or other lenders or equity funding. There
is no assurance that sufficient revenues can be generated or that additional
financing will be available, if and when required, or on terms favorable to
Registrant.

No Assurance of a Public Market - There is currently no active trading in
Registrant's Common Stock and there is no assurance that an active trading
market in Registrant's Common Stock will ever develop. Accordingly, there is a
very high risk that purchasers of Common Stock of Registrant may be unable to
sell their shares in the future.

Risks of Low-Priced Stocks - The Securities Enforcement and Penny Stock Reform
Act of 1990 requires additional disclosure relating to the market for penny
stocks in connection with trades in any stock defined as a penny stock. The SEC
has adopted regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. Such exceptions include any equity security listed on a
major exchange and any equity security issued by an issuer that has (i) net
tangible assets of at least $2,000,000, if such issuer has been in continuous
operation for three (3) years; (ii) net tangible assets of at least $5,000,000,
if such issuer has been in continuous operation for less than three years; or
(iii) average annual revenue of at least $6,000,000, if such issuer has been in
continuous operation for less than three years. Unless an exception is
available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock
market and the risks associated therewith.

Since Registrant's shares of Common Stock are characterized as a penny stock,
the market liquidity for the Company's securities could be severely affected.
Furthermore, the regulations on penny stocks could limit the ability of broker/
dealers to sell the Company's securities and, thus, the ability of purchasers of
the Company's securities to sell their securities in the secondary market.

In addition, if the Company's securities do not continue to be quoted on the
Electronic Bulletin Board of the National Association of Securities Dealers,

<PAGE>

Inc. ("NASD"), or the Company does not have $3,000,000 in net tangible assets,
trading in the Common Stock would be covered by Rule 15c2-6 promulgated under
the Securities Exchange Act of 1934, as amended, (the "Exchange Act") for
non-NASDAQ and non-exchange listed securities. Under such rule, broker/dealers
who recommend such securities to persons other than established customers and
accredited investors must make a special written suitability determination for
the purchaser and receive the purchaser's written agreement to a transaction
prior to sale. Securities also are exempt from this rule if the market price is
at least $5.00 per share.

ITEM 2. DESCRIPTION OF PROPERTY

Registrant has a verbal lease agreement to lease office space at 202-338 West
8th Avenue, Vancouver, B.C., Canada, from Clydemont Development Inc., a
non-related third party, on a monthly lease term, for $1,000 US per month. The
rental rate is competitive for similar space in the area.

ITEM 3. LEGAL PROCEEDINGS

Registrant is not a party to an material pending legal proceedings.

ITEM 4. CONTROL OF REGISTRANT

The following table sets forth information relating to the beneficial ownership
of Registrant's Common Stock by those persons beneficially holding more than 10%
of Registrant's Common Stock, and by all of Registrant's directors and executive
officers as a group as of March 31, 1999. The address of each person is in care
of Registrant, unless otherwise noted.

<S> <C> <C>
Percentage

Name of Number of of Outstanding
Stockholder Shares Owned(1) Common Stock

- ----------- ------------- ---------------

Pao Yao Koo 100,000 2%

Ken Ng 275,000 6%

Alfred Yong(2) 1,046,250 21%

Alan Yong (2) 325,000 7%
- -------------
All Officers and

Directors as a Group 375,000 8%
</TABLE>

(1) As used in this table, "beneficial ownership" means the sole or shared power
to vote, or to direct the voting of, a security, or the sole or shared
investment power with respect to a security (i.e., the power to dispose of, or
to direct the disposition of, a security) and includes the ownership of a
security through corporate, partnership or trust entities. In addition, for
purposes of this table, a person is deemed, as of any date, to have "beneficial
ownership" of any security that such person has the right to acquire within 60
days after such date.

<PAGE>

(2) Alan Yong is a member of Registrant's Advisory Board and a principal
shareholder. Alfred Yong is a principal shareholder and the brother of Alan
Yong.

ITEM 5. NATURE OF TRADING MARKET

As of the date of this Registration Statement, there is no principal non-U.S. or
U.S. trading market for Registrant's securities. As of October 31, 1999
there was a total of 4,956,500 shares of Common Stock outstanding, held
by 59 shareholders, all of which are non-U.S. persons.

ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

There are currently no Turks and Caicos foreign exchange control restrictions on
the payment of dividends on the Common Stock of Registrant to non-resident
holders. There are currently no limitations on the rights of non-resident or
foreign owners to hold or vote the Common Stock, imposed by Turks and Caicos
law, or the Memorandum and Articles of Association of Registrant.

ITEM 7. TAXATION

US Federal Income Tax Consequences to persons who are owners of Common Stock of
Registrant:

The following generally summarizes the principal U.S. federal tax consequences
of the purchase, ownership and disposition of Registrant's Common Stock and,
except as provided explicitly below, to citizens or residents of the U.S. for
U.S. federal income tax purposes, corporations or partnerships created or
organized under the laws of the U.S., or any state thereof, estates the income
which is subject to U.S. federal income taxation regardless of its source or a
trust if a court within the U.S. is able to exercise primary supervision
over the administration and control of the trust and one or more of the U.S.
fiduciaries have the authority to control all substantial decisions of the trust
(collectively "U.S. Holders").

The statements regarding the U.S. tax laws set out below are based on the laws
in force and as interpreted by the relevant taxation authorities as of the date
of this Registration Statement and are subject to any changes in the U.S. law,
or on the interpretation thereof by the relevant taxation authorities or in the
double taxation conventions between the U.S. and any foreign jurisdiction where
a shareholder may reside, (the "convention"), occurring after such date.

As of the date of this filing, there are no reciprocal tax treaties between
the Turks and Caicos Islands, British West Indies and the United States
regarding withholding of taxes. U.S. security holders are not subject to any
taxes, including withholding provisions, under the laws and regulations of the
Turks and Caicos Islands

This summary is of a general nature only and does not discuss all aspects of
U.S. and foreign jurisdiction taxation matters that may be relevant to a parti-
cular investor. This summary deals only with securities held as capital assets
and does not address special classes of purchasers, such as dealers in securi-
ties, U.S. shareholders whose functional currency is not the U.S. dollar and
certain U.S. Holders (including, but not limited to, insurance companies, tax
exempt organizations, financial institutions and persons subject to the alterna-
tive minimum tax) who may be subject to special rules not discussed below. In

<PAGE>

particular, the following summary does address the tax treatment of U.S.
Shareholders who own, directly or by attribution, 10% or more of Registrant's
outstanding Common Stock.

PROSPECTIVE PURCHASERS OF REGISTRANT'S COMMON STOCK ARE ADVISED TO CONSULT WITH
THEIR OWN TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES AS WELL AS WITH RESPECT TO THE TAX CONSEQUENCES IN FOREIGN
JURISDICTIONS, OF THE OWNERSHIP OF THE COMMON STOCK APPLICABLE IN THEIR
PARTICULAR TAX SITUATIONS.

Taxation of Capital Gains

- ----------------------------
Upon the sale or other disposition of shares of Common Stock, a U.S. shareholder
will generally recognize gain or loss for U.S. federal income tax purposes in an
amount equal to the difference between the amount realized on such sale or
disposition and the U.S. shareholder's adjusted tax basis in the Common Stock.
Such gain or loss will be capital gain or loss if the U.S. shareholder holds
such Common Stock as a capital asset. Holders of Common Stock in foreign
jurisdictions will be subject to the laws, rules and regulations applicable to
taxation of capital gains in each such jurisdiction.

All shareholders of Registrant's Common Stock should seek professional tax
advice to determine their income tax liability.

Estate and Gift Taxes

- ------------------------
An individual U.S. shareholder will be subject to U.S. estate and gift taxes
with respect to the Common Stock in the same manner and to the same extent as
with respect to other types of personal property. Holders of Common Stock in
foreign jurisdictions will be subject to the laws, rules and regulations
applicable to taxation of capital gains in each such jurisdiction.

ITEM 8. SELECTED FINANCIAL DATA

The following table presents selected financial data of Registrant for the
period from Inception to October 31, 1999. Registrant's fiscal year end
is December 31. The financial information below has been prepared and audited by
Jung & Lee, Chartered Accountants, Vancouver, B.C., Canada. Registrant's
financial statements are prepared in accordance with accounting principles
generally accepted in Canada which, for purposes of this filing, conform in all
material aspects with accounting principles generally accepted in the U.S.
("U.S. GAAP"). All information is in U.S. Dollars. No dividends have been paid
or declared to date. Registrant has not yet commenced full business operations
and, therefore, has not yet realized any revenues. Since inception, Registrant's
business operations have been focused on preparation for the acquisition,
marketing and on-line use of the StarNet software. For a discussion of these and
other factors which materially affect this selected financial data, see "Item
9-Management's Discussion and Analysis & Financial Condition and Results of
Operations". This information should be read in conjunction with, and is
qualified in its entirety by reference to the financial statements of Registrant
and the notes thereto included in this Registration Statement.

<PAGE>

<S> <C>
For the Period from
Inception to 10/31/99

---------------------------
Statement of Operations Data:

Revenues $ 0
Operating expenses $ (104,318)
Net Loss $ (116,702)
Loss per Ordinary Share $ (.02)
Weighted average shares outstanding 4,956,500

Balance Sheet Data:

Net current assets $ 124,260
Total assets $ 135,959
Short-Term Liabilities $ 12,711

Stockholders' Equity $ 123,248

</TABLE>

ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS

The following discussion is based on Registrant's financial statements which are
prepared in accordance with Canadian GAAP, which conforms in all material
respects with accounting principles generally accepted in the United States.

Overview

- --------
Registrant is engaged in the business of Internet gaming/wagering marketing
Since inception on March 17, 1999, Registrant has acquired the rights to certain
Internet gaming software.

Results of Operations

- ---------------------
Registrant has not yet commenced full business operations and, therefore, has
not yet realized any revenues.

Liquidity and Capital Resources

- ----------------------------------
Since inception, Registrant has satisfied its cash needs during the
developmental stage for startup costs from the sale and issuance of shares of
its Common Stock. Since inception, Registrant has raised a total of $ 43,000
through a private sale of 4,300,000 shares of its Common Stock for $.01 per
share. Registrant recently closed a public offering of its Common Stock, all to
non-U.S. residents, pursuant to a Regulation D, Rule 504 registration statement,
made effective by the New York Department of Law on March 31, 1999. A total of
656,500 shares of Common Stock were sold at $.30 per share.

Since Registrant's long-term cash requirements will consist mainly of license
fees which will not be due until after Registrant commences full business
operations and accepts internet wagers, Registrant believes operating revenues
will be sufficient to meet its long-term cash requirements. However, there is no
assurance Registrant will be able to meet its long-term cash requirements and

<PAGE>

additional financing may be required either on a debt or equity basis.
Registrant is unable to determine whether additional financing will be required
until after it has commenced business operations.

Registrant feels its present sources of liquidity, will be adequate to cover its
anticipated financial obligations and capital expenditures in connection with
its proposed business operations for approximately 12 months. Other than
potential revenues from operations, of which there can be no assurance,
Registrant has not identified any sources of long-term liquidity.

Registrant and its chartered accounting firm, Jung & Lee, have reviewed the
U.S. Financial Accounting Standards and are unaware of any pending accounting
pronouncements that will affect Registrant and which have not been disclosed in
the financial statements included in this registration statement.

ITEM 9A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT.

The members of the Board of Directors of Registrant serve until the next annual
meeting of stockholders, or until their successors have been elected.
Information as to the directors and executive officers of

Registrant is as follows. Except as noted, each Executive Director devotes
substantially all his/her time to the business of Registrant. There exists no
arrangement or understanding between any named officer or director and any other
person pursuant to which he/she was selected as a director or officer.

<S> <C> <C>
Name and Address Age Position(s)
- ------------------ ----- -----------
Pao Yao Koo 29 President and Director
202-338 West 8th Avenue
Vancouver, B.C., Canada V5Y 3X2

Ken Ng 32 Executive V.P.-Operations and

202-338 West 8th Avenue Marketing, Secretary, Treasurer Vancouver, B.C., Canada V5Y 3X2
and a Director

</TABLE>

Background of Officers and Directors

- ----------------------------------------

Pao Yao Koo has been President of Registrant since November 1999 and was
Vice President of Marketing and a Director since inception. Since November 1997,
she has also been a Director of Yorkland Trading, Inc., an international jewelry
distribution company in Vancouver, B.C., Canada and has several years experience
in marketing and sales, especially within the Asian community in various
industries. Since September 1998, she has also been the Vice President of Sales
and Marketing for Crystal Hill Technologies, Inc., a

<PAGE>

financial management company in Vancouver, B.C., Canada. From October 1994 to
January 1997, she was a self-employed international jewelry distributor
in Hong Kong. From April 1992 to October 1994, she was Assistant Manager
of Italies Italian Coffee Shop in Vancouver, B.C., Canada. Ms. Koo will devote
her time as required to the business of Registrant.

Ken Ng has been the Executive Vice President of Operations/Marketing, Secretary
Treasurer and a Director of Registrant since inception. Since March 1997,
he has also been a Director and Vice President of Capital Alliance Group
Inc., a computer and education company with operations in Canada and Thailand.
From July 1995 to February 1997, he was the Managing Director of Univell
Microsystems, a computer manufacturing company in Richmond, B.C., Canada. From
January 1990 to June 1995, he was a Manager for Ano Office Automation, a
computer retail company in Vancouver, B.C., Canada. In addition, Mr. Ng is a
director and shareholder of Strawberry Inc., which operates an Internet gaming
site out of Venezuela known as www.clubriocasino.com. Mr. Ng graduated from BCIT
in Vancouver in 1989 with a B.A. Degree in Electronics/Engineering. He will
devote his time as required to the business of Registrant.

Advisory Board

- ---------------
Alan Yong has been a Member of the Advisory Board since inception. Since August
1996, he has also been a Director and President of Crystal Hill Management,
Inc., a financial management corporation in Vancouver, B.C., Canada, and Pacific
Treasure Resort and Casino Ltd., a Canadian corporation which has an option to
acquire an interest in a water-based casino operation. Mr. Yong is also
presently a director of several companies involved in communications, Internet
and real estate. Mr. Yong owns 325,000 shares of Registrant's Common Stock.

Dr. Wun C. Chiou, Sr. has been a Member of the Advisory Board since inception.
He has been the President and Chief Executive Officer of LinuxOne,
Inc., a Nevada corporation engaged in the development and sale of linux software
products, since March, 1999. From 1996 to March 1999, he was President and
Chief Executive Officer of NetUSA, Inc., a publicly-traded Colorado corporation.
Dr. Chiou was also the Founder and President of Pacific Microelectronics,
Inc. since its inception in 1987. From 1986 to 1987, he was Senior
Scientist for Lockheed, Palo Alto Research Center where he organized Lockheed's
Artificial Intelligence Center. From 1986 to 1987, he also served as a

<PAGE>

consultant for Peterson & Co., Northridge, California. From 1984 to 1985, he was
the Branch Chief of Artificial IntelligenceSoftware for NASA, at Ames Research
Center in Mountain View, California. From 1983 to 1984, he was Senior
Technologist for the California Institute of Technology, Jet Propulsion
Laboratory. From 1981 to 1983, he served as Research Scientist for Teledyne
Systems, Co., Northridge, California. From 1979 to 1981, he was Senior Staff
Engineer for Hughes Aircraft Co. From 1974 to 1979, Dr. Chiou has held a variety
of positions including Research Physicist for the U.S. Army, Areomed. From 1979
to 1986, he taught at Cal State, Northridge and U.C. Berkeley Extension. He
possesses knowledge and research experience regarding expert systems, artificial
intelligence, image modeling, optical information processing, and system
integration, among others. He has published over 100 scientific articles in a
variety of periodicals and is a member of the Optical Society of America,
Society of Photo-Instrumentation Engineers, and the National Association for
Artificial Intelligence. He holds a B.S. from National Taiwan University in
General Science and Psychology; a Master's Degree from Bowling Green State
University in Physics and Mathematics; a Ph.D. from Ohio State University in
Biophysics; and has completed post-doctoral work at Ohio State University on
image modeling.

ITEM 11. EXECUTIVE COMPENSATION OF DIRECTORS AND OFFICERS

The officers and directors of Registrant do not presently receive cash
remuneration or salaries for their efforts and do not intend to receive
remuneration or salaries unless and until Registrant's business operations are
successful, at which time salaries and other remuneration will be established by
the Board of Directors, as appropriate.

ITEM 12. OPTION TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES.

There are no outstanding options to purchase securities from Registrant.

ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

On March 17, 1999, a total of 4,300,000 shares of Common Stock were sold in
exchange for $43,000 U.S., or $.01 per share. 625,000 of such shares are held by
officers and directors of Registrant.

On March 18, 1999, Registrant acquired, by assignment, a non-exclusive
license for the rights to Internet casino software and related proprietary
technology from Ken Ng, an officer, director and shareholder of Registrant.
Consideration for the license was $1, plus costs incurred of $25,000. The
non-exclusive license is for a 1-year period and will be automatically
renewed indefinitely for additional 1-year terms unless Registrant gives notice
of termination at least 45 days prior to the end of any 1-year period, or the
licensor gives notice of termination at least six (6) months prior to the end of
any 1-year period, excluding the first year of the agreement. Future payments
required under the terms of the license agreement are:

- - $10,000 U.S. per month for 5 consecutive months, beginning 90 days from
acceptance of the first wager using the licensed software;

<PAGE>

- - Upon achieving net monthly revenues of $1,000,000 U.S. in any one month,
Registrant is to post an irrevocable letter of credit in the amount of $100,000
U.S.

PART II

========

ITEM 14. DESCRIPTION OF SECURITIES

The following contains certain information concerning Registrant's capital
structure and related summary information concerning the material provisions of
Registrant's Memorandum and Articles of Association (Charter) and applicable
Turks and Caicos law. A copy of the Memorandum and Articles of Association of
Registrant has been filed as an Exhibit to this Registration Statement and is
available for inspection as part of this Registration Statement.

General

- -------
Registrant's authorized share capital is 25,000,000 shares of Common Stock with
a par value of U.S. $.001. The holders of Common Stock currently (i) have equal
ratable rights to dividends from funds legally available therefor, when, as and
if declared by the Board of Directors of Registrant; (ii) are entitled to share
ratably in all of the assets of Registrant available for distribution to holders
of Common Stock upon liquidation, dissolution or winding up of the affairs of
Registrant; (iii) do not have preemptive, subscription or conversion rights and
there are no redemption or sinking fund provisions or rights applicable thereto;
and (iv) are entitled to one non-cumulative vote per share on all matters on
which stockholders may vote. All shares of Common Stock now outstanding are
fully paid for and non-assessable. Reference is made to Registrant's Memorandum
and Articles of Incorporation and the applicable statutes of the Turks and
Caicos Islands, British West Indies, for a more complete description of the
rights and liabilities of holders of Registrant's securities.

Non-cumulative Voting

- ----------------------
The holders of shares of Common Stock of Registrant do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose, and, in such event, the holders of the remaining
shares will not be able to elect any of Registrant's directors.

Cash Dividends

- ---------------
As of the date of this Registration Statement, Registrant has not declared or
paid any cash dividends to its stockholders. The declaration or payment of any
future cash dividend will be at the discretion of the Board of Directors and
will depend upon the earnings, if any, capital requirements and financial
position of Registrant, general economic conditions, and other pertinent
conditions. It is the present intention of Registrant not to declare or pay any
cash dividends in the foreseeable future, but rather to reinvest earnings, if
any, in Registrant's business operations.

Reports

- -------
Registrant will furnish annual financial reports and unaudited quarterly
financial reports to its stockholders, certified by its independent accountants.

<PAGE>

Transfer Agent

- ---------------
Registrant has appointed Transfer.com, an independent, professional transfer
agent in Portland, Oregon, to serve as the transfer agent for its securities.

PART III

=========

ITEM 15. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 16. CHANGES IN REGISTERED SECURITIES AND USE OF PROCEEDS.

There have been no modifications to the Common Stock of Registrant. All of the
shares of Common Stock covered by this Registration Statement have been issued
and all public and private offerings of shares were closed or terminated prior
to the filing of this Registration Statement.

Registrant did not engage an underwriter or other third party in connection with
the sale and issuance of any of the shares of Common Stock covered in this
Registration Statement and as a result, did not incur, directly or indirectly,
any underwriting discounts or commissions, finders' fees or other similar
expenses. In connection with the issuance and sale of the outstanding shares of
Common Stock, Registrant did incur accounting, legal, printing and related
expenses, which taken together were not material. No payments were made to any
officers, directors or their associates, or to any persons owning 10% or more of
Registrant's outstanding shares of Common Stock, other than those disclosed in
Item 13, "Interest of Management in Certain Transactions", of this Registration
Statement. However, none of the expenses or payments represents material changes
in the information set forth in this Registration Statement.

PART IV

========

ITEM 17/18. FINANCIAL STATEMENTS

The financial statements required by Item 18 and included in this Registration
Statement are as follows:

Auditor's Report
Balance Sheet

Statement of Loss and Deficit
Statement of Shareholders' Equity
Statement of Cash Flows
Notes to Financial Statements

ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS

a) Financial Statement of Registrant from Inception through October
31, 1999

<PAGE>

a) Exhibits

<S> <C>
Ex. No. Description of Exhibit

- ------ ----------------------
3.1.1 Memorandum and Articles of Association

6.1 Assignment of Software Agreement and Exhibits

6.2 Casino Operator's License

99 Consent of Softec Systems Caribbean Inc.
</TABLE>

SIGNATURES

==========

In accordance with Section 12 of the Securities Exchange Act of 1934, Registrant
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated: January ____, 2000 _____________________________________
Pao Yao Koo, President and Director

<PAGE>

STARGATE ENTERTAINMENT, INC.

FINANCIAL STATEMENTS

OCTOBER 31, 1999

INDEX

Auditors' Report

Balance Sheet

Statement of Loss and Deficit

Statement of Shareholders' Equity

Statement of Cash Flows

Notes to the Financial Statements

<PAGE>

AUDITORS' REPORT

TO THE SHAREHOLDERS,
STARGATE ENTERTAINMENT, INC.

We have audited the balance sheet of StarGate Entertainment, Inc. as at
October 31, 1999 and the statements of loss and deficit, shareholders'
equity and cash flows for the period from inception on March 17, 1999 to
October 31, 1999. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audits in accordance with generally accepted auditing standards
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at October 31, 1999
and the results of its operations and the changes in cash flows for the period
from inception on March 17, 1999 to October 31, 1999 in accordance with
generally accepted accounting principles in Canada. As required by the British
Columbia Company Act, we report that, in our opinion, these principles have been
applied on a consistent basis.

Vancouver, Canada
December 21, 1999

JUNG AND LEE Chartered Accountants

<PAGE>

<S> <C>
STARGATE ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS AT OCTOBER 31, 1999
(EXPRESSED IN UNITED STATES DOLLARS)

- ----------------------------------------

ASSETS

Current

Cash - Note 3 $103,242
Term deposit - Note 4 17,123
Accounts receivable 3,895
--------
124,260

Furniture and equipment - Note 5 2,272
License rights - Note 6 9,427
--------
TOTAL ASSETS $135,959
========

LIABILITIES

Current

Accounts payable $ 12,711
--------

SHAREHOLDERS' EQUITY

Capital stock - Note 7 4,957

Capital in excess of par value 234,993

Deficit (116,702)
--------
123,248

--------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $135,959
========

<FN>

See accompanying notes to the financial statements

</FN>
</TABLE>

<PAGE>

<S> <C>
STARGATE ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS AND DEFICIT

FOR THE PERIOD FROM INCEPTION ON MARCH 17, 1999
TO OCTOBER 31, 1999
(EXPRESSED IN UNITED STATES DOLLARS)

- ---------------------------------------------------------------

EXPENSES

Accounting and audit $11,082
Amortization 15,781
Legal 33,993
Office and miscellaneous 4,555
Professional fees 6,156
Project development costs 24,188
Telephone 1,187
Transfer agent 2,890
Travel 3,856
-------
NET LOSS BEFORE OTHER ITEMS 104,318

OTHER ITEMS

Write-off leasehold improvements and other assets 15,112
Interest income (2,728)
---------

NET LOSS FOR THE PERIOD 116,702

DEFICIT, BEGINNING OF THE PERIOD -
-------

DEFICIT, END OF THE PERIOD $116,702
=======

LOSS PER SHARE $ .02
=======

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - 4,956,500
=========

<FN>

See accompanying notes to the financial statements

</FN>
</TABLE>

<PAGE>

STARGATE ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY

FOR THE PERIOD FROM INCEPTION ON MARCH 17, 1999
TO OCTOBER 31, 1999
(EXPRESSED IN UNITED STATES DOLLARS)

- ---------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Capital
Issued In Excess

Number and of

Of Shares Outstanding Par Value Deficit Total

---------- ---------- ---------- ------ -----

Opening Balance - $ - $ - $ - $ -

Shares subscribed

At $.01 each 4,300,000 4,300 38,700 - 43,000

Shares subscribed

At $.30 each 656,500 657 196,293 - 196,950

Net Loss for Period - - - (116,702)(116,702)
--------- ------- -------- ------- --------

Balance at

October 31, 1999 4,956,500 $4,957 $234,993 (116,702) $123,248
========= ======= ======== ======== =======

<FN>

See accompanying notes to the financial statements

</FN>
</TABLE>

<PAGE>

STARGATE ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM INCEPTION ON MARCH 17, 1999 TO
OCTOBER 31, 1999

(EXPRESSED IN UNITED STATES DOLLARS)

- ---------------------------------------------------------------

<S> <C>
OPERATING ACTIVITIES

Loss for the period $(116,702)

Items not involving cash:

Amortization 15,781
Write-off of leasehold improvements and

other assets 15,112
-------
(85,809)

Change in non-cash operating working capital:

Accounts receivable ( 3,895)
Accounts payable 12,711
-------
$ (76,993)

---------

INVESTING ACTIVITIES

Purchase of term deposit $ (17,123)
Acquisition of license rights (25,001)
Purchase of capital assets (17,591)
---------
$ (59,715)

---------

FINANCING ACTIVITIES

Proceeds from issuance of capital stock $ 239,950
--------
Increase in cash and cash equivalents

during the period $ 103,242

Cash and cash equivalents, beginning of the period -
---------
Cash and cash equivalents, end of the period $ 103,242
========

<FN>

See accompanying notes to the financial statements

</FN>
</TABLE>

<PAGE>

STARGATE ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD FROM INCORPORATION ON MARCH 17, 1999
TO OCTOBER 31, 1999

(EXPRESSED IN UNITED STATES DOLLARS)

- -------------------------------------------------------------
1. NATURE OF BUSINESS

StarGate Entertainment, Inc. (the "Company") was incorporated on March 17, 1999
in the Turks and Caicos Islands of the British West Indies and is in the process
of registering a wholly-owned subsidiary company (Star Ventures, Inc.) in
Antigua, West Indies. The Company has been established to operate online gaming
sites and has obtained a license for the rights to Internet gaming software.

2. SIGNIFICANT ACCOUNTING POLICIES

Generally Accepted Accounting Principles

The financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in Canada which, for the purposes of
these financial statements, conform in all material respects with accounting
principles generally accepted in the United States.

Use of Estimates

Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements.
Actual results could differ from these estimates.

The financial statements have, in management opinion, been properly prepared
within reasonable limits of materially and within the framework of the
significant accounting policies summarized below.

License Rights

Initial costs incurred to acquire license rights are capitalized and amortized
on a straight-line basis over the term of the license. Subsequent monthly
payments due upon commencement of gaming operations and related marketing
and development costs are expensed in the period in which they are incurred.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, term deposits, accounts
receivable and accounts payable approximate their fair values since they
are short term in nature. It is management's opinion that the Company is not
exposed to significant interest, currency or credit risks arising from these
financial instruments.

Earnings (Loss) per Share

Earnings (loss) per share is calculated using the weighted number of shares
outstanding during the period.

<PAGE>

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original
maturities of three months or less.

Furniture and Equipment and Amortization

Furniture and equipment are recorded at cost and the Company provides for
Amortization computed under the declining balance method at 20% per annum.

Foreign Currency Translation

Transactions in currencies other than the United States dollar are translated at
the exchange rates in effect on the transaction dates. Monetary assets and
liabilities denominated in a foreign currency are translated at the prevailing
rate of exchange at the end of the period. Exchange gains or losses are included
in the statement of loss and deficit.

3. Cash and Cash Equivalents

Cash and cash equivalents are comprised of:

<S> <C>
Cash $ 2,079
Certificate of deposit $ 101,163

----------
103,242

==========
</TABLE>

The certificate of deposit bears interest at 4.75% and matures November 13,
1999.

4. Term Deposit

The term deposit is recorded at cost and is comprised of a Cdn. $25,000
Investment certificate bearing interest at 3.95% per annum and maturing on June
9, 2000.

5. Furniture and Equipment

<S> <C>
Cost $ 2,479
Accumulated amortization 207

-------
$ 2,272

=======
</TABLE>

6. License Rights

The Company has acquired a license for the rights to Internet casino software
from a director for $1 plus costs incurred of $25,000. The license is for a one
year period and will be automatically renewed indefinitely for additional one
year terms unless the Company gives notice of termination at least 45 days prior
to the end of any one year period, or the licensor gives notice of

<PAGE>

termination at least six months prior to the end of any one year period,
excluding the first year of the agreement.

Future payments required under the terms of the license agreement are:

- - - $10,000 per month for five consecutive months, beginning ninety days from
acceptance of the first wager using the licensed software;

- - - a monthly fee based on a percentage of the net monthly revenue, ranging from
25% for the first $300,000 down to 12.5% for amounts over $5,000,000. The fees
are subject to a minimum payment of $25,000 per month and commence 180 days
after acceptance of the first wager using the licensed software; and

- - - upon achieving net monthly revenue of $1,000,000 in any one month, the
Company is to post an irrevocable letter of credit in the amount of $100,000.

<S> <C>
Cost incurred:

Initial acquisition costs $25,001
Amortization 15,574

-------
$ 9,427

=======
</TABLE>

7. Capital Stock

Authorized: 25,000,000 shares with a par value of $0.001 each.

Issued and outstanding:

<S> <C> <C> <C>
Capital

Number Capital in Excess
of Shares Stock of Par Value

--------- ------- --------------
For cash of $.01

per share 4,300,000 $4,300 $ 38,700

For cash of $.30

per share 656,500 657 196,293
--------- ------- ---------
4,956,500 $4,957 $ 234,993
========= ======= ===========
</TABLE>

8. Related Party Transaction

The rights to a license of Internet software were acquired from a director of
the Company for $1 plus $25,000 in costs incurred by him. The transaction has
been recorded at the carrying amount of $25,000 plus $1.

<PAGE>

An officer of the Company was paid $5,775 for accounting and consulting
services rendered during the period.

9. Income Taxes

The Company is subject to Canadian federal and provincial taxes at an effective
rate of 45.6%. No current provision or benefit for income taxes has been
recorded for the period ended October 31, 1999, as the Company has
incurred a net operating loss and has no carryback potential. At October
31, 1999, the Company has a net tax loss carryforward of approximately
$77,000 available to reduce future taxable income, which expires in 2006.
Deferred income taxes arise from temporary differences in the recognition of
income and expenses for financial reporting and tax purposes. The sources of
temporary differences and related deferred income tax amounts are as
follows:

Net deferred tax assets are comprised of:

<S> <C>
Expenses deductible in future for tax purposes $ 15,800
License rights and furniture and equipment 24,000
Net tax loss carryforward 77,000
--------
$116,800

========
Gross deferred tax assets $ 53,200
Deferred tax asset valuation allowance 53,200
--------
Net deferred tax assets $ -
========
</TABLE>

10. Differences Between Canadian and United States Generally Accepted
Accounting Principles

As described in the Significant Accounting Policies, accounting under United
States and Canadian generally accepted accounting principles is substantially
the same with respect to the accounting principles used by the Company in the
preparation of these financial statements.

Under FASB No. 130 "Reporting Comprehensive Income", issued in the United States
in 1997, comprehensive income and its components is to be reported.
Comprehensive income, which incorporates net income, includes all changes in
equity during a period except those resulting from investments and distributions
to owners. There are no material differences between Canadian and U.S. GAAP
which would have an impact on the results of financial position as at October
31, 1999, or the operations or cash flow for the period from inception on March
17, 1999 to October 31, 1999.

11. Recent Accounting Pronouncements

Accounting for Derivative Instruments and Hedging Activities

In June 1998, FASB No. 133 was issued in the U.S. which establishes the
accounting and reporting standards for derivative instruments, including

<PAGE>

instruments embedded in other contracts and hedging activities. SFAS 133 is
effective for financial statements for fiscal years beginning after June 15,
1999.

The Company has not entered into derivative contracts either to hedge existing
risks or for speculative purposes. Accordingly, the Company does not expect the
adoption of the new standards to affect its financial statements.

12. Uncertainty Due to the Year 2000 Issue

The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
Year 2000 as 1900 or some other date, resulting in errors when information using
Year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operation and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations.

Management is assessing the Company's internal operations and the systems
compliance issues of its suppliers. Based on the information available to
management, the Company's suppliers are taking steps that they believe will
address the Year 2000 Issue. It is not possible to be certain that all aspects
of the Year 2000 Issue affecting the Company, including those related to the
efforts of customers, suppliers, or other third parties, will be fully resolved.
For the period ended October 31, 1999, the Company did not incur Year 2000
related costs and does not expect to incur significant future costs related to
this issue.

<PAGE>

EXHIBIT INDEX TO FORM 20-FRG12 REGISTRATION STATEMENT

OF STARGATE ENTERTAINMENT, INC.

================================
<TABLE>
<CAPTION>

<S> <C> <C>
Exhibit No Description of Exhibit Page No.
- ---------- ------------------------ -------

3.1.1 Memorandum and Articles of 29
Association of Registrant

6.1 Assignment Agreement and Software 39
License Agreement

99 Consent of Softec Systems Caribbean Inc. 58
</TABLE>

EXHIBIT NO. 3.1.1

Turks and Caicos Islands, BWI
The Companies Ordinance 1981 (No. 11 of 1981)

MEMORANDUM AND ARTICLES OF ASSOCIATION

STARGATE ENTERTAINMENT, INC.

Date of Filing: March 15, 1999

<S> <C>
EMPOWER CORPORATION LIMITED No. E26382 Recorded in the
P.M.B. 2, Caribbean Place Register of Companies on the
Providenciales 17th day of March, 1999
Turks and Caicos Islands /s/ Registrar of Companies
British West Indies Turks and Caicos Islands

</TABLE>

Turks and Caicos Islands, BWI The Companies Ordinance 1981

MEMORANDUM OF ASSOCIATION

STARGATE ENTERTAINMENT, INC.

1. CORPORATE NAME

The corporation is formed as an exempt company limited by shares, in the name of
StarGate Entertainment, Inc.

2. REGISTERED OFFICE

The registered office of the company is located within the Turks and Caicos
Islands at P.M.B. 2, Caribbean Place, Providenciales, Turks & Caicos Islands,
British West Indies.

<PAGE>

3. REGISTERED AGENT

The registered agent for the Company is Empower Corporation Limited. Empower is
located at P.M.B 2, Caribbean Place, Providenciales, Turks and Caicos Islands,
British West Indies. Telephone number of the registered agent is (649) 941-3160.

4. GENERAL OBJECTS AND POWERS

The object of the Company is to engage in any act or activity that is not
prohibited under any law for the time being in force in the Turks and Caicos
Islands.

The operation of StarGate Entertainment, Inc. will be conducted mainly outside
the islands.

The company is incorporated with reference to the regulations as outlined in the
attached Articles of Association.

5. CAPITAL

The corporation is registered with a nominal share capital of US$25,000;
25,000,000 authorized shares having a par value of US $.001 each.

6. CURRENCY

The books and records of the company will be kept in US dollars.

7. SHAREHOLDERS

The liability of all members of the Corporation is limited to the amount unpaid
on their shares in the Corporation.

Articles of Association
of

StarGate Entertainment, Inc.

1. In these Regulations, the following words and expressions shall, where
not inconsistent with the context, have the following meanings respectively:-

"Members" means the person, body corporate or partnership registered in the
Register of Members as the holder of shares m the Company, and when two or more
persons are so registered as joint holders of shares, means the person whose
name stands first in the Register of Members as one of such joint holders;

"Notice" means written notice unless otherwise specifically stated;

"the Ordinance" means the Companies Ordinance 1981;

"the Company" means the Company for which these Articles are approved and
confirmed;

"Secretary" means the person appointed to perform the duties of Secretary of the
Company and includes any Assistant or Acting Secretary,

"Auditor" includes any individual or partnership.

<PAGE>

2. In these Regulations, unless there be something in the subject or context
inconsistent with such construction, words importing the plural number shall be
deemed to include the singular number.

3. Expressions referring to writing shall, unless the contrary intention
appears, be construed as including printing, lithography, photography and other
modes of representing words in a visible form.

4. Unless the context otherwise requires, words or expressions contained in
these Regulations shall bear the same meaning as in the Ordinance or any
statutory modification thereof in force for the time being.

5. Shares may be issued on the terms that they may, or at the option of the
Company may, be redeemed on such terms and in such manner as the Company before
issue of the shares, may determine and the Company may issue bearer shares in
such form and in such manner as the Directors fit.

6. Where joint holders are registered holders of a share or shares then in the
event of the death of any joint holder or holders the remaining joint holder or
holders shall be absolutely entitled to the said shares and the Company shall
recognize no claim in respect of the estate of any joint holder except in the
case of the last survivor of such joint holders.

7. Every Member shall be entitled to a certificate under the Seal of the Company
specifying the shares held by him and that the same are fully paid up. If any
such certificate shall be proved to the satisfaction of the Directors to have
been, lost, mislaid or destroyed the Directors may cause a new certificate to be
issued, and request an indemnity for the lost certificate if they see fit.

8. All shares shall be fully paid and non-assessable.

Registration of Members

9. The Company shall keep in one or more books a Register of its Members and
shall enter therein the following parties, that is to say -

(a) the name and address of each Member, the number of shares held by him
and the amount paid or agreed to be considered to be paid on such shares;

(b) the date on which each person was entered in the Register of Members;
and

Transfer of Shares

10. Except in the case of bearer shares the instrument of transfer shall be in a
form or as near thereto as circumstances admit as Form A hereunder. The
transferor shall be deemed to remain the holder of such share until the same has
been transferred to the transferee in the Register of Members.

FORM A

Transfer of a Share or Shares

FOR VALUE RECEIVED (fill in amount for purposes of stamp duty)(name in full of
transferor) hereby sell, assign and transfer unto (name in full of transferee)
of (address) share(s) or stock represented by the within certificate.

<PAGE>

Dated: ------------------------------
(Transferor)

-------------------------------
(Transferee)

The Directors may decline to register the transfer of a share without assigning
any reason therefor.

12. The Directors may decline to recognize any instrument of transfer unless it
is accompanied by the certificate of the shares to which it relates, and by such
other evidence as the Directors may reasonably require, to show the right of the
transferor to make the transfer.

13. The joint holder of a share may transfer such share to any one or more such
joint holders, and the joint holders of two or more shares may transfer such
shares or any or either of them to one or more of such joint holders, and the
surviving holder or holders of any share or shares previously held by them
jointly with a deceased Member may transfer any such share to the executors or
administrators of such deceased Member.

Transmission of Shares

14. The executors or administrators of a deceased Member shall, except as
provided hereafter, be the only person recognized by the Company as having any
title to his shares, but this shall not apply in the case of one or more joint
holders of a share or shares, except in the case of the last survivor of such
joint holders. On production of evidence of the death of a joint holder of a
share or shares the remaining holder or holders shall automatically become
entitled to the issue of a new certificate in the name of the remaining holder
or holders.

15. Any person entitled to a share in consequence of the death of any Member,
may be registered as a Member upon such evidence as the Directors may deem
sufficient, or may, instead of being registered himself, elect to have some
person named by him registered as a transferee of such share.

Meetings

16. The Directors may convene a Special Meeting of the Company whenever in their
judgment such a Meeting is necessary upon fourteen days notice in writing to
each of the Members, mailed to each Member at his address as registered in the
Register of Members by air mail (if appropriate) and such notice shall state the
time, place and as far as practicable the objects of the Meeting.

17. The accidental omission to give notice of a meeting to, or the non-receipt
of notice of a meeting by any person entitled to receive notice shall not
invalidate the proceedings at that meeting.

18. Members holding not less than one-tenth part in value of the shares of the
Company shall at all times have the right by requisition to the Secretary of the
Company to require a Special Meeting to be called for the action of any business
specified in such requisition. Such Meeting shall be called within two months
after such requisition.

19. A meeting of the Company shall, notwithstanding that it is called by
shorter notice than that specified in these Regulations, be deemed to have been

<PAGE>

properly called if it is so agreed by all the members entitled to attend and
vote thereat.

20.

(a) At any General Meeting of the Company one or more members present in person
and representing in person or by proxy in excess of 50% of the outstanding
voting shares of the capital stock of the Company shall form a quorum for the
action of business; if within half an hour from the time appointed for the
meeting a quorum is not present the meeting shall stand adjourned to the
following day at the same time and place or to such other day and such other
time as the Directors may determine.

(b) The Chairman may, with the consent of any meeting at which a quorum is
present (and shall if so directed by the meeting), adjourn the meeting from time
to time and from place to place, and only the business left unfinished at the
meeting from which the members present in person or represented by proxy have
adjourned shall be dealt with. It shall not be necessary to give any notice of
the adjourned meeting or of the business to be acted at the adjourned meeting;
save and except for a meeting adjourned sine die, when notice of the adjourned
meeting shall be given as in the case of an original meeting.

21.

(a) Subject to any rights or restrictions lawfully attached to any class of
shares, at any General Meetings of the Company, each registered Member shall be
entitled to one vote for each share held by him and such vote may be given in
person or by proxy.

(b) At any General Meeting of the Company, any question proposed for the
consideration of the Members shall be decided on a simple majority of the votes
of such Members and such majority shall be ascertained in accordance with the
provisions of these regulations.

(c) At any General Meeting of the Company a declaration by the Chairman that a
question proposed for consideration has, on a show of hands, been carried, or
carried unanimously or by a particular majority or lost and an entry to that
effect in a book containing the Minutes of the proceedings of the Company shall,
subject to the provisions of subparagraph (4), be conclusive evidence of that
fact without proof of the number or proportion of the votes recorded in favor of
or against such question.

(d) Notwithstanding the provisions of subparagraph (3), at any General Meeting
of the Company, it shall be lawful, in respect of any question proposed for the
consideration of the Members (whether before or on the declaration of the result
of a show of hands as provided for in subparagraph (3)), for a poll to be
demanded by any of the following persons:

(i) the Chairman of such Meeting; or

(ii) at least three Members present in person or represented by proxy; or

(iii)any Member or Members present in person or represented by proxy and holding
between them not less than one-tenth of the total voting rights of all the
members having the right to vote at such Meetings.

(e) Where, in accordance with the provisions of subparagraph (4), a poll is
demanded, and subject to any rights or restrictions for the time being lawfully

<PAGE>

attached to any claim of shares, every Member present in person at such Meeting
shall have one vote for each share of which he is the holder or for which he
holds a proxy and such vote shall be counted in such manner as the Chairman may
direct and the result of such poll shall be deemed to be the resolution of the
Meeting at which the poll was demanded and shall replace any previous resolution
upon the same matter which has been the subject of a show of hands.

(f) A poll demanded, in accordance with the provisions of subparagraph (4), for
the purpose of electing a Chairman or on a question of adjournment shall be
taken forthwith and a poll demanded on any other question shall be taken at such
Meeting as the Chairman may direct.

22. When a vote is taken by ballot, each Member entitled to vote shall be
furnished with a ballot paper on which he shall record his vote in such manner
as shall be determined at the Meeting having regard to the nature of the
question on which the vote is taken; and each ballot paper shall be signed or
initialed or otherwise marked so as to identify the voter. At the conclusion of
the ballot the ballot paper shall be examined by the Chairman with assistance of
a Member appointed for the purpose, and the result of the ballot shall be
declared by the Chairman.

23. An instrument appointing a proxy shall be in writing under the hand of the
Member or his attorney duly authorized in writing or, if the Member is a
corporation either under seal or under the hand of an officer or attorney of the
corporation duly authorized, and shall be in such shall be in such form or as is
approved by the Directors.

24. Any corporation which is a Member of the Company may by resolution of its
Directors authorize such person as it thinks fit to act as its representative at
any Meeting of the Members of the Company and the person so authorized shall be
entitled to exercise the same powers on behalf of the corporation which he
represents as that corporation could exercise if it were an individual Member of
the Company.

Minutes

25. The Directors shall cause Minutes to be duly entered in books provided
for the purpose -

(a) of all elections and appointments of Officers;

(b) of the names of the Directors or their Alternates present at each
Meeting of the Directors and any Committee of the Directors;

(c) of all resolutions and proceedings of each General Meeting of the Members,
Meetings of the Directors and Meetings of Committees of the Directors, provided
that any minutes of such Meetings, if purporting to be signed by the Chairman
thereof or by the Chairman of the next succeeding Meeting, shall be sufficient
evidence of the proceedings without any further proof of the facts therein
stated, and further provided that when all the Members in person or by proxy
sign the Minutes of an ordinary or extraordinary general meeting, and when a
majority of the Directors sign the minutes of a meeting of the Directors, the
same shall be deemed to have been duly held, notwithstanding the Members or
Directors have not actually come together or that there may have been technical
defects in the proceedings, and a resolution in writing in one or more parts
signed by all the Members or a majority of the Directors shall be as valid and
effectual as if it had been passed at a meeting duly called and constituted.

<PAGE>

Directors

26. The business of the Company shall be managed and conducted by a Board of
Directors consisting of not less than one and such number in excess thereof as
the members may from time determine who shall hold office until their successors
are elected or appointed and any General Meeting may authorize the Board of
Directors to fill any vacancy in their numbers.

27.

(a) The First Directors of the Company shall be determined in writing by the
Subscribers to the Memorandum and Articles of Association, or a majority of
them.

(b) The Directors may appoint additional persons or bodies corporate to the
Board of Directors as they see fit.

(c) The Company may by Ordinary Resolution remove any Director before the
expiration of his period of office and may by Ordinary Resolution appoint
another person or body corporate in his place.

(d) The Directors may by Ordinary Resolution change the location of the
Registered Office of the Company.

28.

(a) A meeting of the Directors may be convened by the Secretary or by any
Director. The Secretary shall convene a Meeting of the Directors of which notice
may be given by telephone or otherwise whenever he shall be required so to do by
any Director.

(b) The members of the Board of Directors may participate in a meeting by means
of a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence m person at a meeting.

(c) The Directors may pass a resolution without holding a meeting if a consent
in writing setting out the resolution required by all of the Directors is filed
in the minutes of the proceedings of the Board. Such consent shall have the same
effect as an unanimous vote.

29. The quorum necessary for the transaction of the business of the
Directors may be fixed by the Directors, and unless so fixed shall be a
majority.

30. Any Director, or his firm, partner or company may act in a professional
capacity for the Company, and he shall be entitled to remuneration for
professional services as if he were not a Director; provided that nothing herein
contained shall authorize a Director or his firm to act as auditor of the
Company.

31. All acts done by any Meeting of the Directors or of a Committee of Directors
or by any person acting as a Director shall, notwithstanding that it be
afterwards discovered that there was some defect in the appointment of any such
Director or person acting as aforesaid, or that they or any of them were

<PAGE>

disqualified, be as valid as if every such person had been duly appointed and
was qualified to be a Director.

General Powers of Directors

32.

(a) The business of the Company shall be managed by the Directors, who may pay
all expenses incurred in promoting and incorporating the Company, and may
exercise all such powers of the Company as are not, by this Ordinance or by
these regulations required to be examined by the Company in General Meeting,
subject, nevertheless, to any of these regulations, to the provision of any
Ordinance and to any regulations made thereunder, being not inconsistent with
these regulations or provisions, as may be prescribed by the Company in General
Meeting; but no regulations made by the Company in General Meeting shall
invalidate any prior act of the Directors which would have been valid if that
regulation had not been made.

(b) The Directors may, from time to time and at any time, by power of attorney,
appoint any company, firm or person, or body of persons, whether nominated
directly or indirectly by the Directors, to be the attorney or attorneys of the
Company for such purposes and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these
regulations) and for such period and subject to such conditions as they may
think fit, and any such powers of attorney may contain such provisions for
protection and convenience of persons dealing with any such attorney as the
Directors may think fit and may also authorize any such attorney to delegate all
or any of the powers, authorities and discretions so vested in the attorney. (c)
The Directors may appoint, suspend and remove the managers, secretary, clerks,
agents and servants of the Company, and may fix their remuneration and determine
their duties, and the securities (if any) to be taken from them respectively,
and may appoint and remove the attorney and brokers of the Company.

(d) The Directors may appoint, suspend and remove the bankers for the Company,
and all signatories to the bank account(s) of the Company. The Directors may
have access to any and all records, statements and advices related to the
Company's banking activities.

33. The Directors may delegate any of their powers to a committee consisting of
two or more of the Directors, but every such committee shall conform to such
directions as the Directors shall impose on them.

Officers

34. The officers of the Company shall consist of a Secretary and such
additional officers as the Directors shall from time to time determine.

35. The Secretary and additional officers, if any, shall be appointed or
elected by the Directors and shall hold office during the pleasure of the
Directors.

36. The Secretary shall attend all Meetings of the Company and of the Directors
and shall keep correct minutes of such Meetings and enter the same in proper
books provided for the purpose. He shall perform such duties as are prescribed
by the Ordinance or these regulations, or as shall be prescribed by the
Directors. The Secretary shall receive such salary as the Directors shall from
time to time determine.

<PAGE>

37. The Directors shall exercise a general supervision over the financial
affairs of the Company, and shall be responsible for correct keeping of the
books, and for safe keeping of all moneys and securities of the Company, and
shall submit their accounts and vouchers to the auditor whenever required so to
do.

Dividends

38. The Directors may declare a dividend to be paid to the Members, in
proportion to their shares, out of the surplus or profits from the business of
the Company, and such dividend may be paid wholly or partly in specie in which
event the sanction of the Company in General Meeting shall be obtained.

39. The Directors may from time to time before declaring a dividend set aside
out of the surplus or profits of the Company such sums as they think proper as a
reserve fund to be used to meet contingencies or for equalizing dividends or for
any other special purpose.

40. The Directors are authorized and empowered to lend to any officer, Director
or Member of the Company any sum or sums of money without restriction as to
amount upon such terms and conditions as they in their absolute discretion may
determine.

Accounts and Financial Statements

41. The financial year end of the Company shall be determined by resolution of
the Directors and, failing such resolution, the financial year end shall be 31st
December.

42. As and when requested by the Members of the Company, a balance sheet made up
for the financial year containing a summary of the assets and liabilities of the
Company under convenient heads and a statement of income and expenditure for the
period requested by the Members shall be laid before the Members in General
Meeting. The preparation and review of the said balance sheet and statement of
income and expenditure shall be completed by the Registered Agent of the Company
and shall be billed to the Members directly at the hourly rates in effect at the
time of the request.

43. As and when requested by the Members of the Company, a balance sheet made up
for the financial year containing a summary of the assets and liabilities of the
Company under convenient heads and a statement of income and expenditure for the
period requested by the Members shall be laid before the Members in General
Meeting. The preparation and review of the said balance sheet and statement of
income and expenditure shall be completed by the Registered Agent of the Company
and shall be billed to the Members directly at the hourly rates in effect at the
time of the request.

Notices

44. Unless otherwise herein or by law expressly provided, a notice may be served
by the Company on any Member, either personally or by telex or cable, to his
registered address or by sending it using air mail (if appropriate) through the
post prepaid in an envelope addressed to such Member at his address as
registered in the Register of Members.

45. Any notice required to be given to the Members shall with respect to any
shares held jointly by two or more persons be given to all such persons.

<PAGE>

46. Any notice shall be deemed to have been served at the time when the same
would be delivered in the ordinary course of transmission, and in proving such
service it shall be sufficient to prove that the notice was properly addressed
and prepaid, if posted, and the time when it was posted or transmitted by telex
or to the cable company as the case may be.

Seal of the Company

47. The Seal of the Company shall not be affixed to any instrument except over
the signature of a Director and the Secretary or any two Directors or by some
person appointed by the Directors; provided that the Secretary may affix the
Seal of the Company over his signature only to any authenticated copies of these
regulations, the Memorandum of Association, the minutes of any meetings or any
other document required to be authenticated by him and to any instrument which a
Meeting of the Directors has specifically approved beforehand.

Indemnity

48. The Directors, Auditors, Secretary and other officers for the time being of
the Company and the Trustees (if any) for the time acting in relation to any of
the affairs of the Company and every of them, and every of their heirs,
executors and administrators, shall be indemnified and secured harmless out of
the assets and profits of the Company from and against all actions, costs,
charges, losses, damages and expenses which they or any of them, their or any of
their heirs, executors or administrators, shall or may incur or sustain by or by
reason of any act done, concurred in or omitted in or about the execution of
their duty, or supposed duty, in their respective offices or trusts except such
(if any) as they shall incur or sustain by or through their neglect or default
respectively and none of them shall be answerable for the acts, receipts,
neglects or defaults of the other or others of them or for joining in any
receipt for the sake of conformity, or for any bankers or other persons with
whom any monies or effects belonging to the Company shall or may be lodged or
deposited for safe custody, or for insufficiency or deficiency or of any
security upon which any monies of or belonging to the Company shall be placed or
invested, or for any other loss, misfortune or damage which may happen in the
execution of their respective offices or trusts, or in relation thereto, unless
the same shall happen by or through their own willful neglect or default
respectively.

Alteration of Regulations

49. No Regulation shall be rescinded, altered or amended, and no new Regulation
shall be made until the same has been proposed and passed at a Meeting of the
Directors and confirmed at a subsequent General Meeting of Members.

Declaration:

For the purpose of incorporating an Exempt Company under the laws of the Turks
and Caicos Islands, Avatar Corporation Limited of P.M.B. 2, Caribbean Place,
Providenciales, Turks and Caicos Islands, British West Indies hereby subscribes
their name to this Memorandum of Association on March 5, 1999 in the presence of
the undersigned.

<PAGE>

/s/ Lisa Cavender, CA,Director
For and on behalf of
Avatar Corporation Limited
P.M.B. 2, Caribbean Place
Providenciales
Turks and Caicos Islands
British West Indies

Witness:
/s/ Claudius Williams,
Blue Hills, Providenciales
Turks and Caicos Islands
British West Indies

EXHIBIT 6.1

ASSIGNMENT AGREEMENT

This agreement dated this 30th day of March 1999 between:

Ken Ng, a person
Of

1108-777 West Broadway Street
Vancouver, British Columbia,
Canada

( HEREINAFTER REFER TO AS KEN NG )

and

StarGate Entertainment Inc.
A Turks & Caicos Corporation
Of
P.M.B. 2, Caribbean Place
Provinciales
Turks $ Caicos Islands,
British West Indies

( HEREINAFTER REFER TO AS STARGATE )

WHEREAS:

Ken Ng wishes to sell all of the interest in his right, title and interest in
and to the on-line casino or on-line gambling software and all other proprietary
rights, license as set forth on Schedule 1 attached hereto.

Softec Systems Caribbean Inc., ( a subsidiary of Starnet Communications

International Inc. of 425 Carrall Street, Vancouver, B.C., Canada) the

proprietor and developer of the software has agreed to the sale as stated
herein.

StarGate agrees to acquire all of the interest in the right, title and interest
in and to the on-line casino or on-line gambling software and all other
proprietary rights, license as set forth on Schedule 1 attached hereto.

Now Witnesseth:

That StarGate shall for a consideration of the sum of $1, an employment contract

<PAGE>

for a term of one (1) year and a reimbursement of $25,000 acquire all of the
interest in the right, title and interest in and to the on-line casino or
on-line gambling software and all other proprietary rights, license as set forth
on Schedule 1 attached hereto.

That Ken Ng agrees to sell all of the interest in his right, title and interest
in and to the on-line casino or on-line gambling software and all other
proprietary rights, license as set forth on Schedule 1 attached hereto for the
consideration as stated in clause 1.

That the closing date shall be on or before the 31st day of March 1999 upon Ken
Ng receiving the payment as stated in clause 1.

That Ken Ng has received all necessary approvals for the sale of the interest
stated in Recital A, including the approval from Softec, a copy of whose
approval is attached hereto as Schedule 2.

Dated: March 30, 1999 By: /s/ Pao Yao Koo
StarGate Entertainment Inc.,
a Turks & Caicos Corporation

Dated: March 30, 1999 By:/s/ Ken Ng

Schedule 1:

- ------------

SOFTEC SYSTEMS CARIBBEAN INC.

A Subsidiary of the Starnet Communications International Inc.
NASD OTC-BB:=SNMM=

425 Carrall Street, Mezzanine Level
Vancouver, B.C. Canada U6B 6E3

SOFTWARE, LICENSE AGREEMENT

THIS AGREEMENT is entered into this 17th day of March 1999.

BETWEEN:

KEN NG, a person with offices at 1108-777 West Broadway, British Columbia, V5Z
4S7

(the Licensee)

AND

SOFTEC SYSTEMS CARIBBEAN INC. with offices at 1589 Newgate
Street, St. John's Antigua, West Indies

(Softec)

WHEREAS,

A. Softec owns rights to Internet casino software (the "Software");
B. Softec wishes to license the Software to other companies;
C. Softec wishes to provide a complete computer hardware and software
package that the Licensee may use to operate an Internet gaming site;

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D. The Licensee wishes to license the Software and make use of Softec's
computer hardware in order to operate an Internet gaming site;

NOW THEREFORE, in consideration of the premises and mutual covenants herein set
forth, the parties agree as follows:

1. GENERAL PROVISIONS

-------------------

1.1 DEFINITIONS

1.1.1 Licensed Software shall mean a licensed data processing program or micro
program consisting of a series or sequence of signals, or instructions,
statements, or fonts stored on any media in machine readable form, and any
related licensed materials such as, but not limited to, graphics, flow charts,
logic diagrams, manuals, and listing made generally available by Softec for use
in connection with the licensed programs. The Licensed Software shall consist of
not more than 2 casinos, one with an adult theme (where a license is available),
and one with a non-adult theme (collectively, the 'Casino"). The Casino shall
have various games of chance which includes, but are not limited to, blackjack,
roulette, pai gow poker, video poker and slot machine and other games as added
from time to time, based on a theme chosen by the Licensee, a sports book web
site within the gaming site, an HTML version of the sports book, and a lottery
ticket distribution web site.

1.1.2 Net Monthly Revenue shall mean, for any given calendar month, the total
amount wagered in the casino, horse track and the sports book, less winnings by
the players in the Casino, horse track and the sports book, PLUS, total sales of
lottery tickets, less the invoiced cost for purchasing lottery tickets for the
lottery ticket sales, PLUS, any membership fees or additional fees that may be
charged by the Licensee that are not related to currency conversion or
transaction processing.

1.1.3 Hardware shall mean all the necessary computers, routers, cabling,
monitors, hard drives, back-up systems, and other equipment, as determined by
Softec in its absolute discretion, located at its offices in St. John's Antigua,
or other locations designated by Softec as may be required in order to properly
store, distribute and run the Licensed Software.

1.1.4 Games shall mean the casino style games, sports book, lottery, and
pari-mutuel games that are played using the Licensed Software and are available
from time to time.

1.1.5 Downloadable Software" shall mean the portion of the Licensed Software
that must be resident on a customer's computer in order for the customer to
access and play the Games.

1.1.6 Master CD shall mean the compact disc containing the Downloadable Software
that may be used to mass produce compact discs for delivery to the Licensee's
customers.

1.1.7 Customer Information" shall mean all data collected and stored on
customers including, without limiting the generality of the foregoing, name,
address, phone and fax number, e-mail address, credit card numbers and
expiration dates or information on other types of payments, amounts wagered and
frequency of wagering.

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1.1.8 "Confidential Information' shall mean material in the possession of Softec
which is not generally available to or used by others or the utility or value of
which is not generally known or recognized as standard practice, including,
without limitation, all financial business and personal data relating to
Softec's clients, any non-public information about affiliates, subsidiaries,
consultants and employees of Softec or its affiliates, business and marketing
plans, strategies and methods, studies, charts, plans, tables and compilations
of business industrial information, computer software and computer technology
whether patentable, copyrightable or not, which is acquired or developed by or
on behalf of Softec or its affiliates from time to time.

1.2 Right to Audit

1.2.1 The Licensee shall, within reason, have the right, without prior notice to
Softec to inspect and audit all Softec's business, accounting and supporting
records which are necessary for purposes of determining Softec's compliance with
the terms of Agreement. Softec shall fully co-operate with any independent
chartered accountants or certified public accountants hired by the Licensee to
conduct any such inspection or audit. If any such inspection or audit discloses
an under statement of less than 3% for any period, Softec shall pay, within ten
days after receipt of the inspection or audit report, the sums due on account of
such understatement with interest calculated at U.S. prime plus one percent.
Further, if such inspection or audit is made necessary by failure of Softec to
furnish invoice reports or any other documentation as herein required, or if an
understatement for any period is determined by such inspection or audit to be 3%
or greater, Softec shall, on demand and in any event within the said ten days,
in addition to paying the sums due on account of such understatement, also
reimburse for the cost of such inspection or audit, including without
limitation, the charges of any independent chartered accountants or certified
public accountants retained by the Licensee in connection with such audit or
inspection and the reasonable travel expenses, room, board and compensation of
employees of the Licensee.

1.2.2 The Licensee's right to audit records shall only extend to records that
date back no more than two of Softec's fiscal years prior to the date Softec
receives notice of an impending audit.

1.3 Indemnification

1.3.1 The Licensee acknowledges and agrees that neither Softec nor any of its
members, shareholders, directors, officers, employees or representatives will be
liable to the Licensee or any of the Licensee's customers for any special,
indirect, consequential, punitive or exemplary damages, or damages for loss of
profits or savings, in connection with this Agreement, the services or the
Hardware or any other information, material or services provided by Softec to
the Licensee under Agreement. If, despite the foregoing limitations, Softec or
any of its shareholders, directors, officers, employees or representatives
should become liable to the Licensee or any other person (a 'Claimant") in
connection with this Agreement, then the maximum aggregate liability of Softec,
its members, shareholders, directors, officers, employees and representatives
for all such things and to all such parties will be limited to the lesser of the
actual amount of loss or damage suffered by the Claimant or the amount of the
Licensee's fees payable by the Licensee to Softec for the six months prior to
the loss.

1.3.2 The Licensee shall indemnify and save harmless Softec and its members,
shareholders, directors, officers, employees, agents, contractors,

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representatives, parent company, or subsidiaries (together, the 'Indemnified
Parties") from and against all damages, losses, costs and expenses (including
actual legal fees and costs), fines and liabilities incurred by or awarded
asserted or claimed against any of the Indemnified Parties by any licensing or
government agency who licenses, regulates, or otherwise governs the licensing or
use of Internet gambling in connection with the Licensee's activities under this
Agreement, including claims brought by a person using or relying upon any advice
given or publication produced and distributed by the Licensee.

1.3.3 Notwithstanding anything in this Section 1.3, if Softec is found guilty of
fraud in executing its' obligations under Agreement, the Licensee shall not be
responsible for any indemnification of the Indemnified Parties to the extent
that the fraud has caused there to be damages.

1.4 Disruptions

1.4.1 The Licensee acknowledges that from time to time, as a result of Hardware
failure, supplier failures, or acts of god, the services provided under this
Contract by Softec can be temporarily disrupted. The Licensee acknowledges and
agrees that neither Softec nor any of its members, shareholders, directors,
officers, employees or representatives will be liable to the Licensee or any of
the Licensee's customers for any special, indirect, consequential, punitive or
exemplary damages, or damages for loss of profits or savings, in connection with
these temporary disruptions. For the purpose of this section, if the services
provided under this Contract by Softec are temporarily disrupted for a period of
seven days or more, the minimum monthly fees as calculated in section 1.7.3
shall not be applied for the month in which the disruption occurs. If the
disruption spans more than one month, the fee in section 1.7.3 will be waived in
the second month.

1.4.2 The Licensee acknowledges that Softec's ability to perform its obligations
under this Agreement are subject to government licensing in whatever
jurisdiction Softec may choose to operate. Softec shall not be held liable for
any damages of any kind whatsoever that may result from changes in government
legislation or policy.

1.5 Conditions of License

This license is granted under the following conditions:

1.5.1 The Licensee acknowledges that its rights in and to the Licensed Software
may not be assigned, licensed or otherwise transferred by operation of law
without the prior written consent of Softec. Violation of this section is
grounds for immediate termination of this Agreement.

1.5.2 Copyright and other proprietary rights of Softec protect the Licensed
Software. The Licensee may be held directly responsible for acts relating to the
Licensed Software which are not authorized by Agreement.

1.5.3 All right, title and interest in and to the Licensed Software, and any
copies thereof, and all documentation, code and logic, which describes and/or
comprises the Licensed Software remains the sole property of Softec.

1.5.4 Softec shall not be responsible for failure of performance of Agreement
due to causes beyond its control, including, but not limited to, work stoppages,
fires, civil disobedience, riots, rebellions, acts of God, and similar
occurrences.

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1.5.5 The sports book 'format" shall remain standard, and will not be materially
altered from Softec's standard sports book facilities. Format shall refer to the
tabular presentation of the sports information making up the sports book look
and feel and shall not include the graphics that may be added in order to
personalize it.

1.5.6 The Licensee acknowledges that this is a non-exclusive agreement and that
Softec will license the Licensed Software to as many other parties as are
willing to enter into a licensing agreement with Softec.

1.5.7 The Licensee shall supply to Softec an irrevocable letter of credit in the
amount of $100,000 U.S. An appropriate amount of these funds shall be released
to Softec in the event the Licensee should become unable or unwilling to pay for
any legitimately invoiced amounts. This security shall only be used to remedy
non-payment of legitimate invoices, and cannot be applied by Softec to any other
alleged breaches of this Agreement. This section shall only become effective
upon the Licensee achieving in any one month Net Monthly Revenue of $1,000,000
or greater, and provided that the Licensee is not using Softec's merchant
number.

1.5.8 The Licensee shall be responsible for ensuring that they are operating the
Licensed Software in compliance with any and all applicable state, provincial,
national, and international laws.

1.5.9 The Licensee shall provide Softec with all documentation necessary to show
that the Licensee has obtained any and all necessary licenses in order to
operate an Internet casino and/or sports book in the jurisdiction in which the
Licensee chooses to operate.

1.5.10 It is the policy of Softec to prevent the use of the Licensed Software
for use as a 'money laundering" vehicle. The Licensee warrants that they will
undertake all reasonable efforts to prevent persons from using the Licensed
Software for use as a money laundering vehicle. If it is revealed that the
Licensee is purposely allowing or is willfully blind to money laundering, Softec
may terminate this agreement without notice.

1.5.11 The Licensee shall not accept wagers from persons residing in Canada and
shall implement all measures stipulated by Softec to ensure that persons
residing in Canada are not able to wager utilizing the Licensed Software.

1.6 Term and Termination

1.6.1 This Agreement shall commence and be deemed effective on the date when
fully executed (the "Effective Date"). This Agreement is in effect for a period
of one year (the 'Term') and shall be automatically renewed indefinitely with
additional one year terms unless the Licensee gives written notice of
termination of this Agreement at least 45 days prior to the end of any one year
period.

1.6.2 Softec may terminate this Agreement by giving written notice to the
Licensee at least six months prior to the end of any one year term provided,
however, Softec shall not give notice of termination in the first year of this
Agreement.

1.6.3 Softec may terminate this Agreement at any time upon five days notice if
the Licensee is more than 30 days in arrears in paying any material monthly fees
due and owing to Softec. The Licensee shall be allowed to cure the breach

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during the notice period, thus preempting Softec's ability to terminate this
Agreement in accordance with this section. The arrears contemplated in this
section must be of a material amount for this section to be used by Softec. For
the purposes of this section, material shall mean anything greater than 5% of
the previous month's fees.

1.6.4 Softec may terminate this Agreement at any time upon five days notice if
the Licensee becomes bankrupt or insolvent or ceases carrying on business for
any reason.

1.6.5 The Licensee may terminate this Agreement at any time upon five days
notice if Softec becomes bankrupt or insolvent or ceases carrying on business
for any reason.

1.6.6 The Licensee may, inter alia, terminate this Agreement at any time upon
five days notice if Softec is materially in breach of Agreement for more than 30
days. Softec shall be allowed to cure the breach during the notice period, thus
preempting the Licensee's ability to terminate this Agreement in accordance with
this section.

1.6.7 Softec may terminate this Agreement at any time upon five days notice if
Softec, or any of its principals, officers or Directors becomes the subject of
third party civil or criminal litigation as a result of the Licensee's
operations under this Agreement. The litigation contemplated herein must be
material, and found to be of a serious nature by independent legal counsel.

1.6.8 Upon termination of this Agreement, the Licensee shall immediately return
to Softec any and all of Softec's materials which Softec has a proprietary right
in that are in the Licensee's possession and/or in the possession of the
Licensee's agents, servants and employees.

1.6.9 Upon termination of this Agreement, all Customer Information shall be
given to the Licensee and Softec shall not make use of or disclose any Customer
Information to any third party.

1.6.10 Upon termination of this Agreement for any reason, any security given by
the Licensee shall be returned to the Licensee within thirty days of
termination, provided however that if there are any outstanding invoiced amounts
(as per section 1.5.7) against the Licensee, sufficient security shall be
retained in order to pay for those claims.

1.7 Remuneration

1.7.1 The Licensee shall pay to Softec a non-refundable one time fee of $75,000
U.S. for the development of the graphical front end of the gaming site and all
set-up costs. This payment shall be paid in accordance with the following
schedule:

- - $25,000 upon signing this Agreement,

- - $10,000 per month, for five consecutive months, with the first payment being
made ninety days from the acceptance of the first wager using the Licensed
Software.

(Hereinafter referred to as the "Monthly Fee")
1.7.2 The Licensee shall pay to Softec a monthly fee based on a percentage of
the Net Monthly Revenue. The fee shall be paid in accordance with Schedule A of

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Agreement. The fees shall commence when the Licensee accepts a wager utilizing
the Licensed Software.

1.7.3 Notwithstanding any amount due and owing in accordance with Schedule A of
this Agreement, the Licensee shall pay to Softec a minimum of $25,000 per month
(Hereinafter referred to as the 'Minimum Monthly Fees'). This section shall
become effective 180 days after acceptance of the first wager using the Licensed
Software, and shall form part of the Monthly Fee. For clarification, the billing
period that this section becomes effective, this section shall be effective for
the entire billing period.

1.7.4 All monthly payments shall be delivered to Softec by the 15th of each
month in payment for the previous month's activity, unless the processing is
done through Softec's merchant numbers.

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1.8 Confidentiality

1.8.1 The Licensee shall not disclose, publish, or disseminate confidential
Information to anyone other than those of its employees or others with a need to
know, and the Licensee agrees to take reasonable precautions to prevent any
unauthorized use, disclosure, publication, or dissemination of Confidential
Information. The Licensee agrees not to use Confidential Information otherwise
for its own or any third party's benefit without the prior written approval of
an authorized representative of Softec in each instance.

1.8.2 Softec shall not disclose, publish, or disseminate Customer Information to
anyone other than those of its employees with a need to know, and Softec agrees
to take reasonable precautions to prevent any unauthorized use, disclosure,
publication, or dissemination of Customer Information. Softec agrees not to use
Customer Information otherwise for its own or any third party's benefit without
the prior written approval of an authorized representative of the Licensee in
each instance.

1.8.3 All Confidential Information, and any Derivatives thereof whether created
by Softec or the Licensee, remains the property of Softec and no license or
other rights to Confidential Information is granted or implied hereby. For
purposes of Agreement, "Derivatives' shall mean: (a) for copyrightable or
copyrighted material, any translation, abridgement, revision or other form in
which an existing work may be recast, transformed or adapted; (b) for patentable
or patented material, any improvement thereon; and (c) for material which is
protected by trade secret, any new material derived from such existing trade
secret material, including new material which may be protected by copyright,
patent and/or trade secret. The Confidential Information shall not include
translations of the Licensed Software that are supplied by the Licensee.

1.8.4 Notwithstanding anything in this Section 1.8, Softec shall be allowed to
use Customer Information for the purpose of fulfilling its reporting obligations
as a public company. Softec shall also be allowed to use Customer Information in
a statistical form so long as it does not identify individuals or specific
companies.

1.8.5 The Licensee shall not disclose the contents of this Agreement to any
third party who is not bound to maintain confidentiality between the parties,
unless it is absolutely necessary for the purpose of fulfilling its reporting
obligations as a public company. The Licensee acknowledges that disclosure of
the terms of Agreement to third parties would cause considerable damage to

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Softec and its parent company, Starnet Communications International Inc. The
Licensee shall file under Section 24B-2 and argue strenuously the need to not
disclose the terms of this agreement in order to maintain the confidentiality of
the terms of this agreement.

2. OBLIGATIONS OF THE LICENSOR

2.1 Hardware

2.1.1 Softec shall supply the Hardware as defined in Agreement.

2.1.2 Softec shall maintain the Hardware and pay all costs for maintaining
and/or upgrading the Hardware.

2.1.3 Softec shall supply the office space required to house the Hardware.

2.1.4 The Hardware shall, at all times, remain the property of Softec.

2.1.5 Softec shall supply an appropriate connection to the Internet with
sufficient bandwidth to properly operate the Licensed Software. The Licensee
shall pay for all bandwidth associated only with those customers that are not
playing the Games using real money and for the downloading of the Licensed
Software via the Internet, and for any related marketing via the Internet.
Bandwidth shall be charged to the Licensee at market rates.

2.1.6 Softec shall not be required to maintain a redundant site.

2.1.7 Softec shall make all reasonable efforts to repair and correct any
problems arising under Softec's areas of responsibility that may arise from time
to time which would cause it to be unable to perform its' obligations under this
Agreement (see section 1.5.4).

2.1.8 Softec shall notify the Licensee of any problems that may arise from time
to time and shall keep the Licensee apprised of any efforts undertaken to
rectify the problem.

2.1.9 The Hardware shall be located only in places where Internet gambling may
be operated legally and where the Licensee has obtained all necessary licenses
to conduct online gaming.

2.2 The Licensed Software

2.2.1 Softec shall install the Licensed Software on the Hardware.

2.2.2 Softec shall allow all of the Licensee's customers and all persons who
seek to be licensee's customers Internet access to the Licensed Software.

2.2.3 Softec shall allow the Licensee's customers to download directly from the
server the Downloadable Software necessary for the Licensee's customer to play
the Games.

2.2.4 Softec shall supply to the Licensee a single Master CD containing the
Downloadable Software.

2.2.S Softec may from time to time, at its discretion, create additional games,
which can be added to the Licensed Software. If additional games become
available, the Licensee may request to have the addition games added to the

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Licensed Software at no additional licensing cost to the Licensee.

2.2.6 Softec may from time to time, at its discretion, translate part or all of
the Games into other languages, which can be added to the Licensed Software. If
additional languages become available, the Licensee may request to have the
additional languages added to the Licensed Software at no cost to the Licensee.
Likewise the Licensee may, at its sole discretion, translate part or all of the
Licensed Software into other languages for its own use in marketing.

2.2.7 Notwithstanding anything stated in this section 2.2, any changes requested
by the Licensee to be made to the graphics portion of the Licensed Software,
shall be charged to the Licensee at market rates, unless the change is done by
the Licensee.

2.2.8 Notwithstanding anything stated in this section 2.2, any changes made to
the 1,Aaster CD at the Licensee's request will be billed to the Licensee at
market rates, plus a $ 1 00.00 U.S. administration fee. Softec retains the right
to refuse to make the requested changes.

2.2.9 Softec hereby agrees to make a Master CD's, for each country in which the
Licensee has a specific re-seller that will require a CD for account tracking
purposes.

2.2.10 Softec shall only be required to provide the Licensed Software in the
English language only.

2.2.11 Softec will provide all upgrades of the Licensed Software that do not
require changes to the graphical interface, at no charge to the Licensee.

2.2.12 All upgrades are to be made available to the Licensee within 30 days of
the completion of testing.

2.2.13 The Licensee may operate the Casino on as many separate URL's as the
Licensee wants, with no additional licensing fee to be paid.

2.2.14 Softec warrants that the Licensed Software correctly implements
algorithms, which are in accordance with the rules and payouts, which may be
displayed on the screen at any time by the player. Pseudo-random numbers used by
the software for the purposes of choosing game outcomes and shuffling cards are
generated in an unbiased manner.

2.2.15 Notwithstanding anything in this Agreement, the Licensee shall not
operate or sub-license more than ten casinos with different names and/or
different graphics.

2.2.16 Softec shall provide additional casinos for the Licensee's sub-licensees
at a cost of $15,000 for each casino. This price shall remain fixed for a period
of six months from the date this agreement is signed. Any additional casinos
purchased after that date shall be at a price to be agreed upon by the parties.
Each sub-licensee is subject to prior approval by Softec.

2.3 Financial Transactions

2.3.1 Softec shall provide a transaction processing system that will allow the
Licensee's customers to deposit funds for use of the Games (the 'Transaction
Processing System'). The Licensee's customers will be able to deposit funds via
the Internet through the use of Visa, Master Card, or American Express credit

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cards. Other methods of payment may be made available from time to time at
Softec's discretion, at a cost to the Licensee to be agreed upon at the time.

2.3.2 Softec shall only be responsible for processing credit card debits and
credits for which the Licensee holds the appropriate merchant number accounts.

2.3.3 The Licensee shall be responsible for all aspects of collecting and paying
funds, in accordance with this Agreement.

2.3.4 The Licensee shall have no rights whatsoever in the Transaction Processing
System supplied by EFS Caribbean Inc.

2.4 Technical Support

2.4.1 Softec shall supply 24 hour technical support for the Licensee's customers
and for the Licensee.

2.4.2 Softec shall make the Technical support available via the Internet and via
toll free telephone lines.

2.4.3 Softec shall determine the number of people acting as technical support
and the number of incoming telephone lines for technical support in its absolute
discretion.

2.4.4 Technical support offered via the telephone shall be in English language
only.

2.4.5 Technical support offered via the Internet shall be in all languages in
which the Licensed Software is available.

2.5 Accounting

2.5.1 Softec shall maintain records of all transactions and wagers placed
utilizing the Licensed Software.

2.5.2 The Licensee shall pay a flat fee of $100.00 US plus all reasonable hourly
administration fees and disbursements, including printing, photocopy and
shipping costs, each time accounting information is requested. Administration
fees shall be paid out at market prices. No fees are payable for regular
accounting information provided to the Licensee for the purpose of calculating
Net Revenue.

2.5.3 Softec shall supply a complete accounting record, as defined by Softec
from time to time, of the previous month's activity relating to the Licensed
Software within ten working days of the end of each month. The accounting
records shall be delivered either by facsimile or by e-mail.

2.5.4 Softec shall provide daily interim accounting reports, as defined by
Softec from time to time. The daily interim accounting records shall be
delivered either by facsimile or by e-mail.

2.5.5 Softec shall have the right to utilize the accounting information for
statistical and reporting purposes provided specific information about the
Licensee is not disclosed.

2.5.6 Softec shall archive and maintain the accounting information for a period
of 2 fiscal years.

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2.5.7 Softec, at its discretion, may destroy any portion of the accounting
information that Softec deems to be no longer relevant.

2.5.8 The Licensee shall be given thirty days written notice prior to the
destruction of any accounting information. The Licensee may choose to archive
information about to be destroyed, at its own facilities.

2.6 Customer Data

2.6.1 Softec shall maintain a database containing the Customer Information.

2.6.2 The Customer Information shall remain the property of the Licensee.

2.6.3 Softec shall provide daily interim Customer Information reports, as
defined by Softec from time to time.

2.6.4 The Licensee shall pay a fee of $ 1 00. 00 US plus all reasonable hourly
administration fees and disbursements, including printing, photocopy and
shipping costs, each time additional Customer Information is requested.
Administration fees shall be paid out at market prices.

2.6.5 Softec shall have the right to utilize the Customer Information for any
purpose that does not conflict with the Licensee's marketing of the Licensed
Software. Under no circumstances shall Softec utilize the Customer Information
in the marketing of any gaming site being operated by a subsidiary of Starnet
Communications International Inc., Softec's parent company, or for any of
Softec's other licensees.

2.6.6 Softec shall archive and maintain the Customer Information for a period
of two years.

2.6.7 Softec, in its discretion, may destroy any portion of the Customer
Information that Softec deems to be no longer relevant.

2.6.8 The Licensee shall be given thirty days written notice prior to the
destruction of any Customer Information. The Licensee may choose to archive
information about to be destroyed, at its own facilities.

2.7 The Games

2.7.1 The lottery tickets and play options available in the lottery web site
shall be determined from time to time by Softec in its sole discretion.

2.7.2 Softec shall determine the odds for the casino from time to time, and
notify the Licensee of these odds. The Licensee shall be responsible for setting
the odds for the sportsbook and the HTML sportsbook, from time to time, in its
sole discretion.

2.7.3 The Licensee shall determine the betting limits for both the casino
sportsbook and the HTML sportsbook, from time to time, in its sole discretion.
The Licensee may choose zero as a betting limit.

2.7.4 The Licensee, in its sole discretion, shall determine the betting limits
for the Games. The Licensee may choose zero as a betting limit.

2.7.5 Softec shall determine the games available in the casino and both versions
of the sportsbook, from time to time, in its sole discretion, but shall

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provide all available games to the Licensee at no additional cost, provided the
Licensee does not request graphical changes.

2.7.6 Softec shall determine the lottery tickets available in the casino as well
as the forms of play, from time to time, in its sole discretion.

2.7.7 Softec shall only supply the Games that the Licensee has appropriate
licenses to operate.

3. OBLIGATIONS OF THE LICENSEE

3.1 Licenses

3.1.1 The Licensee shall be responsible for obtaining and maintaining all
necessary licenses for the operation of an Internet Casino and an Internet
Sportsbook operation, or whichever the Licensee intends to operate, in a
location where Softec maintains Hardware.

3.1.2 Softec shall recommend a lawyer in Antigua that can assist the Licensee in
obtaining, an Internet casino license as required by the Antigua Free Trade
Zone.

3.2 Merchant Numbers

3.2.1 The Licensee shall be responsible for obtaining and maintaining
appropriate merchant numbers for the processing of Visa, Master Card American
Express credit cards and any other credit card the Licensee may obtain merchant
numbers for (the 'Merchant Numbers').

3.2.2 Notwithstanding that from time to time, Softec may make merchant numbers
available to the Licensee through another subsidiary of Starnet Communications
International Inc. ('SCII"), neither Softec nor SCII, nor any other subsidiary
of SCII shall be responsible for maintaining or continuing to provide merchant
numbers.

3.3 Marketing

3.3.1 The Licensee shall be responsible for all marketing of the services
offered through the Licensed Software.

3.3.2 The Licensee shall spend on a monthly basis, a minimum of 15% of the
previous month's Net Revenue on marketing, promoting and re-selling the
Licensee's gaming site.

3.3.3 Softec is not responsible for tracking or maintaining any records or data
with respect to marketing. The Licensee shall be allowed access to the Hardware
for the purpose of tracking and maintaining marketing data.

3.3.4 The Licensee shall be responsible for all aspects of customer service,
including, but not limited to dealing with customer complaints and paying out
winnings.

3.4 Distribution of Software

3.4.1 The Licensee shall be responsible for the production and distribution of
compact discs containing the Downloadable Software.

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3.4.2 The Licensee shall not alter the Licensed Software as supplied on the
Master CD in any way.

3.4.3 The Licensee shall ensure that the packaging for the Licensed Software,
the entry web page for the casino and sportsbook, as well on any compact disks
containing the Licensed Software, shall display all proprietary rights symbols
such as Copyright and Trademark, as supplied by Soft6c (the 'Symbols'). The
Symbols shall be of the exact same size and font as supplied by Softec.

3.5 Regulatory Issues

3.5.1 The Licensee shall be solely responsible for determining which
jurisdictions they choose to market to and receive wagers from.

3.5.2 The Licensee shall be responsible for determining the legality of
accepting wagers in whichever jurisdictions they choose to market to and receive
wagers from.

3.5.3 The Licensee shall indemnify Softec for any reasonable legal costs, and
fines that arise as a result of the Licensee choosing to accept wagers from any
jurisdiction that determines or has determined that Internet wagering is
illegal.

3.6 The Web Site

3.6.1 The Licensee shall construct and maintain the entire web site(s) where the
Downloadable Software is to be made available to the Licensee's customers (the
'Web Sites").

3.6.2 The Licensee shall pay for any and all Uniform Resource Locators ("URL's")
that the Licensee deems necessary to properly market the Licensed Software.

3.6.3 The Licensee shall ensure that the Web Sites shall display a statement
that the software is licensed, as well as all proprietary rights symbols such as
Copyright and Trademark, as supplied by Softec (the 'Symbols'). The Symbols
shall be of the exact same size and font as supplied by Softec.

3.6.4 The Licensee shall have the right to add as many URL's that are dedicated
solely to the promotion of the Licensee's gaming site as the Licensee deems
necessary.

3.6.5 The Licensee shall have the right to make any changes to the Web Sites the
Licensee feels appropriate. All changes that are effected by Softec will be
charged to the Licensee at market rates.

3.6.6 If requested, Softec shall construct and maintain any and all additional
web sites the Licensee deems necessary for the marketing of the Licensed
Software. All work done to build additional web sites shall be charged to the
Licensee at market rates.

3.6.7 Softec shall not in any way be responsible for the design of the Web Sites
utilized by the Licensee.

3.6.8 The Licensee shall include in their Terms and Conditions of Play for the
Licensed Software the Terms and Conditions that are recommended by Softec. The
Licensee may embellish or add to these Terms and Conditions. If the Licensee
does not implement the minimum required Terms and Conditions, in so far as the

<PAGE>

Terms and Conditions would have protected the Licensee, Softec shall not be
responsible to the Licensee, notwithstanding anything in this Agreement.

3.6.9 To enhance the credibility of your gaming operation, each licensee is
required to utilize the Softec intermercial provided and designed by Softec, and
display the Softec Seal of Approval icon on the website's homepage.

4. STANDARD CLAUSES

4.1 Notices

Unless otherwise provided in Agreement, any notice provided for under Agreement
shall be in writing and shall be sufficiently given if delivered personally, or
if transmitted by facsimile with an original signed copy delivered personally
within twenty-four hours thereafter, or mailed by prepaid registered post
addressed to Softec at their respective addresses set forth below or at such
other than current address as is specified by notice.

To Softec:
Newgate Street
P.O. Box 1589
St.John's, Antigua
West Indies

Attention: Chris Zacharias
Fax: (268) 480-1656

To the Licensee:
C/O Clare Roberts
Roberts & Co.
St. John's, Antigua
West Indies

4.2 Entire Agreement and Schedules

The parties agree that Agreement and its Schedule, if any, constitute the
complete and exclusive statement of the terms and conditions between the
Licensee and Softec covering the performance hereof and cannot be altered,
amended or modified except in writing executed by an authorized representative
of each party. The Licensee further agrees that any terms and conditions of any
purchaser order or other instrument issued by the Licensee in connection with
Agreement which are in addition or inconsistent with the terms and conditions of
Agreement shall not be binding on Softec and shall not apply to Agreement.

4.3 Governing Law and Arbitration

Any dispute in connection with Agreement shall be settled by arbitration in
accordance with any Arbitration Act agreed upon between the parties; provided,
however, should any dispute arise under Agreement, the parties shall endeavor to
settle such dispute amicably between themselves. In the event that the parties
fail to agree upon an amicable solution, such dispute shall be finally
determined by arbitration as aforesaid.

4.4 Good Faith

The parties acknowledge to one another that each respectively intends to perform
its obligations as specified in Agreement in good faith.

<PAGE>

4.5 Parties to Act Reasonably

The parties agree to act reasonably in exercising any discretion, judgment,
approval or extension of time that may be required to effect the purpose and
intent of Agreement. Whenever the approval or consent of a party is required
under Agreement, such consent shall not be unreasonably withheld or delayed.

4.6 Governing Law

This agreement and all Schedules shall be governed by and construed in
accordance with the laws of the Country of Antigua, and the Licensee hereby
attorns to the jurisdiction of the courts of Antigua notwithstanding any other
provision expressed or implied in either the agreement or the Schedules.

4.7 Time to be of the Essence

Time is of the essence.

4.8 Number and Gender

In this Agreement the use of the singular number includes the plural and vice
versa the use of any gender includes all genders, and the word 'person' includes
an individual, a trust, a partnership, a body corporate and politic, an
association and any other incorporated or unincorporated organization or entity.

4.9 Captions

Captions or descriptive words at the commencement of the various sections are
inserted only for convenience and are in no way to be construed as a part of
Agreement or as a limitation upon the scope of the particular section to which
they refer.

4.10 Non-Assignability

This Agreement is personal to the Licensee, except as provided in S.4.11, and
the Licensee may not assign or transfer any of its rights or obligations under
Agreement without the prior written consent or Softec.

4.11 Benefit

This Agreement shall enure to the benefit of and be binding upon the Licensee,
its successors and assigns. The Licensee may delegate the performance of any of
its obligations hereunder to any corporation which controls, is controlled by or
is under common control with the Licensee.

4.12 Waiver

No condoning, excusing or waiver by any party hereto of any default, breach of
non-observance by any other party hereto, at any time or times with respect to
any covenants or conditions herein contained, shall operate as a waiver of that
party's rights hereunder with respect to any continuing or subsequent default,
breach or nonobservance, and no waiver shall be inferred from or implied by any
failure to exercise any rights by the party having those rights.

4.13 Further Assurance

Each of the parties hereto hereby covenants and agrees to execute such further

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and other documents and instruments and to do such further and other things as
may be necessary to implement and carry out the intent of Agreement.

4.14Cumulative Rights

All rights and remedies of Softec are cumulative and are in addition to and
shall not be deemed to exclude any other rights or remedies allowed by law
except as specifically limited hereby. All rights and remedies may be exercised
concurrently.

4.15 Prior Agreements

Except as specifically provided for herein, this Agreement, including its
Schedules, contains all of the terms agreed upon by the parties with respect to
the subject matter herein and supersedes all prior agreements, arrangements and
understandings with respect thereto, whether oral or written.

4.16 Severability

If any part of Agreement is unenforceable because of any rule of law or public
policy, such unenforceable provision shall be severed from Agreement, and this
severance shall not affect the remainder of Agreement.

4.17 No Partnership

Notwithstanding anything in this Agreement, no part of this Agreement, nor the
Agreement as a whole shall be construed as creating a partnership or agency
relationship between the parties. If any part of this Agreement should become
construed as forming a partnership or agency relationship, that part shall be
amended such that no partnership or agency relationship is created, but, that
part achieves what it was originally intended to achieve.

4.18 Dollar Amounts

All references to money or specific dollar amounts in this Agreement are in
United States Dollars.

4.19 Interpretation

In the interpretation of this Agreement or any provision hereof, no inference
shall be drawn in favor of or against any party by virtue of the fact that one
party or its agents may have drafted this Agreement or such provision.
Notwithstanding the above, if there is any uncertainty in the interpretation of
this Agreement, the uncertainty shall be interpreted in Softec's favor.

IN WITNESS WHEREOF the parties have executed Agreement on the date first
written.

Softec Systems Caribbean Inc.

By:/s/ Christopher H. Zacharias By:/s/ J.A. Carles
Title: In House Counsel Title: Chief Financial Officer

The Licensee:

By: /s/ Ken Ng

<PAGE>

SCHEDULE A

-----------

The Licensee agrees to pay Softec monthly fees according to the following:

<S> <C>
THE LICENSEE'S NET MONTHLY FEE PAYABLE Revenue
(U.S. Dollars)

- - -------------------------------------- --------------

Greater than $0.00 but less than or = to $300,000 25%

Greater than $300,000 but less than or = to $1,000,000 20%

Greater than $1,000,000 but less than or = to $5,000,000 15%

Greater than $5,000,0OO 12.5%

The above table should be read with the following understanding: If the licensee
has Net Monthly Revenue of $550,000, the fee payable is calculated as follows:

</TABLE>
<TABLE>
<CAPTION>

<S> <C>
25% on the first $300,000 $ 75,000
20% on the next $250,000 $ 50,000
--------
For a total fee payable $125,000
</TABLE>

SCHEDULE OF MARKET RATES

---------------------------

The Market rates as set out in this schedule and referred to in this Agreement
are subject to change without notice to the Licensee.

<S> <C>
Video editing: $100.00 per hour
Graphic design: $ 75.00 per hour
Programming $150.00 per hour
Quality Assurance and testing: $40.00 per hour

</TABLE>

Schedule of Merchant Number Terms

--------------------------------------------

Monthly processing limit: $100,000
Merchant discount: 5.50%

Rolling reserve: 5% for 180 days if chargebacks are less than 5%
25% if chargebacks exceed 5% - but will be subject to review
Transaction fee: $1.60 per transaction applied to both debit and credit
Transactions

<PAGE>

Fraud Screen fee: $.60 per transaction applied to all sales transactions
regardless of response (accept of reject). This system is essential to
keep the chargeback ratio down.
Settlement: 30 days following the month end (e.g., All September
transactions will be settled by October 30).
Chargeback: $25 per chargeback transaction
Payout processing fee is $5.00 per bank draft

Softec makes no guarantee as to the availability of the merchant numbers
contemplated in this Schedule. Please refer to Section 3.2.2 of this Agreement
for clarification.

Schedule 2

- ------------ STARGATE ENTERTAINMENT, INC.

A Turks and Caicos Corporation

Directors Resolution

The following being all of the directors of StarGate Entertainment, Inc. (the
Company) do hereby as of this 30th day of March 1999, resolve the following:

1) That the Company has agreed to acquire all of the interest in the right,
title and interest in and to the on-line casino or on-line gambling software and
all other proprietary rights, license as set forth in the Assignment Agreement
by Ken Ng, attached hereto.

2) That the Company hereby be approved to incorporate a wholly-owned subsidiary
in Antigua known as Star Ventures Inc. and that the any one or all of the same
directors be appointed of StarGate hereinafter be appointed the directors of
Star Ventures, Inc.

3) That Ken Ng, a director of StarGate Entertainment Inc. hereby abstained
from voting on the acquisition.

4) That StarGate hereby resolves to assign all of its right, title and interest
in and to the on-line casino or on-line gambling software and all other
proprietary rights and licenses, as set forth in the attached Assignment
Agreement by Ken Ng to Star Ventures Inc.

5) That all of the other directors of StarGate hereby acknowledge that this
transaction or acquisition is carried out in the best interest of the Company.

6) The above is agreed and resolved to by all of the directors.

/s/ Pao Yao Koo /s/ Terry Bahar /s/ Ken Ng (Abstained from Vote)

Exhibit 99

- ----------

CONSENT OF SOFTEC SYSTEMS CARIBBEAN INC.

=======================================

SOFTEC Systems Caribbean, Inc., a subsidiary of Starnet Communications
International, Inc. hereby consents to the assignment and transfer of Ken Ng's
Interest in and to the Software License Agreement between Softec and Ken Ng,
entered into on March 17, 1999, to StarGate Entertainment, Inc., a Turks &
Caicos corporation.

<PAGE>

Softec Systems Caribbean, Inc.
/s/ Christopher H. Zacharias, In House Counsel

<PAGE>