SUNHAWK COM CORP, SB-2, 1999-06-17

SUNHAWK COM CORP
SB-2, 1999-06-17

Previous: DLJ COMMERCIAL MORT COMM PASS THR CER SER 1999-CG2, 424B5, 1999-06-17

Next: FORESTER FUNDS INC, N-8A, 1999-06-17

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 17, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

SUNHAWK.COM CORPORATION
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

<TABLE>
<S> <C> <C>
WASHINGTON 2741 91-156830
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

223 TAYLOR AVENUE NORTH, SUITE 200
SEATTLE, WASHINGTON 98109
(206) 728-6063
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PRINCIPAL PLACE
OF BUSINESS)

MARLIN ELLER
CHIEF EXECUTIVE OFFICER AND PRESIDENT
SUNHAWK.COM CORPORATION
223 TAYLOR AVENUE NORTH, SUITE 200
SEATTLE, WASHINGTON 98109
(206) 728-6063
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

COPIES OF ALL COMMUNICATIONS TO BE SENT TO:

<TABLE>
<S> <C>
THE OTTO LAW GROUP, PLLC KELLEY DRYE & WARREN LLP
DAVID M. OTTO, ESQ. M. RIDGWAY BARKER, ESQ.
4553 52ND AVENUE NE TWO STAMFORD PLAZA
SEATTLE, WASHINGTON 98105 281 TRESSER BOULEVARD
(206) 985-1820 STAMFORD, CONNECTICUT 06901
(203) 351-8032
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- -----------

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- -----------

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- -----------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
BE REGISTERED REGISTERED SHARE(1) PRICE(2) (2)
- -------------------------------------------------------------------------------------------------------------------------
Common Stock, no par value........... 1,380,000 shares $8.00 $11,040,000 $3,070
- -------------------------------------------------------------------------------------------------------------------------
Representative's warrants to purchase
shares of Common Stock, no par
value(3)........................... 120,000 shares $0.001 $ 120 None(4)
- -------------------------------------------------------------------------------------------------------------------------
Common Stock, no par value, issuable
upon exercise of Representative's
warrants........................... 120,000 shares $9.60 $ 1,152,000 $ 321
- -------------------------------------------------------------------------------------------------------------------------
Total................................ $3,391
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Bona fide estimate for computation of the registration fee pursuant to Rule
457(a) under the Securities Act.
(2) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o) under the Securities Act.
(3) Represents warrants to be issued to the Representative. Pursuant to Rule 416
under the Securities Act, there are also being registered hereby such
additional indeterminate number of shares of common stock as may become
issuable by reason of the anti-dilution provisions set forth in the
Representative's warrants.
(4) None pursuant to Rule 457(g) under the Securities Act.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

The information in this prospectus is not complete and may be changed.
Underwriters may not confirm sales of these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.

SUBJECT TO COMPLETION, DATED JUNE 17, 1999

PROSPECTUS

1,200,000 Shares
LOGO

Common Stock

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

This is an initial public offering of 1,200,000 shares of common stock of
Sunhawk.com Corporation.

No public market currently exists for our shares.

We will apply for quotation of the common stock on the Nasdaq SmallCap(R)
Market under the symbol "SNHK," and listing on the Pacific Stock Exchange under
the symbol "SNH."

It is expected that the initial public offering price will be between $7.00
and $8.00 per share.

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF FACTORS THAT YOU
SHOULD CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.

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

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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

<TABLE>
<CAPTION>
PER SHARE TOTAL
---------- ----------
<S> <C> <C>
Public offering price....................................... $ $
Underwriting discounts and commissions...................... $ $
Proceeds, before expenses, to Sunhawk.com................... $ $
</TABLE>

The underwriters may, under certain circumstances, for 30 days after the
date of this prospectus purchase up to an additional 180,000 shares of common
stock from us at the initial public offering price less the underwriting
discount.

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

The underwriters are severally underwriting the shares being offered. The
underwriters expect to deliver the shares against payment in New York, New York
on , 1999.

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

COLEMAN AND COMPANY SECURITIES, INC.

OSCAR GRUSS & SON INCORPORATED

, 1999
<PAGE> 3
[Inside Cover Page]

Fore front: Various screens from Sunhawk.com's web site depicting different
screens and features of the Sunhawk.com web site

Background: Sheet music and sampling of sheet music covers

Text: Sunhawk.com.
Digital Print Audio
The complete solution for delivering music on-line. Sunhawk.com is a
leading digital music producer dedicated to enhancing the enjoyment of
music worldwide.

[Inside Back Cover]

Sampling of sheet music covers representing a few of the currently available
sheet music titles offered by Sunhawk.com

Text: Sunhawk.com
Your Interactive Music Store
<PAGE> 4

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding our company and the common stock being sold in this
offering and our financial statements and notes to those statements appearing
elsewhere in this prospectus. Except as otherwise indicated, all information in
this prospectus assumes that the underwriters do not exercise the option granted
by Sunhawk.com to purchase additional shares in this offering. See
"Underwriting."

Sunhawk(R), Sunhawk.com, the Sunhawk.com logo and Solero(R) are trademarks
or registered trademarks of Sunhawk.com Corporation. All other trademarks and
trade names appearing in this prospectus are the property of their respective
holders.

SUNHAWK.COM CORPORATION

We were incorporated in the State of Washington on August 20, 1992 and
intend to reincorporate in the State of Delaware prior to the closing of this
offering. See "Description of Securities." Our principal executive offices are
located at 223 Taylor Avenue North, Suite 200, Seattle, Washington 98109, and
our telephone and fax numbers are (206) 728-6063 and (206) 728-6416,
respectively. Our e-mail address is [email protected], and our web site
address is www.sunhawk.com. Information accessed on or through our web site does
not constitute a part of this prospectus.

We are a leading provider of digital sheet music over the Internet. We have
proprietary technology that allows customers to download encrypted sheet music
files over the Internet in a playable, interactive digital format (the "Solero
format") which can then be viewed, played, stored on and printed from IBM and
compatible personal computers ("PCs"). Our patented electronic commerce
("e-commerce") and other proprietary technologies provide music publishers with
greater control over the distribution of their digital sheet music by enabling
us to limit the unauthorized redistribution of this digital sheet music and
efficiently monitor and report the royalties due upon purchases by customers. We
also process and fulfill orders over the Internet for traditional printed sheet
music from our online catalog.

We currently have contracts with Warner Bros. Publications U.S., Inc.
("Warner"), which owns 7.1% of our common stock prior to this offering, and EMI
Christian Music Publishing ("EMIC"), a subsidiary of EMI Music Publishing. These
contracts provide us with the right to sell and distribute digital editions of
selected musical compositions from Warner's and EMIC's catalogs. We are
continuing to convert music from the Warner and EMIC catalogs into our Solero
format and are selling this digital sheet music, in addition to other song
titles, on our Internet retail site at www.sunhawk.com. Our digital sheet music
is also sold through referrals from Warner's web site and EMIC's web site, as
well as through our associates program, in which web site owners receive sales-
based referral fees when they link customers to us from their web sites. We have
both domestic in-house and overseas third-party production capabilities that
complete the conversion of the printed sheet music into digital format in
preparation for distribution and sale over the Internet. As of May 24, 1999, we
had approximately 20,000 pages of digital sheet music, representing
approximately 4,500 song titles, archived and available for distribution and
sale.

We also compress digitally recorded music files utilizing MPEG-1 Audio
Layer-3 ("MP3") technology, encrypt these recorded music files and sell the
recorded music in our proprietary Sunhawk audio format ("Sunhawk Audio") over
the Internet. When Sunhawk Audio files are delivered and downloaded, they can
only be played using our proprietary Solero viewer ("Solero Viewer") and, by
virtue of our encryption technology, can be accessed only by the purchasing
customer. This enables us to securely distribute digitally recorded music over
the Internet and provide the owner of the music with royalty payments and better
control over the distribution of their recorded music. While we presently have a
limited number of recorded music files in Sunhawk Audio format, we expect to
expand the number of recorded music files and song titles available for
3
<PAGE> 5

distribution by broadening our existing strategic alliances with Warner and
EMIC, developing alliances with record companies and other music publishers, and
securing the rights to distribute the recorded music complement of the Solero
digital sheet music we sell.

Internet use worldwide has grown dramatically since the end of 1989 when
there were approximately 1.1 million Internet users, according to the Internet
Industry Almanac. This source projects the number of Internet users at year-end
2000 to be approximately 330 million. As the number of Internet users grows, so
too do the opportunities for e-commerce.

Music is one of the oldest and most popular forms of entertainment and
constitutes a multi-billion dollar consumer industry. According to a 1998
industry report by The Music Trades, the worldwide music products industry was
estimated to be $15 billion in 1997. According to a 1999 report by The Music
Trades, U.S. businesses accounted for approximately $6.3 billion in total music
products sales in 1997, of which print music ranked fifth in all product
categories with retail value revenues of $433.5 million. However, the fragmented
nature of print music retail distribution and certain other inefficiencies
inherent in print music production and distribution present numerous challenges
to traditional print music retailers.

By leveraging the growth of the Internet and the shop-at-home convenience
of e-commerce with our proprietary technology, we offer customers and other
retailers worldwide an alternative to the traditional printed sheet music
distribution channel, featuring a larger selection of song titles than
previously available in most traditional retail music stores.

Our management team is led by Mr. Marlin Eller, our Chairman of the Board,
Chief Executive Officer and President, who spent 13 years at Microsoft
Corporation where, among other things, he led the development of the graphics
subsystem of Windows 1.0. Additionally, the Eller and McConney 1995 Family
Living Trust, of which Mr. Eller is a co-trustee, has invested total
consideration of approximately $6.1 million in Sunhawk.com since our inception.
Other members of our management team have held senior positions at such
organizations as KPMG Peat Marwick, LLP and the U.S. National Academy of
Sciences. Finally, our board of directors includes members such as Mr. Luis F.
Talavera, a former Director of Research and Development at Microsoft
Corporation, and Mr. Fred Anton, currently the President and Chief Operating
Officer of Warner.

Our goal is to be the leading provider of digital sheet music and related
products over the Internet. To achieve this goal, we will need to continue to
expand our catalog of music titles available to customers, leverage current
technology to extend the breadth of our product offerings and capitalize on
cross-selling opportunities. Another key element of our strategy is to increase
interest in and traffic to our web site through various Internet marketing
techniques and the use of one-to-one customer relationship marketing. We will
also continue to employ traditional advertising methods to strengthen and
increase recognition of the Sunhawk and Solero brand names, including the
distribution of CD-ROMs and enhanced audio compact discs ("CDs") containing our
Solero Viewer for installation by prospective customers. Finally, we intend to
establish and leverage relationships with educational institutions and
traditional retailers of music-related products to both generate sales and
increase our exposure to our target market.
4
<PAGE> 6

THE OFFERING

<TABLE>
<S> <C>
Common stock offered by us............... 1,200,000 shares
Common stock to be outstanding after this
offering............................... 3,140,851 shares
Over-allotment option.................... 180,000 shares
Use of proceeds.......................... We anticipate that the net proceeds from this offering will
be used for:
- sales and marketing activities;
- acquiring rights to digitize and sell additional music in
the Solero music format and in the Sunhawk Audio format
as well as the audio complement to the digital sheet
music we sell;
- increasing our production of Solero digital sheet music
and of Sunhawk Audio files as well as the audio
complement to the digital sheet music we sell;
- working capital to finance, among other things, the
hiring of additional management and other personnel and
other general corporate purposes;
- one-time payment to Eller McConney LLC in connection with
the assignment of Eller McConney LLC's right to receive
for ten years, at no additional cost to us, production
services for digital sheet music from a new independent
Russian production company;
- upgrading and acquiring computer hardware and software;
and
- upgrading existing facilities (including leasehold
improvements).
Proposed Nasdaq SmallCap(R) Market
Symbol................................. "SNHK"
Proposed Pacific Stock Exchange Symbol... "SNH"
</TABLE>

5
<PAGE> 7

SUMMARY FINANCIAL INFORMATION

The following table summarizes the financial data of our business. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS
ENDED SEPTEMBER 30, ENDED MARCH 31,
------------------------- ------------------------
1997 1998 1998 1999
----------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales................................... $ 15,066 $ 27,263 $ 14,372 $ 45,389
Gross profit............................ 10,052 4,746 7,731 8,466
Loss from operations.................... (844,406) (1,349,125) (592,579) (1,120,700)
Net loss................................ (910,983) (1,475,579) (649,623) (1,234,628)
Net loss per share --
basic and diluted..................... $ (0.78) $ (1.19) $ (0.53) $ (0.97)
Weighted average common shares for net
loss per share computations -- basic
and diluted........................... 1,173,402 1,239,790 1,233,607 1,270,879
</TABLE>

The following table provides a summary of our balance sheet as of March 31,
1999. The as adjusted column reflects the sale of 1,200,000 shares of common
stock in this offering at an assumed initial public offering price of $7.50 per
share after deducting the estimated underwriting discounts and commissions and
estimated offering expenses payable by us. See "Capitalization."

<TABLE>
<CAPTION>
AT MARCH 31, 1999
------------------------
ACTUAL AS ADJUSTED
---------- -----------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $1,377,429 $ 8,587,429
Total assets................................................ 3,635,779 10,845,779
Total shareholders' equity.................................. 3,344,994 10,554,994
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS
ENDED ENDED
SEPTEMBER 30, MARCH 31,
------------- ------------- TOTALS AS OF
1997 1998 1998 1999 MARCH 31, 1999
----- ----- ----- ----- --------------
<S> <C> <C> <C> <C> <C>
SUMMARY OPERATING DATA:
Solero song titles published.................... 411 1,420 749 1,816 3,647
Solero pages published.......................... 1,898 5,088 2,443 8,981 15,967
Total online digital products sold.............. 124 3,387 843 6,687 10,198
</TABLE>

6
<PAGE> 8

RISK FACTORS

You should carefully consider the risks described below before making a
decision to buy our common stock. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may also impair our
business operations. If any of the following risks actually occur our business
could be harmed. In that case, the trading price of our common stock could
decline, and you may lose all or part of your investment. You should also refer
to the other information set forth in this prospectus, including our financial
statements and the notes to those statements.

Certain statements throughout this prospectus are forward-looking
statements. These forward-looking statements include, but are not limited to,
statements about our plans, objectives, expectations and intentions and other
statements that are not historical facts. When we use the words "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar
expressions, we are generally identifying forward-looking statements. Because
these forward-looking statements involve risks and uncertainties, there are many
factors that could cause actual results to differ materially from those
expressed or implied by these forward-looking statements, including the factors
discussed below.

WE HAVE INCURRED LOSSES SINCE INCEPTION AND MAY INCUR FUTURE LOSSES.

To date, we have had limited revenues and have not shown a profit in our
operations. We incurred net losses of $910,983 in 1997, $1,475,579 in 1998 and
$1,234,628 for the six months ended March 31, 1999. Nonetheless, we had total
equity of $3,344,994 as of March 31, 1999. We expect to continue to devote
substantial resources to the production of Solero digital sheet music and
Sunhawk Audio files, sales and marketing activities and the acquisition of
rights to additional sheet music and recorded music. As a result, we will need
to generate significant revenues to achieve and maintain profitability. Our
business strategy may not be successful, and we cannot predict when, or if, we
will become profitable. If we achieve profitability, we may not be able to
sustain it.

WE HAVE A LIMITED OPERATING HISTORY.

We were incorporated in August 1992 but did not go online with our web site
until February 1997 and did not make our first sale online until March 1997.
Accordingly, we have a limited operating history upon which you can evaluate our
business and prospects, which makes it difficult to forecast our future
operating results. The new and evolving nature of using e-commerce for the
digital sheet music distribution business increases these uncertainties. You
must consider our business in light of the risks, uncertainties and problems
frequently encountered by companies with limited operating histories.

DIGITAL SHEET MUSIC IS AN UNPROVEN PRODUCT.

Our future success will depend on our ability to significantly increase
sales of our Solero digital sheet music over the Internet, while successfully
managing costs. If music publishers, other music content providers and consumers
do not adopt the Internet as a means of distributing digital sheet music in
general, and our technology in particular, our business would be harmed.

THERE IS NO EXISTING INDUSTRY STANDARD FOR THE DISTRIBUTION OF DIGITAL SHEET
MUSIC.

The market for digital music products is characterized by new developments
in technology and evolving industry standards. There is currently no generally
adopted industry standard, and one may never materialize, for the creation,
storage and distribution of playable, interactive digital sheet music. We cannot
assure you that our Solero format will be a successful format for the creation,
storage and distribution of playable, interactive digital sheet music, or that
it will be adopted by customers in

7
<PAGE> 9

sufficient numbers for us to be successful. Further, if another format for the
creation, storage and delivery of playable, interactive digital sheet music
emerges, we cannot assure you that it will be possible to convert Solero digital
sheet music into that alternate format.

WE DEPEND ON OUR EXISTING AND FUTURE RELATIONSHIPS WITH MUSIC PUBLISHERS AND
OTHER SHEET MUSIC PROVIDERS TO FURTHER EXPAND OUR CATALOG.

In order to expand our catalog of song titles, we must negotiate and enter
into license agreements with music publishers and other sheet music providers.
Our ability to maintain existing relationships with music publishers and record
companies is critical to the success of our business. As of May 24, 1999, a
majority of our catalog of Solero digital song titles was licensed from Warner
and EMIC. Although our agreements with Warner and EMIC are for initial terms of
ten and five years, respectively, from the date of execution, the agreements
could be terminated prior to the normal expiration of their terms in the event
of any uncured material breach. Any termination of the Warner or EMIC agreements
would decrease the availability of digital sheet music that we offer customers
and would harm our business.

In addition, our success will depend on our ability to build relationships
with additional music publishers to expand our catalog of song titles. While we
have rights to convert and distribute a number of sheet music titles, other
music publishers have a substantial number of sheet music titles to which we
will continue to solicit conversion and distribution rights. We cannot assure
you as to when those rights will be available to us, if at all, or that such
rights will be available to us on commercially reasonable terms. Our failure to
expand our catalog of digital sheet music titles may affect the growth of our
sales and could harm our business.

WE RELY ON THIRD PARTIES IN FULFILLING ORDERS FOR TRADITIONAL PRINTED SHEET
MUSIC.

Although we have accounts with several distributors, we obtain
substantially all of our traditional printed sheet music directly from an
unaffiliated third-party distributor with whom we do not have a written
agreement. There can be no assurance that if our distributor relationship was
terminated, we would be able to find an alternative, comparable supplier capable
of providing printed sheet music on terms that we would find satisfactory. To
the extent our distributor does not have sufficient capacity or is otherwise
unable to fulfill orders on a timely basis, such capacity constraints could harm
our business. We also rely on third-party carriers for traditional printed sheet
music shipments and are therefore subject to the risks, including employee
strikes and inclement weather, associated with these carriers' ability to
provide delivery services to meet our shipping needs. If we fail to adequately
address these and other order fulfillment risks, our business would be harmed.

NEW SOURCES OF PUBLISHING RIGHTS OTHER THAN THOSE WE HAVE NOW MAY COST MORE.

We may be required to pay substantial royalty advances or be required to
make payments to acquire additional music conversion and distribution rights
from new sources in the future. We cannot assure you that we will be able to
recoup advances or payments, if any, that may be payable for such rights. Our
failure to make such payments could harm our relationships with our licensors,
including, but not limited to, cancellation of our license agreements. In
addition, license fees payable to music publishers and other licensing agencies
may increase as we continue to expand our catalog and as competition for these
titles increases. Music publishers, record companies, copyright owners,
performance rights societies, licensing agencies and others may make claims for
royalties in addition to those we are currently paying. If we are required to
pay increased or additional licensing fees, these increased payments could
reduce our margins and could harm our business.

8
<PAGE> 10

WE FACE COMPETITION.

As a retailer of print and digital sheet music over the Internet, we
currently or potentially compete with a variety of companies. In the print sheet
music market, our competitors include:

- traditional retail sheet music merchants, including conventional
mail-order companies;

- various music merchandisers that sell instruments and related music
products over the Internet;

- music publishers that sell products directly over the Internet on a
mail-order basis; and

- assorted e-commerce web sites selling books and music over the Internet,
including print sheet music at lower prices in some cases than we
currently offer.

With respect to digital sheet music, we do not believe any of our
competitors have converted substantial portions of sheet music into an
interactive digital format that can be stored, encrypted, previewed, played and
printed via a PC. However, companies that are currently in similar or
potentially competing businesses include Sheet Music Direct (affiliated with Hal
Leonard Corporation and Music Sales Corporation) and Coda Music Technology. If
these or other companies successfully develop competing technologies or acquire
significant catalogs of music, our business could be harmed. In addition, if we
expand the Sunhawk Audio portion of our business, we will face significantly
increased competition and different competitive challenges from other Internet
audio providers than we currently experience.

Many of our current and potential competitors are well-established
companies that have greater financial, marketing, distribution, brand
recognition and other resources than we have, and there can be no assurance that
we will be able to compete effectively against these companies. Additionally,
larger, well-established and well-financed entities such as major music
publishers may acquire, invest in, or form joint ventures with our e-commerce
competitors or other sheet music publishers or suppliers who develop their own
Internet distribution channels, any of which could harm our business.

WE DEPEND ON FOREIGN SUBCONTRACTORS TO CONVERT SHEET MUSIC INTO THE SOLERO
FORMAT.

While our encryption, quality control and Internet operations are located
at our offices in Seattle, Washington, substantially all of our digital sheet
music is produced by third-party subcontractors in the Philippines and Russia.
These relationships may be affected by political or economic uncertainties,
termination of our existing agreements or personnel shortages. Although domestic
third-party providers of these services are available, we believe that such
services are more costly. If the supply of music converted into our Solero
format from foreign third-party subcontractors is disrupted for any reason, our
ability to produce additional Solero music titles will be disrupted until other
service providers are contracted with, and our business could be harmed. See
"Business -- Operations" and "Certain Transactions."

WE DEPEND ON THE CONTINUED GROWTH OF E-COMMERCE.

Our future revenues and any potential future profits are dependent upon
widespread acceptance and increased use of the Internet as a medium for
commerce. We cannot predict whether customers who have used traditional means of
commerce will instead purchase digital and pre-printed sheet music or digitally
recorded music over the Internet. Customer concerns over the security of
transactions conducted on the Internet, together with concerns over the privacy
of users, may inhibit the growth of the Internet and e-commerce. If use of the
Internet does not continue to grow, or if the necessary Internet infrastructure
or complementary services are not developed and maintained to effectively
support any growth that may occur, our business could be harmed.

9
<PAGE> 11

WE FACE RISKS ASSOCIATED WITH UNANTICIPATED INCREASES IN CUSTOMER TRAFFIC.

We believe our present digital encrypted download and order delivery
systems are adequate for the foreseeable future. Nonetheless, we may add
customers at unanticipated rates that will require us to upgrade our existing
software and hardware, secure additional services and equipment, and add
capacity to our system. Our success will depend in part on our ability to
quickly and effectively scale our operations to accommodate any significant
increase in customer traffic and orders. If we do not successfully scale our
operations to accommodate increased customer demands for our products, our
business could be harmed.

OUR OPERATIONS ARE SUBJECT TO SYSTEM FAILURE RISKS.

Our ability to sell digital sheet music over the Internet successfully and
provide high quality customer service depends on the efficient and uninterrupted
operation of our computer and communications systems. Our systems are vulnerable
to damage from fires, earthquakes, floods and other natural disasters as well as
telecommunications failures, power losses, computer viruses, vandalism and
similar events. The occurrence of any of the foregoing could lead to
interruptions, delays, loss of data or the inability to sell our products. Our
customers may become dissatisfied by any system failure or delay that interrupts
our ability to provide service. Sustained or repeated system failures could
affect our reputation, which would harm our business. Substantially all of our
computer hardware for operating Sunhawk.com is currently located at a single
facility in Seattle, Washington. We are in the process of installing a redundant
system and designing a formal disaster recovery plan. The failure to complete
any of the foregoing could harm our business.

OUR PRODUCTS AND SERVICES MAY CONTAIN ERRORS.

We offer complex products and services. They may contain undetected errors
when first introduced or when new versions are released. If we market products
and services that contain errors or that do not function properly, we may
experience negative publicity, loss of or delay in market acceptance, or claims
against us by customers, any of which could harm our business.

OUR SALES AND OTHER TAX OBLIGATIONS MAY INCREASE IN THE FUTURE.

We collect sales taxes for transactions in the State of Washington only.
One or more local, state, federal or foreign jurisdictions may seek to impose
additional sales or other tax obligations on us. Proposals have been made at
various state and local levels that would impose additional taxes on the sale of
goods and services over the Internet. None of these has been adopted as of this
date. If adopted, however, such taxes could impair the growth of e-commerce and
our business could be harmed. In 1998, Congress passed the Internet Freedom Act,
which imposes a three-year moratorium on state and local taxes on Internet-based
transactions. We cannot assure you that this moratorium will be extended.
Failure to renew this moratorium would allow various states to impose taxes on
e-commerce, which could harm our business.

WE FACE RISKS ASSOCIATED WITH GROWTH AND NEW BUSINESS.

While we have experienced rapid growth, we believe anticipated growth may
place a significant strain on our operations. In addition, we may expand our
product and service offerings to include other forms of digital content. Any
such growth or expansion may require significant additional costs and expenses
and could expose us to increased competition and other risks. To manage growth,
we must train, manage and motivate our employees and efficiently manage our
systems and resources. We cannot assure you that we will be able to effectively
manage the expansion of our operations. Our failure to effectively manage growth
could harm our business.

10
<PAGE> 12

WE MAY ENCOUNTER SECURITY RISKS ASSOCIATED WITH OUR BUSINESS ON THE INTERNET.

A significant concern regarding e-commerce over the Internet has been the
need for secure transmission of consumer information. We rely on encryption and
credit card authentication technology for the purpose of securely transmitting
confidential information such as customer credit card numbers. We cannot predict
whether events or developments in technology could result in a compromise or
breach of the technology we use to protect customer transaction data and other
information. Despite our security efforts, if third persons were able to breach
our network security or otherwise misappropriate our users' personal information
or credit card information, we could be subject to liability. Moreover, we could
incur additional expenses if new regulations regarding the use of personal
information are introduced or if authorities choose to investigate our privacy
practices. We may need to expend significant capital and other resources to
protect against security breaches or to remedy problems caused by any breaches.
Our insurance policies may not be adequate to reimburse us for losses caused by
security breaches. Any compromise of our encryption and authentication
technology could harm our business.

WE RELY ON THIRD-PARTY TECHNOLOGY AND INTERNET SERVICE PROVIDERS.

While a substantial portion of our software and technology has been
internally developed, we rely on third parties for certain of our software and
technology. There can be no assurance that third-party technology licenses or
agreements to provide certain services will continue to be available to us on
commercially reasonable terms, or at all. In addition, our success will depend,
in large part, upon third parties maintaining the Internet infrastructure to
provide a reliable network with the speed, ease of use, data capacity, security
and hardware necessary for reliable Internet access and services. The loss of
any of these third-party technologies, or the failure of our service providers
to provide necessary Internet services, could harm our business.

WE ARE SUSCEPTIBLE TO YEAR 2000 RISKS.

Our software, products and information systems were developed using a
four-digit year code. As a result, we believe that our software, products and
information systems will function properly with respect to dates in the Year
2000 and thereafter. We cannot assure you, however, that either our technology
or the products, software and systems of other companies on which our products,
software, systems and operations rely will function properly with respect to
dates in the Year 2000 and thereafter. Any resulting system failures could harm
our business. We have identified our critical vendors and are monitoring their
Year 2000 compliance programs. We are also in the process of establishing our
contingency plans. The failure of any of our critical vendors to adequately
address the Year 2000 problem or the failure by us to successfully implement our
contingency plans could harm our business.

WE DEPEND UPON OUR INTELLECTUAL PROPERTY RIGHTS, INCLUDING OUR DOMAIN NAME, AND
THOSE RIGHTS ARE SUBJECT TO INFRINGEMENT BY OTHERS AND REGULATORY CHANGES.

We consider our patents, trademarks, trade secrets and other similar
intellectual property to be a valuable part of our business. To protect our
intellectual property rights, we rely upon copyright, trademark, patent and
trade secret laws and generally enter into confidentiality agreements with our
employees, consultants, vendors and corporate business partners. We cannot
assure you that applicable U.S. or foreign laws or our use of confidentiality
agreements will provide sufficient protection from misappropriation or
infringement of our intellectual property rights or the unauthorized use or
distribution of our products, particularly in foreign countries where laws or
law enforcement practices may not protect our intellectual property rights as
fully as in the United States. If third parties were to use or otherwise
misappropriate our copyrighted materials, trademarks or other intellectual
property rights without our consent or approval, independently develop products
utilizing our technologies or breach the security provided by our encryption and
e-commerce

11
<PAGE> 13

technology our competitive position could be harmed, or we could become involved
in litigation to enforce our rights. Our failure or inability to protect our
intellectual property rights could harm our business.

We currently hold various Internet domain names relating to our brands,
including the "Sunhawk.com" domain name. Domain names generally are regulated by
Internet regulatory bodies. The manner in which domain names are regulated in
the United States and in foreign countries is subject to change, and any adverse
change in these regulations could harm our business.

WE MAY BE EXPOSED TO LIABILITY FOR MUSIC AND OTHER CONTENT ON OUR WEB SITE AND
MAY FACE INTELLECTUAL PROPERTY INFRINGEMENT AND OTHER CLAIMS.

Although we do not believe we infringe upon the intellectual property or
other rights of any third parties, we cannot assure you that third parties will
not assert such claims against us in the future or that such claims will not be
successful. Because of the third-party use of music and information downloaded
from our web site, we may be subject to claims for copyright or trademark
infringement, negligence, defamation, obscenity or on other grounds. The area of
law relating to the digital distribution of music and other materials over the
Internet is unsettled, and we face risks associated with, for example, content
appearing on sites to which we link, content appearing on sites created by
members of our associates program and a failure by us to obtain all necessary
rights to distribute our music products. We may also face claims based on the
software, technology and other materials that we obtain from third parties. Our
insurance may not adequately protect us against these types of claims and, even
if these claims do not result in liability, we could incur significant costs and
a diversion of technical and management resources in investigating and defending
ourselves against these claims, which could harm our business. Although we are
generally indemnified against claims related to software and other materials
licensed from third parties, such indemnity may not be available or adequate in
all cases.

WE DEPEND ON KEY PERSONNEL.

Our success depends substantially on the continued services of our
executive officers and key employees, in particular Marlin Eller, our Chairman
of the Board, Chief Executive Officer and President. The loss of the services of
Mr. Eller or any of our other executive officers or key employees could harm our
business. We have applied for a $1,000,000 key man life insurance policy on the
life of Mr. Eller. None of our executive officers or key employees currently has
a contract that guarantees employment. There can be no assurance that any of
these persons will remain employed by us or that these persons will not
participate in businesses that compete with us in the future.

OUR OFFICERS AND DIRECTORS WILL CONTINUE TO HAVE SUBSTANTIAL CONTROL OVER
SUNHAWK.COM AFTER THIS OFFERING.

Immediately after the closing of this offering, the Eller and McConney 1995
Family Living Trust, of which Mr. Eller, our Chairman of the Board, Chief
Executive Officer and President, and Mary McConney, our Treasurer, serve as the
trustees, will own 1,430,565 shares of our outstanding common stock, which will
represent 45.5% of our outstanding common stock (43.1% if the underwriters'
over-allotment option is exercised in full). Accordingly, the Eller and McConney
1995 Family Living Trust will have significant influence over the election of
directors and other matters submitted to a vote of our shareholders. Moreover,
our executive officers, directors and entities affiliated with them will, in the
aggregate, beneficially own 50.0% of our outstanding common stock upon the
completion of this offering. As a result, these shareholders will possess
significant influence over us, with the ability to significantly influence all
matters requiring approval by our shareholders. See "Principal Shareholders."

12
<PAGE> 14

WE MAY RAISE ADDITIONAL FINANCING IN THE FUTURE.

If we raise funds through the issuance of equity, equity-related or debt
securities in the future, such securities may have rights, preferences or
privileges senior to those of the rights of our common stock, and our
shareholders may experience dilution as a result of such financing. We have no
current arrangements with respect to, or potential sources of, additional
financing. If we seek to raise additional capital, we cannot assure you that any
future financing will be available to us when needed, on commercially reasonable
terms, or at all. Any inability to obtain additional financing when needed could
harm our business. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

WE FACE GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES.

As commerce on the Internet continues to evolve, federal, state, local or
foreign agencies may adopt laws and regulations that may impact our business,
including legislation and regulations relating to the distribution of music and
other content over the Internet and privacy and encryption issues. Moreover, the
applicability to the Internet of existing laws governing issues such as property
ownership, content, taxation, defamation and personal privacy is uncertain.
Further, the growing use of the Internet has burdened the existing
telecommunications infrastructure and has caused interruptions in telephone
service. Telephone carriers have petitioned the government to regulate the
Internet and impose usage fees on Internet service providers. The imposition of
such laws and regulations could expose us to significant liability. In addition,
any such new legislation or regulation or government enforcement of existing
regulations may limit the growth of the Internet, increase our cost of doing
business or increase our legal exposure, any of which could harm our business.

UNLESS A PUBLIC MARKET DEVELOPS FOR OUR COMMON STOCK, YOU MAY NOT BE ABLE TO
SELL YOUR SHARES.

Prior to this offering, there has been no public market for our common
stock. Accordingly, we cannot assure you that an active trading market will
develop and be sustained upon the completion of this offering or that the market
price of our common stock will not decline below the initial public offering
price. The initial public offering price was determined by negotiations between
us and the Representative. See "Underwriting" for a discussion of the factors
considered in determining the initial public offering price.

OUR QUARTERLY RESULTS AND COMMON STOCK PRICE ARE LIKELY TO BE HIGHLY VOLATILE.

The stock market and Internet stocks specifically have experienced
significant price and volume fluctuations that have affected the market price of
common stock for many companies engaged in industries similar to that of
Sunhawk.com. We expect our future quarterly operating results to experience
significant fluctuations caused by a variety of factors, many of which are
outside of our control. Period-to-period comparisons of our results of
operations may not be meaningful and should not be relied upon as an indication
of our future performance. In addition, sheet music purchases have traditionally
been subject to seasonality fluctuations. As a result, investors purchasing in
this offering may not be able to resell their shares at or above the initial
public offering price and could lose all of their investment. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

WE WILL REINCORPORATE IN THE STATE OF DELAWARE, AND, AS A RESULT, EXISTING
SHAREHOLDERS MAY HAVE DISSENTERS' RIGHTS.

Prior to the completion of this offering, we intend to reincorporate in the
State of Delaware. Our shareholders, whose rights are currently governed by our
Amended and Restated Articles of Incorporation, our Restated Bylaws and
Washington law, will, upon completion of the Delaware

13
<PAGE> 15

reincorporation, be governed by our Delaware Certificate of Incorporation, our
Delaware Bylaws and Delaware law. See "Description of Securities -- Delaware
Reincorporation." Although we do not believe that such reincorporation entitles
our existing shareholders to dissenters' rights, any claims for dissenters'
rights, if successful, could require payment by us to dissenting shareholders of
the fair value of their shares. Any successful claim against us by a dissenting
shareholder could harm our business.

CERTAIN ANTI-TAKEOVER PROVISIONS MAY MAKE IT MORE DIFFICULT FOR A THIRD PARTY TO
ACQUIRE US.

Provisions of our Amended and Restated Articles of Incorporation, Amended
and Restated Bylaws, and following our Delaware reincorporation, provisions of
our Delaware Certificate of Incorporation and Delaware Bylaws, as well as
certain provisions of Washington and Delaware law, could make it more difficult
for a third party to acquire us, even if doing so would be beneficial to our
shareholders. See "Description of Securities -- Anti-Takeover Law."

14
<PAGE> 16

USE OF PROCEEDS

The estimated net proceeds to us of this offering, assuming an initial
public offering price of $7.50 per share and after deducting estimated
underwriting discounts and commissions and estimated offering expenses payable
by us, will be approximately $7,210,000 ($8,398,000, if the underwriters'
over-allotment option is exercised in full). We currently expect to apply the
estimated net proceeds as follows:

<TABLE>
<CAPTION>
USE AMOUNT PERCENTAGE
- ------------------------------------------------------------ ---------- ----------
<S> <C> <C>
Sales and marketing activities, including expenditures
associated with the production and distribution of CD-ROMs
and enhanced CDs containing the Solero Viewer for
installation by prospective customers, distribution of
promotional inserts in direct mailings to targeted
audiences, web site advertising, seasonal promotions and
the hiring of additional personnel........................ $2,000,000 28%
Acquiring rights to digitize and sell additional music in
the Solero music format and in the Sunhawk Audio format as
well as the audio complement to the digital sheet music we
sell...................................................... 2,000,000 28%
Increasing our production of Solero digital sheet music and
of Sunhawk Audio files as well as the audio complement to
the digital sheet music we sell........................... 1,500,000 21%
Working capital to finance, among other things, the hiring
of additional management and other personnel and other
general corporate purposes................................ 660,000 9%
One-time payment to Eller McConney LLC in connection with
the assignment of Eller McConney LLC's right to receive a
total of 270,000 pages of digital sheet music over ten
years, at no additional cost to us, production services
for digital sheet music from a new independent Russian
production company........................................ 600,000 8%
Upgrading and acquiring computer hardware and software,
including the purchase of a redundant server and an
additional server which we expect to locate in Europe..... 250,000 3%
Upgrading existing facilities (including leasehold
improvements)............................................. 200,000 3%
---------- ---
Total............................................. $7,210,000 100%
========== ===
</TABLE>

We cannot assure you that the above dollar amounts will be specifically
allocated as set forth in the foregoing table. As a result, our management will
have discretion in the application of the proceeds. Allocation of net proceeds
is further subject to future events including general economic conditions,
changes in our strategy and response to competitive pressures and consumer
preferences associated with the music industry and Internet commerce. Pending
ultimate application, the net proceeds will be invested in interest-bearing
securities guaranteed by the U.S. government or its agencies.

15
<PAGE> 17

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 1999:

- on an actual basis; and

- on an as adjusted basis to reflect the receipt by us of the estimated
net proceeds from this offering.

You should read this information together with our financial statements and
the notes to those statements included elsewhere in this prospectus.

<TABLE>
<CAPTION>
AT MARCH 31, 1999
--------------------------
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
Shareholders' equity:
Preferred Stock, no par value; 1,000,000 shares
authorized; none issued and outstanding................ $ -- $ --
Common Stock, no par value; 20,000,000 shares authorized;
1,940,851 shares issued and outstanding, actual;
3,140,851 shares issued and outstanding, as adjusted... 7,584,745 14,794,745
Accumulated deficit......................................... (4,239,751) (4,239,751)
----------- -----------
Total shareholders' equity............................. 3,344,994 10,554,994
----------- -----------
Total capitalization.............................. $ 3,344,994 $10,554,994
=========== ===========
</TABLE>

The foregoing table assumes no exercise of any outstanding stock options.
In addition to the shares of common stock to be outstanding after this offering,
we may issue additional shares of common stock under the following plans and
arrangements:

- 46,305 shares of common stock subject to options outstanding under our
1996 Stock Option Plan and 218,695 shares available for future issuance
under the Plan as of March 31, 1999;

- 120,000 shares of common stock reserved for issuance upon exercise of the
Representative's warrants; and

- 180,000 shares of common stock reserved for issuance upon exercise of the
underwriters' over-allotment option.

See "Management -- Stock Option Plan" and "Underwriting."

16
<PAGE> 18

DILUTION

Our net tangible book value at March 31, 1999 was $1,885,184, or $0.97 per
share. Net tangible book value per share represents the amount of total tangible
assets of Sunhawk.com reduced by our total liabilities, divided by the number of
shares of common stock outstanding as of March 31, 1999. After giving effect to
the sale by us of the 1,200,000 shares of common stock offered in this
prospectus at an assumed initial public offering price of $7.50 per share (after
deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us), our as adjusted net tangible book value at
March 31, 1999 would have been $9,095,184, or $2.90 per share. This represents
an immediate increase in net tangible book value of $1.93 per share to existing
shareholders and an immediate dilution of $4.60 per share to new investors
purchasing shares of common stock in this offering. The following table
illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price....................... $7.50
Net tangible book value per share at March 31, 1999....... $0.97
Increase per share attributable to new investors.......... 1.93
-----
As adjusted net tangible book value per share after this
offering.................................................. 2.90
-----
Dilution per share to new investors......................... $4.60
=====
</TABLE>

The following table sets forth on an adjusted basis at March 31, 1999,
after giving effect to the sale by us of 1,200,000 shares of common stock
offered in this prospectus at an assumed initial public offering price of $7.50
per share, the number of shares of common stock purchased from us, the total
consideration paid to us, and the average price paid per share by existing
shareholders and by investors purchasing shares of common stock in this
offering:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------- --------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders.............. 1,940,851 61.8% $ 5,883,272 39.5% $3.03
New investors...................... 1,200,000 38.2% 9,000,000 60.5% 7.50
--------- ----- ----------- -----
Total.................... 3,140,851 100.0% $14,883,272 100.0%
========= ===== =========== =====
</TABLE>

The foregoing table assumes no exercise of any outstanding stock options.
As of March 31, 1999, there were outstanding options to purchase 46,305 shares
of common stock under the 1996 Stock Option Plan, at a weighted average exercise
price of $5.38 per share. To the extent that outstanding options are exercised,
there will be further dilution to new investors. See "Management -- Stock Option
Plan."

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock, and
we do not anticipate paying cash dividends in the foreseeable future. Any future
determination with regard to the payment of dividends will be at the sole
discretion of our board of directors.

17
<PAGE> 19

SELECTED FINANCIAL DATA

The following selected financial data for the years ended September 30,
1997 and 1998 are derived from our financial statements, which have been audited
by Ernst & Young LLP, independent auditors. The selected financial data at March
31, 1999 and for the six months ended March 31, 1998 and 1999 are derived from
unaudited financial statements. The unaudited financial statements include all
adjustments, consisting of normal recurring adjustments, which we consider
necessary for a fair presentation of our financial position and results of
operations for these periods. When you read the selected financial data below,
it is important that you also read the historical financial statements and
related notes to those statements appearing elsewhere in this prospectus, as
well as the section of this prospectus entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The historical
results and the results for the six months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the entire year
ending September 30, 1999 or future results.

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED FOR THE SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31,
-------------------------- ------------------------
1997 1998 1998 1999
----------- ------------ ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Sales.................................. $ 15,066 $ 27,263 $ 14,372 $ 45,389
Cost of goods sold..................... 5,014 22,517 6,641 36,923
---------- ----------- ---------- -----------
Gross profit........................... 10,052 4,746 7,731 8,466
Selling, general and administrative
expenses............................ 854,458 1,353,871 600,310 1,129,166
---------- ----------- ---------- -----------
Loss from operations................... (844,406) (1,349,125) (592,579) (1,120,700)
Interest expense on notes payable to
shareholders........................ 66,577 126,454 57,044 113,928
---------- ----------- ---------- -----------
Net loss............................... $ (910,983) $(1,475,579) $ (649,623) $(1,234,628)
========== =========== ========== ===========
Net loss per share -- basic and
diluted............................. $ (0.78) $ (1.19) $ (0.53) $ (0.97)
========== =========== ========== ===========
Weighted average common shares for net
loss per share computations -- basic
and diluted......................... 1,173,402 1,239,790 1,233,607 1,270,879
</TABLE>

<TABLE>
<CAPTION>
AT SEPTEMBER 30,
------------------------- AT MARCH 31,
1997 1998 1999
----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).......................... $(1,602,704) $(3,213,584) $1,377,429
Total assets....................................... 212,831 508,516 3,635,779
Total shareholders' equity (deficit)............... (1,432,323) (2,807,902) 3,344,994
</TABLE>

18
<PAGE> 20

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of
operations should be read in conjunction with the financial statements and the
notes to those statements and other financial information included elsewhere in
this prospectus.

OVERVIEW

We were incorporated in August 1992 and began distributing and selling
digital sheet music over the Internet in March 1997. From the date of
incorporation until March 1997, our operating activities consisted principally
of creating our digital sheet music catalog, developing and patenting our
technology, establishing international operations for the production of digital
sheet music, negotiating for the rights to distribute and sell sheet music,
developing a corporate infrastructure for the management of data, producing
digital sheet music, creating and distributing certain CD-ROM compilations and
developing the Sunhawk.com web site. In September 1996, we began selling CD-
ROMs of the complete works of Scott Joplin, and in July 1997, we began selling
CD-ROMs of Handel's Messiah, both containing digital sheet music in our Solero
format. We launched our web site in February 1997 and made our first sale of
digital sheet music in March 1997. In 1998, we established our strategic
alliances and entered into contracts with Warner and EMIC for the right to sell
and distribute selected portions of their sheet music catalogs. Since March
1997, we have sold approximately 10,200 digital sheet music products and
approximately 1,400 traditional printed sheet music products and CD-ROMs.
Through March 31, 1999, substantially all of our sales have been derived from
the sale of CD-ROMs and digital or printed sheet music through our web site and
from special promotions and services for our strategic partners.

Sales are primarily derived from digital and printed sheet music offered
over the Internet and either downloaded directly from our web site or ordered
from our web site and delivered via regular mail or overnight courier. Sales are
net of any applicable discounts, and sales of traditional printed sheet music
include shipping and handling charges. A customer's account is settled by
directly charging his credit card. For digital sheet music downloaded over the
Internet, revenues are recognized upon execution of the order. Revenues from
sales of traditional printed sheet music are recognized upon shipment of the
printed sheet music from our offices in Seattle, Washington.

Cost of goods sold consists principally of the costs associated with
royalty payments, materials, amortization of the cost of producing digital
masters, shipping costs and credit card processing fees. In order to expand our
digital sheet music catalog, we entered into contracts with Warner and EMIC for
initial terms of ten and five years, respectively, from the date of execution.
These contracts provide us with access to selected portions of the music
catalogs of Warner and EMIC. Upon the sale of any digital title licensed from
Warner or EMIC, we are required to remit the appropriate royalty to the
respective publisher. Royalty payments are based on actual sales, less credit
card processing fees and shipping costs, if any. Inventory consists of CD-ROMs
and the cost of the printed sheet music books. Amortization of the cost of
producing digital masters relates to the digital sheet music and is based on the
shorter of estimated useful lives or the term of the distribution contracts for
the digital masters. Shipping costs and credit card processing fees include
costs related to the shipping of traditional printed sheet music and the
processing of credit card payments for printed and digital sheet music. We
expect that our cost of goods sold will increase significantly as we accelerate
our production of digital sheet music and enter into additional strategic
partnerships to further develop and expand our catalog of digital sheet music
and recorded music. Furthermore, amortization of the music catalog distribution
rights will begin in the quarter ending June 30, 1999, resulting in an increase
in cost of goods sold. The amortization of music catalog distribution rights is
estimated at $38,000 per quarter through the remaining term of the Warner
contract, which ends December 31, 2007.

19
<PAGE> 21

Selling expenses consist primarily of trade shows and other promotional and
advertising expenditures, including payroll and payroll-related expenses. We
have incurred minimal advertising expenditures to date as we have focused our
efforts on creating our digital sheet music catalog and securing strategic
alliances and the rights to digitize sheet music. We expense all advertising
costs as incurred, and we expect selling expenses to increase significantly as
we seek to increase the number of Solero Viewers downloaded from our web site or
distributed on CD-ROMs and enhanced CDs, drive customer traffic to our web site,
enhance our brand name awareness and otherwise promote the sale of our products.
General and administrative expenses consist primarily of management salaries and
expenses, insurance premiums, rent, telephone costs, travel expenses for general
business, legal and professional fees, staff salaries, other payroll expenses
and other related expenses for general corporate functions.

To date, we have incurred substantial costs to expand our sheet music
catalog; produce, distribute and sell digital and printed sheet music; develop
our technologies; acquire patents and other intellectual property rights;
acquire the rights to certain sheet music; secure contracts with Warner and
EMIC; and further develop and grow our operational infrastructure and web site.
As a result, we have incurred operating losses since our date of incorporation.
In addition, we expect to incur significantly increased operating expenses in
connection with the expansion of our catalog of digital sheet music and the
distribution and sale of certain recorded music, the increase in the size of our
staff, the expansion of our sales and marketing efforts, the upgrade of our
software and hardware, further development of our technology and the acquisition
of rights to additional sheet music and recorded music. To the extent that
increases in operating expenses precede or are not followed by increases in
sales, our business could be harmed.

We have a limited operating history upon which to base an evaluation of our
business and prospects. We have yet to achieve significant sales, and our
ability to generate significant sales in the future is uncertain. Further, in
view of the rapidly evolving nature of our business and our very limited
operating history, it is not possible to forecast sales. We believe, therefore,
that period-to-period comparisons of our financial results are not necessarily
meaningful, and you should not rely upon them as an indication of future
performance.

Our business and prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in their early
stages of development, particularly companies in new and rapidly evolving
markets such as the Internet and e-commerce. In addition, our sales depend
substantially upon the level of activity on our web site and our ability to
successfully create brand name awareness and market recognition for our product.
Although we have experienced growth in our sales, there can be no assurance that
our sales will continue at their current rate of growth.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1999 COMPARED TO THE
SIX MONTHS ENDED MARCH 31, 1998

Sales

Sales for the six months ended March 31, 1999 were $45,389 compared to
$14,372 for the six months ended March 31, 1998. This increase in sales resulted
from entering into strategic alliances with Warner and EMIC, offering printed
sheet music on our web site, providing a wider selection of music titles in our
Solero format, benefiting from the overall increase in Internet shopping,
offering certain promotional features on our web site in order to increase
customer traffic and providing special services for our strategic partners.

Cost of Goods Sold

Cost of goods sold for the six months ended March 31, 1999 was $36,923
compared to $6,641 for the six months ended March 31, 1998. The increase in cost
of goods sold as a percentage of sales was primarily due to an increase during
the six months ended March 31, 1999 in the proportion of

20
<PAGE> 22

royalty-bearing sales to sales of public domain titles which do not bear
royalties. Also, the increased amortization of digital sheet music masters
during the six months ended March 31, 1999 resulted from the increased number of
digital sheet music titles available during that period. For the six months
ended March 31, 1999, royalty payments accounted for $12,637, or 28% of sales,
and costs associated with the amortization of digital sheet music masters
accounted for $12,182, or 27% of sales. For the six months ended March 31, 1998,
royalty payments accounted for $628, or 4% of sales, and costs associated with
the amortization of digital sheet music masters accounted for $3,074, or 21% of
sales.

Selling, General and Administrative Expenses

Selling expenses for the six months ended March 31, 1999 were $100,141
compared to $34,590 for the six months ended March 31, 1998. Selling expenses
for both six-month periods consisted primarily of expenditures incurred in
connection with advertising, attending trade shows, establishing our strategic
alliances with Warner and EMIC, expansion of our web site and payroll-related
expenses. General and administrative expenses for the six months ended March 31,
1999 were $1,029,025 compared to $565,720 for the six months ended March 31,
1998. This increase was primarily due to the expansion of our production
capabilities and our digital sheet music catalog, hiring additional employees,
corporate facility expenses necessary to operate the business, relocation of our
office and additional professional services.

Interest Expense on Notes Payable to Shareholder

Interest expense for the six months ended March 31, 1999 was $113,928
compared to $57,044 for the six months ended March 31, 1998. We intend to pay
off the balance of $113,928 on September 29, 1999. The interest expense for both
six-month periods was attributable to loans to us made by the Eller and McConney
1995 Family Living Trust, which loans were converted into common stock on March
31, 1999.

RESULTS OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1998 COMPARED TO THE YEAR
ENDED SEPTEMBER 30, 1997

Sales

Sales for the year ended September 30, 1998 were $27,263 compared to
$15,066 for the year ended September 30, 1997. Sales for the year ended
September 30, 1997 consisted of sales over the Internet of sheet music converted
into Solero format and CD-ROMs. The increase in sales was principally due to the
expansion of our music catalog and customer base, which resulted from the
inclusion of song titles from the Warner and EMIC catalogs and the addition of
traditional printed sheet music on our web site.

Cost of Goods Sold

Cost of goods sold for the year ended September 30, 1998 was $22,517
compared to $5,014 for the year ended September 30, 1997. The increase in cost
of goods sold was due to an increase in the proportion of royalty-bearing sales
to sales of public domain titles which do not bear royalties and an increase in
the amortization of digital sheet music masters due to the increase in the
number of digital sheet music titles from $1,804, or 12% of the sales for the
year ended September 30, 1997, to $8,347, or 31% of sales for the year ended
September 30, 1998.

Selling, General and Administrative Expenses

Selling expenses for the year ended September 30, 1998 were $82,915
compared to $65,021 for the year ended September 30, 1997. This increase was due
primarily to our attendance at more trade

21
<PAGE> 23

shows and general advertising. General and administrative expenses for the year
ended September 30, 1998 were $1,270,956 compared to $789,437 for the year ended
September 30, 1997. This increase was primarily due to the expenses associated
with operating a larger office, improvements and upgrades to our facilities and
software and hardware, increases in the number of personnel necessary to support
the growth of our business and operations, and costs incurred in connection with
adding production and programming functions and enhancing the features and
functionality of our web site and related technology.

Interest Expense on Notes Payable to Shareholder

Interest expense for the year ended September 30, 1998 was $126,454
compared to $66,577 for the year ended September 30, 1997. This increase was due
to the additional debt we incurred in order to satisfy our operating costs and
expenses.

LIQUIDITY AND CAPITAL RESOURCES

We have financed our operations since inception primarily with funds
received from the sale of equity to and loans from the Eller and McConney 1995
Family Living Trust. As of March 31, 1999, we had cash and cash equivalents of
$1,624,720 and working capital of $1,377,429. We are currently financing our
daily operations primarily through an equity investment made by the Eller and
McConney 1995 Family Living Trust.

Net cash used in operating activities totaled $1,015,914 for the six months
ended March 31, 1999 compared to $533,653 for the six months ended March 31,
1998. The increases in net cash used in operating activities for both six-month
periods were primarily attributable to increases in production staff.

Net cash used in investing activities was $219,271 for the six months ended
March 31, 1999 compared to $121,745 for the six months ended March 31, 1998. In
both six-month periods the cash used in investing activities was used primarily
for the acquisition of property, equipment, digital sheet music masters, patents
and trademarks.

Net cash provided by financing activities was $2,800,812 for the six months
ended March 31, 1999 compared to $701,000 for the six months ended March 31,
1998. The increase in net cash for financing activities for the six months ended
March 31, 1999 was derived from proceeds from the sale of common stock to the
Eller and McConney 1995 Family Living Trust in the aggregate amount of
$1,500,000 and proceeds from notes payable in the aggregate amount of $1,355,000
issued to the Eller and McConney 1995 Family Living Trust which, along with
other notes payable to the Eller and McConney 1995 Family Living Trust, were
converted into common stock at a conversion price of $9.53 per share on March
31, 1999. Net cash for financing activities for the six months ended March 31,
1998 was primarily derived from proceeds from notes payable issued to the Eller
and McConney 1995 Family Living Trust in the aggregate amount of $601,000,
which, along with other loans by the Eller and McConney 1995 Family Living
Trust, were converted into common stock at $9.53 per share on March 31, 1999.

We believe that we will need to acquire additional equipment to assist in
our production capabilities; equipment to upgrade our web site; other equipment,
hardware and software related to our computer systems, server and web site
operations; and additional furniture and fixtures. We expect to fund our
purchase of additional capital equipment with our working capital, which will
include proceeds from this offering.

We believe that the net proceeds from our prior financing, a debt to equity
conversion by the Eller and McConney 1995 Family Living Trust, this offering and
cash flows from operations will be adequate to satisfy our operations, working
capital and capital expenditure requirements for at least the next 12 months. If
we seek to raise additional capital, however, there can be no assurance that

22
<PAGE> 24

additional financing will be available on acceptable terms, if at all, or that
any additional financing will not dilute shares held by our shareholders.

YEAR 2000 COMPLIANCE

23
<PAGE> 25

BUSINESS

OVERVIEW

We are a leading provider of digital sheet music over the Internet. We have
proprietary technology that allows customers to download encrypted sheet music
files over the Internet in a playable, interactive digital format which can then
be viewed, played, stored on and printed from PCs. Our patented e-commerce and
other proprietary technologies provide music publishers with greater control
over the distribution of their digital sheet music by enabling us to limit the
unauthorized redistribution of this music and efficiently monitor and report the
royalties due upon purchases by customers. We also process and fulfill orders
over the Internet for traditional printed sheet music from our online catalog.

We currently have contracts with Warner, which owns 7.1% of our common
stock prior to this offering, and EMIC. These contracts provide us with the
right to sell and distribute digital editions of selected musical compositions
from Warner's and EMIC's catalogs. We are continuing to convert music from the
Warner and EMIC catalogs into our Solero format and are selling this digital
sheet music, in addition to other song titles, on our Internet retail site at
www.sunhawk.com. Our digital sheet music is also sold through referrals from
Warner's web site and EMIC's web site, as well as through our associates
program, in which web site owners receive sales-based referral fees when they
link customers to us from their web sites. We have both domestic in-house and
overseas third-party production capabilities that complete the conversion of the
printed sheet music into digital format in preparation for distribution and sale
over the Internet. As of May 24, 1999, we had approximately 20,000 pages of
digital sheet music, representing approximately 4,500 titles, archived and
available for distribution and sale.

We also compress digitally recorded music files utilizing MP3 technology,
encrypt these recorded music files and sell the recorded music in our
proprietary Sunhawk Audio format over the Internet. When Sunhawk Audio files are
delivered and downloaded, they can only be played using our Solero Viewer and,
by virtue of our encryption technology, can be accessed only by the purchasing
customer. This enables us to securely distribute digitally recorded music and
provide the owner of the music with royalty payments and better control over the
distribution of their recorded music. While we presently have a limited number
of recorded music files in Sunhawk Audio format, we expect to expand the number
of recorded music files and titles available for distribution by broadening our
existing strategic alliances with Warner and EMIC, developing alliances with
record companies and other music publishers, and securing the rights to
distribute the recorded music complement of the Solero digital sheet music we
sell.

Our management team is led by Mr. Marlin Eller, who spent 13 years at
Microsoft Corporation where, among other things, he led the development of the
graphics subsystem of Windows 1.0. Additionally, the Eller and McConney 1995
Family Living Trust, of which Mr. Eller is a co-trustee, has made an investment
of total consideration of approximately $6.1 million in Sunhawk.com since our
inception. Other members of our management team have held senior positions at
such organizations as KPMG Peat Marwick, LLP and the U.S. National Academy of
Sciences. Finally, our board of directors includes members such as Mr. Luis F.
Talavera, a former Director of Research and Development at Microsoft
Corporation, and Mr. Fred Anton, currently the President and Chief Operating
Officer of Warner.

INDUSTRY BACKGROUND

Growth of Internet Use

Internet use worldwide has grown dramatically since the end of 1989 when
there were approximately 1.1 million Internet users, according to the Internet
Industry Almanac. This source estimated the number of Internet users at end of
1997 to be approximately 100 million. Growth

24
<PAGE> 26

projections for the years 1998 to 2000 vary widely from approximately 50% to
100% per year, but assuming the more conservative end of this range, the
Internet Industry Almanac projects the number of Internet users at the end of
2000 to be approximately 330 million. Within the United States, this source
estimates that the number of users will grow from approximately 55 million at
the end of 1997 to approximately 132 million by the end of 2000. As the number
of Internet users grows, so too do the opportunities for e-commerce.

The Music Product Industry

Music Publication and Distribution

When songwriters or composers create musical compositions, they often do
not have the resources to fund the production and marketing of their
compositions in a cost-effective manner. In exchange for a percentage of
revenues, music publishers typically assume the production and promotion
responsibilities needed to bring a composition to market, including the audio
recording, the production and distribution of the print music, copyright and
royalty administration and marketing. Some of the major music publishers include
EMI Music Publishing, Warner/Chappell Music, BMG Music Publishing, Polygram
Music Publishing,* Sony/ATV Tree and MCA Music Publishing.* The approximate
sizes of their respective catalogs are illustrated below, according to a 1996
report by Larry Wacholtz, a music industry author.

NUMBER OF SONG TITLES

<TABLE>
<CAPTION>
EMI 1,000,000
- --- ---------
<S> <C>
Warner/Chappell 800,000
BMG 500,000
Polygram 250,000
Sony 100,000
MCA 100,000
</TABLE>

* MCA Music Publishing now includes the former Polygram Music Publishing
pursuant to a 1998 merger.

25
<PAGE> 27

Music publishers either retain and manage print and distribution rights
themselves, or they may license these rights to other publishers or
distributors. These rights may be given worldwide, or they may be territorially
restricted. Sheet music distributors deliver sheet music to retail outlets or
other wholesalers which, in turn, sell the printed sheet music to customers.
[SUNHAWK DISTRIBUTION GRAPHIC]

The retail distribution of print music in the United States is highly
fragmented. According to a 1999 review by the National Association of Music
Merchants, of a total of 8,443 music retail stores in the United States, only
4,481 stores sold print music in 1998, of which 106 were print music specialty
stores. According to 1998 reports by The Music Trades, the combined 1997
revenues of Hal Leonard Corporation, Warner Brothers Publications, Music Sales,
Ltd., Alfred Publishing, Carl Fischer Music Group and Mel Bay Publishing
together amounted to approximately $219 million.

26
<PAGE> 28

Challenges Faced by Traditional Print Music Retailers

The fragmented nature of print music retail distribution and certain other
inefficiencies inherent in print music production and distribution present
numerous challenges to traditional print music retailers. Printed sheet music
can occupy a significant amount of store space with high inventory risks for
music store owners, and shelf space constraints limit the titles immediately
available to consumers and also preclude access to lesser known or independent
artists. The fulfillment and distribution process for printed sheet music is
expensive and time-consuming, also affecting the supply and price of product
available to the consumers. These and other factors significantly affect the
cost, availability and variety of printed sheet music available to consumers
today.

SUNHAWK.COM SOLUTION

In converting traditional printed sheet music into a digital encrypted
format that can be delivered over the Internet and then viewed, listened to,
stored on and printed from a customer's computer, we are changing the manner in
which sheet music is published, distributed and purchased. We are replacing
traditional printed sheet music with a playable, interactive digital format
containing security and educational features. Our products offer customers a
highly efficient and more complete and enjoyable musical experience while
providing music publishers with a means to limit the unauthorized redistribution
of their digital sheet music and efficiently monitor the royalties due upon
purchase.

By leveraging the growth of the Internet and the shop-at-home convenience
of online retail with our proprietary technology, we have the ability to offer
customers and other retailers worldwide an alternative to the traditional
printed sheet music media distribution channel, featuring a larger selection of
song titles than previously available in most traditional retail music stores,
search engines and other methods to quickly locate items of interest,
interactive functionality, decreased inventory risks and fulfillment costs and
immediate and direct delivery of music.

SUNHAWK.COM PRODUCTS, SERVICES AND PROPRIETARY TECHNOLOGY

We are in the business of delivering digital sheet music over the Internet
to individuals and businesses in a manner that is user-friendly and better
protects the copyrighted content of composers and publishers. Utilizing our
proprietary technology, we are able to convert scanned images of printed music
into interactive digital music, which customers are then able to download, play
and purchase. Through our encryption and e-commerce technologies, we are able to
limit the unauthorized distribution by the end-user of the music files and
efficiently track the royalty payments to be paid to the publisher and others.
As a result, our offerings are attractive both to end-user consumers as well as
to composers, publishers and other strategic partners.

OUR SOLERO MUSIC SOFTWARE ALLOWS US TO CREATE A LIBRARY OF DIGITAL
CONTENT. The Solero format provides a digital format for the creation, storage
and distribution of digital sheet music as well as other musical content. This
format can capture standard music notation, audio, lyrics, guitar tablature and
chords, big note formats and other forms of digital music content. The digital
information is then stored in a sophisticated relational database, which allows
for advanced searches and efficient distribution to end-users.

The Solero music software is a suite of three IBM PC compatible
object-oriented applications, each of which is written in the C++ computer
language, for converting, creating and enjoying digital sheet music.

27
<PAGE> 29

Converting. The Solero musical optical character recognition software
performs "musical OCR" by converting scanned images of printed music into
digital music. We have developed a unique technology for electronically storing
the musical symbols contained in a musical score (e.g., note heads and stems) in
a nonsequential format. This process, which is protected by a patent entitled
"Method and Apparatus for Nonsequential Storage of and Access to Digital Musical
Score and Performance Information," works as follows:

- The digital music technology assigns a different table for each type of
symbol (e.g., a table for stems).

- Each table contains cross-references that enable the musical score to be
quickly and accurately generated in visual or audio form.

- The nonsequential format facilitates forward and backward compatibility
of different versions of the format and produces files that are highly
compressible.

Creating. The Solero Editor is used to complete the conversion to digital
music initiated by the Solero OCR software and is also used by composers to
create and engrave (the process of typesetting music notation) original music.
The Solero Editor was specifically developed with the needs of music publishers
in mind in order to encourage its adoption as a standard for music engraving.
The Solero Editor enables us to finalize and refine our digital sheet music.

Enjoying. The Solero Viewer is used to play and print the Solero format
files (the digital sheet music) that have been created with the Solero OCR
software and the Solero Editor, and to play the Sunhawk Audio files.

OUR WEB SITE AND SOLERO VIEWER PROVIDE CUSTOMERS WITH EASY ACCESS TO OUR
PRINT AND DIGITAL SHEET MUSIC PRODUCTS. Our customers include musicians,
composers, educators, recreational musicians and other individuals interested in
music. A customer can access our store front at www.sunhawk.com or through
referrals from the Warner and EMIC web sites. Once a customer has entered our
web site, he may search for a song by composer, artist, title or keyword. In
addition, our titles are arranged by music type (such as rock, classical,
Christian and country), and a customer can browse these pages based on his own
music preferences and interests. Our site also features "top ten" lists, new
releases and editor's picks to further stimulate customer interest in our
products.

Our library of interactive digital sheet music in the Solero format
contains numerous song titles and represents many genres of classical and
popular music. A sample of the composers and titles represented in the library
appears on the two inside cover pages of this prospectus. Customers may also
purchase traditional printed sheet music on our web site by ordering the
selected song titles online and having the sheet music delivered in print form
by mail or courier service.

We provide our Solero Viewer free of charge on our web site. Simply by
clicking the "download" button on the Sunhawk.com web site, customers can
download our Solero Viewer, thus gaining the ability to download and view our
digital sheet music products. As of March 31, 1999, approximately 25,000 Solero
Viewers had been downloaded and registered.

Once a customer has selected a title that is available in our Solero
format, he can download the digitized music file onto his PC and listen to a
portion of the song before paying for the title, thus allowing him to preview
various selections before electing to purchase. In addition, our Solero Viewer
allows the customer, upon purchase, to view and print the music, or, when
listening to its audio playback, change its tempo, instruments or

28
<PAGE> 30

sing or play his own musical instrument along with it. A screen shot of our
Solero Viewer and its various features is set forth below:

[SOLERO VIEWER PICTURE]

1) Open the music index
2) Purchase music
3) Print the score
4) Move from page to page
5) Select one or two page view
6) Visit Sunhawk.com
7) Change the instruments
8) Adjust the tempo
9) Start, stop or pause playback
10) Notes are highlighted on playback
11) Optional player piano view
12) View of the music index

29
<PAGE> 31

OUR E-COMMERCE TECHNOLOGY OFFERS ATTRACTIVE SECURITY AND ROYALTY-TRACKING
FEATURES TO COMPOSERS AND PUBLISHERS. Our e-commerce technology was designed to
enable us to:

- securely distribute digital sheet music, as well as text, graphics and
other types of copyright-protected digital content, in encrypted,
proprietary digital envelopes over the Internet;

- limit the unauthorized redistribution of digital music files by the
consumer; and

- meter and track digital music files over the Internet to help ensure that
appropriate royalties are paid upon purchase of the music content.

Encryption and E-Commerce Process. Our technology uses encryption as a
means to securely protect and distribute digital data. Encryption is the process
of changing data into a form that can be read only by the intended recipient.
The following is a description of how our system, many aspects of which are
protected by a patent entitled "Encryption System with Transaction Coded
Decryption Key," works:

- A customer identifies himself. In our system this is the registration of
the Solero Viewer, whereby each downloaded Solero Viewer is assigned a
unique identifier.

- When a customer requests data for download, the data is uniquely
encrypted for that customer's Solero Viewer based on the customer's
unique identifier.

- When a customer purchases a license to use the data, we also distribute
the unique digital "key" necessary to unlock the data.

- The distributed file remains encrypted at all times, and each time the
digital content is used, it is decrypted using the key provided to that
Solero Viewer system.

Since each digital file is uniquely encrypted and can only be decrypted by
the specific Solero Viewer which was used to purchase the digital music,
unauthorized redistribution of the digital music is limited. Specifically,
digital rights are protected at numerous levels:

- If a user passes a digital music file to a friend, because the file
remains encrypted at all times and can only be decrypted by the unique
"key" provided upon purchase, the recipient cannot open the encrypted
file and therefore it cannot be used.

- If a user is able to identify the key and decrypt a file, and then
attempts to pass the decrypted file along to a friend, the friend's
Solero Viewer will not read the decrypted file because only the original
user's key-enabled Solero Viewer works with that particular decrypted
file.

- If a user passes a decrypted file along with a purchased key to a friend,
the key identifies the user and can be used to track users who illegally
provide files to other users.

Our e-commerce technology also includes a download-then-pay feature, which
minimizes online transaction failures, such as customer cancellations and
download malfunctions. Our client-driven credit card software makes it easy to
use a credit card to complete purchases. The download-then-pay feature allows a
customer to first download the digital music file onto his PC and preview a
portion of the product before paying for the sheet music. Upon receipt of the
customer's credit card information, the digital content

30
<PAGE> 32

is "unlocked" with the digital key described above, and the customer can then
view, play and print the sheet music.

Benefits to Publishers. Our e-commerce technology, with its encryption
software and digital rights management capabilities, provides an immediate
solution to the concerns of music publishers that their music content be
protected when distributed over the Internet. Further, our e-commerce and other
proprietary technology provides assurance to publishers that we have a method to
efficiently monitor the distribution of sheet music so that royalties due and
owing to the publisher are paid.

OUR TECHNOLOGY ENABLES US TO OFFER PRODUCTS IN ADDITION TO DIGITAL SHEET
MUSIC. An essential element of our growth strategy is to continue to use our
proprietary technology to broaden the range of products we offer to customers.

Sunhawk Audio Files. The Sunhawk format incorporates encryption and
e-commerce technology that enables us to compress recorded music files utilizing
MP3 technology, encrypt these files and deliver them to customers in our Sunhawk
Audio format. These Sunhawk Audio files can be downloaded from our web site and
stored on the customer's PC. When Sunhawk Audio files are delivered and
downloaded, they can only be played using our Solero Viewer and, by virtue of
our encryption technology, can be accessed only by the purchasing customer. In
addition, as with digital sheet music, our e-commerce technology facilitates the
purchase of the music, limits any unauthorized redistribution of this digital
music and tracks royalty payments owed to publishers and others.

Enhanced CDs. We also can enhance CDs by including our Solero Viewer on an
audio CD. By including our Solero Viewer on the CD, a record company can include
digital liner notes, graphics, text or any other information on the enhanced CD.
At the same time, the record company can include on the CD a digital sheet music
version of one of the songs featured on the CD as well as links to our web site
where the customer can download other digital sheet music versions of the songs
included on the audio CD. To date, EMIC has distributed approximately 85,000
enhanced CDs containing our Solero Viewer.

SALES AND MARKETING

We employ several concurrent Internet and traditional marketing strategies
in an effort to drive traffic to our web site, increase customer interest in our
products and generate sales. As part of this multi-prong marketing approach, we
are expanding our program of establishing inbound links to our web site from
other third-party sites, such as portals, search engines, musical instrument
sites and related web sites. In addition, we have launched a related associates
program in which web site owners receive sales-based referral fees when they
link customers to us from their web sites. We also intend to augment our online
advertising efforts on industry-specific sites, such as music e-commerce,
publisher, artist and special interest music sites. Finally, we intend to
increase our use of one-to-one customer relationship marketing by continuing our
efforts of sending periodic informational and promotional emails to our current
Solero registrants and expanding the number of individuals in our target market
who receive such online materials.

In addition to driving traffic to our web site through the use of Internet
advertising, we intend to strengthen our brand name and increase customer appeal
through the use of traditional marketing methods. Moreover, we intend to utilize
numerous forms of advertising to promote the Sunhawk and Solero names and
products, including advertising

31
<PAGE> 33

in industry-specific publications, direct mailing efforts to our target market,
distributing CD-ROMs and enhanced audio CDs containing our Solero Viewer, and
participation in trade show events. These techniques will enable us to target
existing and prospective customers in a cost-efficient manner.

We believe that many traditional retail music stores prefer to carry very
little sheet music in order to avoid the expense of maintaining inventory. We
intend to structure alliances with retail music stores that will allow the music
store to access our web site directly at the store location. We believe this
on-site capability will both generate sales and increase our exposure to our
target market. In addition, we see an opportunity for reciprocal advertising
efforts between our web site and traditional retailers whereby these retailers
agree to promote our web site to their customers in exchange for free or
low-cost advertising of their stores on our web site. We also intend to
penetrate the music education market by establishing relationships with private
and public schools and music institutions, thereby increasing our target
customer base and expanding our distribution channels.

OPERATIONS

Our operations are designed to capitalize on the shift in the way people
buy and use music and on the growth of the Internet as a medium for distributing
goods and services. There are currently four distinct aspects of our business
operations:

- digital production;

- digital distribution;

- digital retailing; and

- digital publishing.

Digital Production

Producing a digital score in the Solero format is a six-step process.
First, the printed sheet music is registered into our database. Second, the
printed sheet music is scanned using conventional scanning technology. Third,
the scanned image is loaded into our Solero OCR system, which converts the
scanned image of sheet music into the digital Solero file format. Fourth, the
digital Solero file is sent to either our Philippine or Russian subcontractor
for visual and audio editing with the Solero Editor software. Fifth, the Solero
digital score is returned to our Seattle, Washington headquarters, where it is
checked for quality. Sixth, the score is uploaded to our web site at
www.sunhawk.com, and made

32
<PAGE> 34

available for online download, preview and purchase in the encrypted Solero
format. A depiction of the digital production process is set forth below:
[GRAPHIC]

33
<PAGE> 35

Philippine Production. Under our contract with International Music
Engraving Company, a Philippine subcontractor, we receive 500 to 1,500 pages of
publish-ready sheet music per month at a cost to us of $15.00 per page. This
contract was entered into on April 1, 1998 and extends indefinitely; however,
either party may terminate this contract by providing two months notice to the
other party.

Russian Production. We currently receive for review approximately 4,100
pages of digital sheet music per month from Avtograf, a Russian joint stock
company in which Eller McConney LLC holds a 94% ownership interest, pursuant to
a five-year agreement, and accrue and expect to pay to Eller McConney LLC $7.00
per page. Mr. Eller and Ms. McConney are the sole members of Eller McConney LLC.
This sheet music is sold to us pursuant to an agreement between us and Eller
McConney LLC, which has an agreement with Avtograf to receive production
services for digital sheet music. Subsequent to the closing of this offering, we
will enter into an assignment and assumption agreement with Avtograf, Eller
McConney LLC and a new independent Russian production company which will require
that Eller McConney LLC assign to us all of its rights to receive production
services for digital sheet music from Avtograf in exchange for a one-time
payment from us to Eller McConney LLC subsequent to the closing of this offering
of $600,000 in cash. In addition, Avtograf will assign to the new Russian
production company its obligation to provide production services for digital
sheet music. Thereafter, the new independent Russian production company will be
obligated to provide services for digital sheet music to us at a rate of a
minimum of 2,250 pages per month and a total of 270,000 pages over the next ten
years at no additional cost to us. The one-time payment of $600,000 to Eller
McConney LLC will be accounted for as a prepayment for digital sheet music
production services from the new independent Russian production company over the
next ten years with recourse to Eller McConney LLC in the event of
non-performance. Neither Eller McConney LLC, Mr. Eller, Ms. McConney nor
Sunhawk.com will have an interest in the new Russian production company. See
"Certain Transactions."

We believe our foreign subcontractors are able to manage an increase in
production should we require it. In addition, U.S. third-party production
capabilities are available, although we believe that such domestic service
providers may be more costly than our foreign service providers.

Digital Distribution

Using our technology, we are providing an opportunity to change the
distribution and retailing of sheet music from a paper-based retail store model
to a digital download, preview, purchase and print-on-demand model. Our
proprietary technologies and Internet distribution capabilities offer publishers
a direct, low-cost retail channel for the secure and efficient distribution of
digital sheet music. Our distribution model significantly reduces distribution
costs by removing those costs traditionally associated with the distribution of
sheet music -- printing, warehousing and transportation and retail store
overhead costs. We believe that our digital distribution model can provide
publishers with the ease of use and distribution of digital material, the
security of limiting the distribution of digital music files, and the means to
better ensure that appropriate royalties will be calculated and paid for their
use. By the deployment of our proprietary technologies, we believe we will be
able to secure relationships with additional publishers to provide us with the
distribution rights to their sheet music. This, in turn, will enable us to offer
customers a wider selection of sheet music.

34
<PAGE> 36

Digital Retailing

Our web site, www.sunhawk.com, was launched in February 1997. In addition,
the Warner and EMIC online music stores promote Solero sheet music. Purchase
transactions are directed to our web site where we operate the transaction
processing functions for each purchase.

We believe that by providing digital sheet music over the Internet we enjoy
structural economic advantages relative to traditional retailers, including:

- lower costs and essentially unlimited shelf space, allowing us to offer a
broad selection of music titles that would be economically or physically
impractical to stock in a traditional music retail store;

- the ability to serve a worldwide customer base from a single domestic
location;

- through the global reach of the Internet, the ability to deliver a broad
selection of titles to customers in international, rural or other
locations that would not otherwise support a larger-scale physical retail
store;

- flexible advertising opportunities;

- lower personnel requirements and costs;

- scaleable technology and systems that can serve a growing customer base
and demand; and

- ability to maintain "out-of-print" sheet music in our retail digital
catalog.

Digital Publishing

We have the ability to publish the music of composers and artists,
including professional and amateur musicians, who wish to have their music
directly distributed digitally over the Internet. Our proprietary technologies
enable us to publish digital sheet music for lesser known composers and artists
and serve as a secure platform from which any artist can reach large audiences
in a short period of time.

As we continue to produce, distribute and sell increasing amounts of
digital sheet music, we believe that decisions to publish music will no longer
be driven by concerns about the costs of engraving, printing, warehousing and
distribution. By providing digital sheet music over the Internet, the cost of
printing (paper and ink) is borne directly by the consumer, and warehousing and
distribution costs simply consist of maintaining servers, storing digital sheet
music on these servers and sustaining relationships with Internet service
providers. Thus, only "engraving" (producing a digital sheet music file) remains
as our principal cost.

Digital publishing enables publishers to more easily distribute their
copyrighted music. Further, by delivering sheet music with our e-commerce
technology, publishers can limit the unauthorized distribution of their digital
sheet music and monitor the sales volume to make certain that appropriate
royalties are paid upon purchase.

35
<PAGE> 37

INTELLECTUAL PROPERTY

Our success will depend in large part on our ability to protect our
proprietary software and other intellectual property. To protect our proprietary
rights, we rely generally on patent, copyright, trademark and trade secret laws;
confidentiality agreements with our employees, consultants, vendors and
corporate business partners. Despite these protections, a third party could,
without authorization, copy or otherwise obtain and use our products or
technology to develop similar technology. Moreover, our agreements with
employees, consultants and others who participate in product and service
development activities may be breached, we may not have adequate remedies for
any breach, and our trade secrets may become known or independently developed by
competitors.

Patents. We have been issued two patents and have three patent applications
pending in the United States relating to our product architecture and
technology. Specifically, we have been issued a patent relating to our
relational database storage of music information ("Method and Apparatus for
Nonsequential Storage of and Access to Digital Musical Score and Performance
Information," Patent Number 5,773,741) as well as a patent relating to our
e-commerce technology ("Encryption System with Transaction Coded Decryption
Key," Patent Number 5,889,860), for which a continuation has been filed to
pursue the broader applications of this invention. Two other patents relating to
music notation and music notation input, respectively, are pending.

Any pending or future patent applications may not be granted, existing or
future patents may be challenged, invalidated or circumvented, and the rights
granted under a patent that has issued or any patent that may be issued may not
provide competitive advantages to us. Many of our current and potential
competitors dedicate substantially greater resources to protection and
enforcement of intellectual property rights, especially patents. If a blocking
patent has been issued or is issued in the future, we would need either to
obtain a license or to design around the patent. We may not be able to obtain a
required license on acceptable terms, if at all, or to design around the patent.

We attempt to avoid infringing known proprietary rights of third parties in
our product and service development efforts. We have not, however, conducted and
do not conduct comprehensive patent searches to determine whether the technology
used in our products infringes patents held by third parties. In addition, it is
difficult to proceed with certainty in a rapidly evolving technological
environment in which there may be numerous patent applications pending, many of
which are confidential when filed, with regard to similar technologies. If we
were to discover that our products violate third-party proprietary rights, we
may not be able to obtain licenses to continue offering these products without
substantial re-engineering, efforts to undertake this re-engineering may not be
successful, licenses may be unavailable on commercially reasonable terms, if at
all, and litigation may not be avoided or settled without substantial expense
and damage awards.

Trademarks. We have registered our "Solero" and "Sunhawk" marks in the
United States. We intend to continue to pursue the registration of these and
certain of our other trademarks in the United States and in other countries;
however, we cannot assure you that we can prevent all third-party use of our
trademarks.

Copyrights and Other Proprietary Rights. The underlying music we distribute
in digital and print form is protected by copyright law, unless the music has
become part of the public domain. Even if the underlying music has become part
of the public domain, we take steps to add copyrightable and other proprietary
elements in creating our Solero

36
<PAGE> 38

editions. There is no assurance that the steps we take will be adequate to
protect these rights or that we will be successful in preventing the illegal
duplication, distribution or other use of our products. Our failure to
adequately limit the unauthorized redistribution of our music products could
result in litigation or liability, which could harm our business.

We generally procure licenses for the music distributed in digital and
print form from third-party licensors, including music publishers and composers,
on a non-exclusive basis. Some of our competitors offer, or could offer, the
same sheet music song titles that we have licensed from these music publishers.
In some cases we own the copyrights in the underlying music. The underlying
music may be owned by a single copyright owner or have multiple copyright
owners. We have different licensing arrangements with these parties depending on
what rights we acquire. These arrangements range from formal contracts to
informal agreements based on the nature of the subject matter. We often rely on
our positive working relationships with copyright owners to obtain licenses on
favorable terms. Any changes in the nature or terms of these arrangements,
including any requirement that we pay significant fees for the use of the
content, or if such arrangements are found to be unenforceable, could have a
negative impact on the availability of content and could harm our business.

The laws of some foreign countries do not protect our proprietary rights to
the same extent as do the laws of the United States, and effective patent,
copyright, trademark and trade secret protection may not be available in these
jurisdictions.

We rely on technology that we license from third parties, including
software that is integrated with internally developed software and used in our
products and services, to perform key functions. Third-party technology licenses
may not continue to be available to us on commercially reasonable terms. The
loss of any of these technologies could harm our business. Moreover, although we
are generally indemnified against claims that our third-party technology
infringes the proprietary rights of others, this indemnification may be
unavailable or inadequate for all types of intellectual property rights. These
claims, even if not meritorious, could result in the expenditure of significant
financial and managerial resources in addition to potential product service
redevelopment costs and delays, all of which could harm our business.

COMPETITION

As a retailer of digital and printed sheet music over the Internet, we
currently or potentially compete with a variety of companies. With respect to
digital sheet music, we do not believe any of our competitors have converted
substantial portions of sheet music into an interactive digital format that can
be stored, encrypted, previewed, played and printed on a PC. However, companies
that are currently in similar or potentially competing businesses include:

- Sheet Music Direct. SMD has developed an Internet-based,
purchase-on-demand delivery system for digital sheet music, but their
music is non-interactive and does not allow the user to play the music,
choose instruments or select tempo. The web site is affiliated with sheet
music distributors Hal Leonard Corporation and Music Sales Corporation.

- Coda Music Technology. Coda has announced that it has developed an alpha
version of a product that would allow online transmission and viewing of
musical scores.

37
<PAGE> 39

If we expand the Sunhawk Audio portion of our business, we will face
significantly increased competition and different competitive challenges from
other Internet audio providers than we currently experience.

We believe that we have established certain barriers to entry to discourage
others from entering into the business of online sale and distribution of
digital music over the Internet, including the following:

- We have developed proven technologies for encrypting and managing the
rights to content.

- This technology enables us to provide publishers with the comfort and
security that the digital music files will be used as authorized and that
they will receive the royalties for the purchase of the copyrighted
material.

- We have built a production process designed to create what we believe is
one of the largest digital sheet music catalogs available.

- We have developed and deployed a proven method of digital distribution
which has been adopted by Warner and EMIC, two important music
publishers.

- We have secured two patents to certain aspects of our technology and have
developed significant other proprietary software for the conversion and
distribution of digital content.

Despite these potential barriers to entry, many of our current and
potential competitors are well-established companies that have greater
financial, marketing, distribution, brand recognition and other resources than
we have, and there can be no assurance that we will be able to compete
effectively against these companies. See "Risk Factors -- We Face Competition."

RESEARCH AND DEVELOPMENT

Since our inception, all of the time and financial resources dedicated to
research and development activities to develop our technology and digital sheet
music catalog have been expensed. Accordingly, we have not capitalized any
research and development expenditures. However, we estimate that we spent
approximately $220,000 in research and development activities during the last
two fiscal years. We cannot assure you that we will successfully develop new
technology or that competitors will not develop products, services or other
technology that are superior to ours.

FACILITIES

We lease approximately 20,000 square feet of office space in Seattle,
Washington at an annual rent of $326,808. The remaining lease term expires on
September 1, 2003. These facilities currently house our employees, and we
conduct general corporate and administrative matters, software development,
cataloging, scanning, quality control, music editing, web site development,
server operations and data warehousing from this location. We believe that our
current leasehold facilities are adequate for our intended use for the
foreseeable future.

38
<PAGE> 40

LEGAL PROCEEDINGS

From time to time we are subject to legal proceedings that arise in the
ordinary course of business. We do not believe that these actions, when finally
concluded, will have a material adverse effect on our business.

EMPLOYEES

As of June 1, 1999, we had 37 full-time and 3 part-time employees. None of
our employees is represented by a labor union, and we believe that our employee
relations are good.

39
<PAGE> 41

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The following table sets forth information about our directors, executive
officers and certain key employees.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Marlin Eller 46 Chairman of the Board, Chief Executive
Officer and President
Tricia Parks-Holbrook 43 Chief Financial Officer
Jill Ohara 43 Vice President of Operations
Theodore Grabowski, Jr. 43 Vice President of Legal and Business
Affairs
Gary Martin 46 Vice President of Publishing
Mary E. McConney, Ph.D 44 Treasurer
Fred Anton 52 Director
Luis F. Talavera 34 Director
Patricia Tangora 45 Director
</TABLE>

Marlin Eller is a co-founder of Sunhawk.com and is currently our Chairman
of the Board, Chief Executive Officer and President, positions he has held from
time to time since our inception in 1992. From 1982 to 1995, Mr. Eller held the
position of Manager, Software Development, at Microsoft Corporation. At
Microsoft, Mr. Eller was the development lead for GDI, the graphics subsystem of
Windows 1.0; development lead for Pen Windows; and the designer of handwriting
recognition software. While at Microsoft, he was named as the inventor on six
patents. He also led groups involved in video and data compression and
encryption and started the Microsoft online services. He received his Bachelor
of Arts, Phi Beta Kappa and magna cum laude, in Mathematics/Physics from Whitman
College in 1974 and his Master of Science in Mathematics from the University of
Washington in 1979. Mr. Eller also co-authored the book, Barbarians Led by Bill
Gates, published by Henry Holt, Inc. in 1998, and co-authored the article,
"Multiple-Scattering Calculations of X-Ray Absorption Spectra," published by The
American Physical Society in 1995. He was a visiting instructor in Computer
Sciences at Williams College for two years prior to joining Microsoft. Mr. Eller
is married to Ms. McConney, our Treasurer.

Tricia Parks-Holbrook joined Sunhawk.com in June 1999 as our Chief
Financial Officer. From 1989 to 1998, Ms. Parks-Holbrook was with KPMG Peat
Marwick, LLP as Senior Manager and was responsible for supervising the planning
and performance of attest engagements with clients in a variety of industries.
From 1988 to 1989, she was with CP National Corporation in their external
reporting department. From 1979 to 1988, Ms. Parks-Holbrook worked with PGL
Corporation, a subsidiary of F.H. Tompkins, PLC, a public company in the United
Kingdom, serving the last three years in the capacity of controller. Ms.
Parks-Holbrook received her Bachelor of Science, cum laude, in Business
Administration with an Accounting Option from California State University at
Hayward, California in 1988. While there she received the San Francisco
Financial Executive Institutes Medallion Award. She is licensed and certified as
a public accountant in California (1991) and Washington (1998), and is a member
of the American Institute of Certified Public Accountants and the Washington
Society of Certified Public Accountants. She also serves as treasurer on the
board of Resolve of Washington State, a non-profit organization.

40
<PAGE> 42

Jill Ohara joined Sunhawk.com in February 1998 as Music Production Manager,
was promoted to Vice President of Production in April 1998 and has served as
Vice President of Operations since June 1999. From 1981 to 1997, Ms. Ohara
served with the U.S. National Academy of Sciences ("NAS") and was assigned to
the Radiation Effects Research Foundation ("RERF"), a multicultural research
foundation in Japan. As Chief of the Information Technology Department at the
RERF, she set current priorities and future directions for foundation computing
activities; implemented computer policy standards; reported to funding agencies
and international committees; designed and executed a $1 million yearly budget;
and served on research and policy committees affecting foundation directions.
With a staff of 20, she initiated and completed the foundation transition from a
mainframe system to a Unix workstation and PC distributed computing network and
introduced modern software tools to manage a database of several hundred
thousand individuals. Ms. Ohara received outstanding service awards from NAS in
1995 and 1996. In other management and research roles at RERF, she engaged in
hardware/software support, statistical programming, data analysis and support of
a dosimetry system used in the setting of worldwide radiation protection
standards. From 1979 to 1981, she served as Statistician in the Jonsson
Comprehensive Cancer Center at the University of California at Los Angeles,
performing extensive programming for database management and statistical
analysis. Ms. Ohara received her Bachelor of Arts, magna cum laude, in
Mathematics from UCLA in 1977 and her Master of Science in Biostatistics from
UCLA in 1979. She has published articles in Biometrics, Radiation Research and
the American Journal of Roentgenology.

Theodore Grabowski, Jr. joined Sunhawk.com as our General Counsel in July
1998 and assumed the position of Vice President of Legal and Business Affairs in
June 1999. From 1989 to 1997, Mr. Grabowski worked for Mindscape, Inc., a
developer of entertainment and educational software, and held the position of
Vice President and Associate General Counsel when he left the company. Prior to
that, he was in private practice with an emphasis on intellectual property and
licensing law. Mr. Grabowski received a Bachelor of Arts degree, magna cum
laude, in Psychology and in Philosophy, from California State University at
Northridge in 1979, and a Juris Doctorate from Loyola Marymount University of
Los Angeles in 1984.

Gary Martin joined Sunhawk.com in January 1995 as our Program Manager and
has served as our Vice President of Publishing since June 1999. Mr. Martin built
and developed our digital music production operations and set up the initial
Russia music production facility. He formulated the engraving specifications for
our Solero Music Editor, designed the proprietary font which provides graphical
elements used in the Solero music scores, created the Sunhawk Style Manual used
by employees and third-party subcontractors for maintaining high quality and
uniformity in our Solero scores. Mr. Martin currently oversees the quality of
music production, promotes and maintains new contracts with music publishers and
coordinates the development of our marketing team. From 1993 to 1994, while
serving as Vice President of MacArthur Publishers, Inc., a desktop publishing
company, Mr. Martin worked with the Ancient Biblical Manuscript Center in
California and typeset The Dead Sea Scrolls Catalog (Scholars Press, 1994), one
of the most comprehensive database compilations on this topic to date. Mr.
Martin earned a Bachelor of Arts, cum laude, in Physics-Astronomy from Whitman
College in 1975.

Mary E. McConney, Ph.D is a co-founder of Sunhawk.com and is currently our
Treasurer. From 1992 until June 1999, Ms. McConney served as our Chief Financial
Officer, Secretary and Treasurer and as a director. In addition, from 1988 to
the present,

41
<PAGE> 43

Ms. McConney has served as the President of HiroSoft International Corporation,
a corporation she founded that writes statistical programs for modeling
different kinds of risk functions. From 1985 to 1988, Ms. McConney was employed
in the fields of applied statistics and database design and implementation by
NAS. From 1977 to 1985, she was employed in the fields of applied statistics,
database design and policy analysis by the University of Washington and the
University of Pennsylvania. Ms. McConney received her Bachelor of Arts in
Physics and Environmental Studies from Whitman College in 1976. While at the
University of Pennsylvania, she received two Master degrees, one in economics in
1979 and one in Urban Planning in 1980, and a Ph.D in spatial economics in 1983.
Ms. McConney's duties at HiroSoft do not interfere with her duties at
Sunhawk.com since she devotes substantially all of her time to her duties at
Sunhawk.com. She has published articles in the Annals of the New York Academy of
Sciences, Urban Studies, Circulation and the Journal of the American College of
Cardiology.

Fred Anton has been a director of Sunhawk.com since July 1998. Since March
1998, Mr. Anton has served as the President/Chief Operating Officer of Warner
Bros. Publications, where he also served as the Chief Financial Officer/Chief
Operating Officer from September 1996 to March 1998. From 1994 to September
1996, Mr. Anton served as Vice President of Finance for the Warner Music Group
and subsequently was made Executive Vice President/Chief Operating Officer for
Warner Vision Entertainment. From July 1990 to 1994, he served as the Vice
President International Finance and Administration at Time Warner, Inc. Mr.
Anton has a Bachelor of Arts degree in Economics from Clark University in
Worcester, Massachusetts and a Master of Business Administration degree from
Washington University in St. Louis, Missouri. He is a member of the American
Institute of Certified Public Accountants and the New York State Society of
Certified Public Accountants. He is also on the board of directors of the Music
Publisher's Association. See "Certain Transactions."

Luis F. Talavera has been a director of Sunhawk.com since June 1999. Since
1998, Mr. Talavera has overseen seed-capital funding by N.S.L., an international
venture capital fund specializing in computer and communications ventures. Mr.
Talavera also currently serves as a board member for various technology
companies, including Global Product Channel, a Norwegian e-commerce solutions
company, and Poseidon, a French developer of swimming pool safety technology.
From 1988 to 1997, Mr. Talavera was employed by Microsoft Corporation, most
recently as a Director of Research and Development. At Microsoft, Mr. Talavera
was one of the first members of the Pen Windows computing team and the co-author
of Microsoft's first handwriting recognition software. As a Director of Research
and Development for Softimage, a subsidiary of Microsoft, from 1995 to 1997, Mr.
Talavera was responsible for the development and launch of Softimage IDS, the
first non-linear professional post-production system. Mr. Talavera received a
Bachelor of Science degree in Computer Engineering from the University of
California at San Diego in 1987. He also holds two patents that have been issued
and three patents that are pending.

Patricia Tangora has been a director of Sunhawk.com since June 1999. Ms.
Tangora is currently a member of Dethman & Tangora, LLC, an environmental
consulting firm. From 1989 to 1998, Ms. Tangora was a senior project manager at
R.W. Beck, Inc., a national consulting and engineering firm. She was made an
owner in that firm in 1997. At R.W. Beck, her work included conducting due
diligence reviews for project financing, negotiating long-term, multi-million
dollar service contracts and advising clients on development and environmental
compliance strategies for major projects. She was also responsible for
approximately $1 million in annual sales and participated in strategic

42
<PAGE> 44

planning and marketing efforts within her area of practice. Ms. Tangora received
her Bachelor of Arts degree in English from Whitman College in 1976 and a
Bachelor of Science degree in Civil/Environmental Engineering from the
University of Washington in 1979.

We currently have authorized five directors; however, one board seat
currently remains vacant. We are in the process of identifying a fifth director.
Directors are elected by the shareholders at each annual meeting of shareholders
to serve until the next annual meeting of shareholders or until their successors
are duly elected and qualified.

See "Certain Transactions" for a description of the voting arrangement
between Warner and certain of our shareholders relating to Warner's ability to
nominate one of the members of our board of directors.

AUDIT COMMITTEE AND COMPENSATION COMMITTEE

Our board of directors has established an audit committee and a
compensation committee. The audit committee, which currently consists of
Patricia Tangora and Luis Talavera, is responsible for reviewing our internal
accounting procedures and consulting with and reviewing the services provided by
our independent auditors. The compensation committee, which currently consists
of Fred Anton and Patricia Tangora, is responsible for reviewing and
recommending to our board of directors the compensation and benefits of all
officers of Sunhawk.com and establishing and reviewing general policies relating
to the compensation and benefits of our employees.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

Directors' Compensation. Effective as of the date of the completion of this
offering, as an inducement to joining our board of directors, each of our
non-employee directors has been granted, at the initial public offering price,
an immediately exercisable option under our 1996 Stock Option Plan to purchase
2,500 shares of common stock. In addition, we pay each non-employee director
$2,500 per board meeting attended. All directors are entitled to reimbursement
for expenses incurred in traveling to and from meetings of our board of
directors.

Executive Officers' Compensation. During the fiscal year ended September
30, 1998, and prior to the closing this offering, Mr. Eller was not paid a
salary. Brent Mills, our former Chief Executive Officer, received a salary of
$55,000 during the fiscal year ended September 30, 1998, and a salary of $23,163
during the fiscal year ended September 30, 1999 prior to the termination of his
employment with us in March 1999. None of our other executive officers received
total annual salary and bonus during the fiscal year ended September 30, 1998 in
excess of $100,000. To date, we have not granted Mr. Eller any stock options or
other equity-based compensation. After completion of this offering, Mr. Eller
will enter into an employment agreement with us. This employment agreement will
have a three-year term and provide Mr. Eller with (i) an annual salary of
$96,000 for the first year, which salary will be increased by 10% during each of
the two subsequent years, (ii) options under our 1996 Stock Option Plan to
purchase 30,000 shares of our common stock vesting over five years at an
exercise price equal to the initial public offering price, and (iii) an annual
bonus to be determined by our compensation committee on a yearly basis.

43
<PAGE> 45

KEY MAN INSURANCE

We have applied for a $1,000,000 key man life insurance policy on the life
of Mr. Eller.

STOCK OPTION PLAN

Our board of directors adopted our 1996 Stock Option Plan in June 1996, and
our shareholders approved it in June 1996. We have reserved a total of 303,526
shares of common stock for issuance under the plan, of which 218,695 shares were
available for issuance as of March 31, 1999. The plan provides for the granting
to employees, including officers and directors, of incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, and for the granting to employees, consultants and nonemployee
directors, of nonstatutory stock options. Unless terminated earlier, the plan
will terminate in June 2006. Generally, options granted under the plan vest over
five years and have a term of ten years and are nontransferable.

After this offering, the plan will be administered by our compensation
committee, known as the "administrator." The administrator determines the terms
of options granted under the plan, including the number of shares subject to an
option, the vesting terms, the exercise price, and the term and exercisability
of options. The exercise price of all incentive stock options granted under the
plan generally must be at least equal to the fair market value of our common
stock on the date of grant. The administrator has the authority to grant
nonstatutory stock options at prices below fair market value. Payment of the
purchase price of options may be made in cash or other consideration as
determined by the administrator. If an optionee would have the right in any
calendar year to exercise for the first time incentive stock options for shares
having an aggregate fair market value (determined for each share as of the date
the option to purchase the shares was granted) in excess of $100,000, any such
excess options shall be treated as nonstatutory stock options.

In the event that we are acquired by another company, we expect that awards
outstanding under the plan will be assumed or equivalent awards substituted by
our acquiror. If an acquiror did not agree to assume or substitute awards, the
vesting of outstanding options will accelerate prior to consummation of the
transaction.

The board of directors has the authority to amend or terminate the plan as
long as such action does not materially and adversely affect any outstanding
options and provided that shareholder approval for any amendments to the plan
shall be obtained to the extent required by applicable law.

CERTAIN TRANSACTIONS

On March 31, 1999, the Eller and McConney 1995 Family Living Trust
converted $3,568,406 of debt owed to it by Sunhawk.com into 374,257 shares of
our common stock at a price per share of $9.53. On this same date, the Eller and
McConney 1995 Family Living Trust forgave $1,000,000 of long-term debt owed to
it by Sunhawk.com and purchased an additional 157,345 shares of our common stock
for $1,500,000, at a price per share of $9.53. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

44
<PAGE> 46

We currently receive for review approximately 4,100 pages of digital sheet
music per month from Avtograf, a Russian joint stock company in which Eller
McConney LLC holds a 94% ownership interest, pursuant to a five-year agreement,
and accrue and expect to pay to Eller McConney LLC $7.00 per page upon
acceptance. Mr. Eller and Ms. McConney are the sole members of Eller McConney
LLC. This sheet music is sold to us pursuant to an agreement between us and
Eller McConney LLC, which has an agreement with Avtograf to receive production
services for digital sheet music. Upon the closing of this offering, we will
enter into an assignment and assumption agreement with Avtograf, Eller McConney
LLC and a newly formed independent Russian production company which will require
that Eller McConney LLC assign to us all of its rights to receive pages of
digital sheet music from Avtograf in exchange for a one-time payment from us to
Eller McConney LLC subsequent to the closing of this offering of $600,000 in
cash. In addition, Avtograf will transfer to the new Russian production company
its obligation to provide production services for digital sheet music.
Thereafter, the new independent Russian production company will be obligated to
provide production services for digital sheet music to us at a rate of a minimum
of 2,250 pages per month and a total of 270,000 pages over the next ten years at
no additional cost to us. The one-time payment of $600,000 to Eller McConney LLC
will be accounted for as a prepayment for digital sheet music production
services from the new independent Russian production company over the next ten
years with recourse to Eller McConney LLC in the event of non-performance.
Neither Eller McConney LLC, Mr. Eller, Ms. McConney nor Sunhawk.com will have an
interest in the new Russian production company.

On May 18, 1998, we entered into a distribution agreement with Warner. As
part of the consideration paid by us for the rights granted to us under the
distribution agreement, we agreed to issue 138,371 shares of our common stock to
Warner, contingent upon the occurrence of certain events. Consequently, on March
31, 1999, as a result of the sale of shares of our common stock to the Eller
McConney 1995 Family Living Trust, we issued Warner 138,371 shares of our common
stock. We have also granted certain registration rights to Warner in connection
with all of the shares of our common stock held by Warner. See "Description of
Securities." Further, under the terms of the Warner distribution agreement,
certain of our shareholders agreed to vote any shares of our common stock held
by them for the election of an individual to be designated by Warner to our
board of directors. This right will continue for so long as Warner owns shares
representing at least 2% of our outstanding common stock. Warner has currently
designated Fred Anton to serve as its representative on our board of directors.
See "Management."

45
<PAGE> 47

PRINCIPAL SHAREHOLDERS

The following table sets forth information regarding the beneficial
ownership of our common stock as of the date of this prospectus, and as adjusted
to reflect this offering, by:

- each person or group that we know owns 5% or more of our common stock;

- each of the named executive officers and each of our directors; and

- our executive officers and directors as a group.

<TABLE>
<CAPTION>
BENEFICIALLY OWNED SHARES(1)
-------------------------------------
PRIOR TO OFFERING AFTER OFFERING
------------------- --------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT PERCENT
------------------------------------ --------- ------- --------------
<S> <C> <C> <C>
Eller and McConney 1995 Family Living
Trust(2)..................................... 1,430,565 73.7% 45.5%
c/o Sunhawk.com Corporation
223 Taylor Avenue North, Suite 200
Seattle, Washington 98109
Marlin Eller(2)................................ 1,430,565 73.7% 45.5%
Mary E. McConney, Ph.D(2)...................... 1,430,565 73.7% 45.5%
Brent Mills(3)................................. 359,584 18.5% 11.4%
7720 39th Avenue N.E.
Seattle, Washington 98105
Judy McOstrich(4).............................. 359,584 18.5% 11.4%
7720 39th Avenue N.E.
Seattle, Washington 98105
Warner Bros. Publications U.S., Inc. .......... 138,371 7.1% 4.4%
15800 N.W. 48th Avenue
P.O. Box 4340
Miami, Florida 33014
Fred Anton(5).................................. 138,371 7.1% 4.4%
Gary Martin(6)................................. 3,330 * *
Patricia Tangora............................... -- -- --
Luis F. Talavera............................... -- -- --
Jill Ohara..................................... -- -- --
Theodore Grabowski, Jr. ....................... -- -- --
All directors and executive officers as a group
(8 persons)(7)............................... 1,572,266 80.9% 50.0%
</TABLE>

- -------------------------
* Less than 1%

(1) This table is based on information supplied by our executive officers,
directors and shareholders. Subject to applicable community property laws,
and except as otherwise provided, each shareholder named in the table has
sole voting and investment power with respect to the shares set forth
opposite such shareholder's name.

(2) Mr. Eller, our Chairman of the Board, Chief Executive Officer and President,
and Ms. McConney, our Treasurer, are the trustees of the Eller and McConney
Family 1995 Living Trust and, as such, retain voting and investment power
with respect to these shares.

(3) Includes 38,526 shares of common stock held by Mr. Mills' spouse, Judy
McOstrich.

46
<PAGE> 48

(4) Includes 321,058 shares of common stock held by Ms. McOstrich's spouse,
Brent Mills.

(5) Includes 138,371 shares of our common stock owned by Warner, of which one of
our directors, Fred Anton, is President/Chief Operating Officer. Mr. Anton
disclaims beneficial ownership over these shares.

(6) Represents immediately exercisable options granted under our 1996 Stock
Option Plan.

(7) Includes 138,371 shares of our common stock owned by Warner, of which one of
our directors, Fred Anton, is President/Chief Operating Officer. Mr. Anton
disclaims beneficial ownership and over these shares. Also includes 3,330
shares of common stock issuable pursuant to immediately exercisable options
held by Gary Martin, our Vice President of Publishing.

47
<PAGE> 49

DESCRIPTION OF SECURITIES

The following summary description of our capital stock is not intended to
be complete and is subject to and qualified in its entirety by reference to,
prior to the Delaware reincorporation described below, our Amended and Restated
Articles of Incorporation and our Amended and Restated Bylaws and, following our
Delaware reincorporation, our Delaware Certificate of Incorporation and our
Delaware Bylaws, copies of each of which are filed as exhibits to the
registration statement of which this prospectus forms a part.

GENERAL

Immediately prior to the date of this prospectus, we had authorized capital
stock consisting of 20,000,000 shares of common stock, no par value, of which
1,940,851 shares were issued and outstanding, and 1,000,000 shares of preferred
stock, no par value, of which no shares were issued and outstanding. Immediately
prior to the date of this prospectus, there were five holders of record of our
common stock. Upon completion of this offering and following our Delaware
reincorporation, we will be authorized to issue 10,000,000 shares of common
stock, $0.0001 par value, of which 3,140,851 shares of common stock will be
issued and outstanding, assuming that no options are exercised. Our Delaware
Certificate of Incorporation will not provide us with the right to issue
preferred stock.

We have reserved 303,526 shares of common stock for issuance under our 1996
Stock Option Plan, of which 218,695 shares were available for issuance as of
March 31, 1999.

COMMON STOCK

Holders of outstanding shares of our common stock are entitled to one vote
per share on all matters submitted to a vote of our shareholders. Except as may
be required by applicable law, holders of outstanding shares of our common stock
vote together as a single class. Holders of a majority of the outstanding shares
of our common stock constitute a quorum at any meeting of our shareholders, and
the vote by the holders of a majority of our common stock is required to effect
certain fundamental corporate changes, including liquidation, merger or sale of
substantially all of our assets.

Holders of our common stock are entitled to receive dividends if and when
declared by our board of directors out of funds legally available for that
purpose. See "Dividend Policy." In the event of our liquidation, dissolution or
winding up, holders of our common stock are entitled to share ratably in all
assets remaining after payment of liabilities. Holders of our common stock have
no preemptive rights or other rights to subscribe for unissued or treasury
shares or securities convertible into or exercisable or exchangeable for shares
of our common stock. The outstanding shares of common stock are, and the shares
of common stock being offered in this prospectus when issued will be, duly
authorized and validly issued and, upon payment therefor, fully paid and
nonassessable.

PREFERRED STOCK

Prior to our Delaware reincorporation, our board of directors has the
authority to issue up to 1,000,000 shares of preferred stock in one or more
series and to fix the powers, designations, rights, preferences and restrictions
thereof, including dividend rights, conversion rights, voting rights, redemption
terms, liquidation preferences and the number of shares constituting each such
series, without any further vote or action by our
48
<PAGE> 50

shareholders. The issuance of preferred stock in certain circumstances may
delay, deter or prevent a change in control of Sunhawk.com, may discourage bids
for our common stock at a premium over the market price of the common stock, and
may adversely affect the market price of, and the voting and other rights of the
holders of, our common stock. We currently have no plans to issue any preferred
stock and will be unable to do so after our Delaware reincorporation.

DELAWARE REINCORPORATION

Prior to the closing of this offering, we intend to reincorporate
Sunhawk.com from a corporation governed by the laws of the State of Washington
to a corporation governed by the laws of the State of Delaware. As part of the
reincorporation process, we will form a Delaware corporation as our wholly-owned
subsidiary, which will be governed by a Delaware Certificate of Incorporation
and Delaware Bylaws. Our shareholders, whose rights are currently governed by
our Amended and Restated Articles of Incorporation, Amended and Restated Bylaws
and Washington law, will, upon completion of the Delaware reincorporation, have
their rights governed by our Delaware Certificate of Incorporation, our Delaware
Bylaws and Delaware law. Although we do not believe that such reincorporation
entitles our existing shareholders to dissenters' rights, any claims for
dissenters' rights, if successful, could require payment by us to dissenting
shareholders of the fair value of their shares.

The shares you may purchase pursuant to this offering will be governed by
our Delaware Certificate of Incorporation, our Delaware Bylaws and Delaware law.
In this prospectus, where applicable, we have described the material differences
between the rights of our shareholders under our Amended and Restated Articles
of Incorporation, our Amended and Restated Bylaws and Washington law, and the
rights to be effective upon completion of our Delaware reincorporation under our
Delaware Certificate of Incorporation, our Delaware Bylaws and Delaware law.

Under our Delaware Certificate of Incorporation to be effective following
the Delaware reincorporation, shareholders who hold shares of our common stock
issued prior to the date of the closing of this offering (or have been granted
options to purchase shares of our common stock prior to such date) will not be
able to, directly or indirectly, offer, sell, announce an intention to sell,
contract to sell, pledge, hypothecate, grant any option to purchase or otherwise
dispose of any shares of our common stock or any securities convertible into or
exchangeable or exercisable for shares of our common stock for a period of 24
months following the closing of this offering without the prior written consent
of the Representative. The shares of common stock currently being offered will
not be subject to this "lock-up" provision and will be freely tradable after
issuance. See "Shares Eligible for Future Sale."

REGISTRATION RIGHTS

Under the terms of our distribution agreement with Warner, Warner is
entitled to have its shares registered by us under the Securities Act.
Specifically, following the expiration of the "lock-up" period to be contained
in our Delaware Certificate of Incorporation, Warner may request that we
register all or a part of its shares. Warner may make this request no more than
twice. Pursuant to the terms of Warner's agreement, we will bear all
registration expenses other than underwriting discounts and commissions in

49
<PAGE> 51

connection with any such registration. See "Underwriting" for a description of
certain registration rights granted to the Representative.

ANTI-TAKEOVER LAW

Both Washington law and Delaware law contain certain provisions which could
make our acquisition by a third party more difficult. These provisions,
summarized below, are expected to discourage coercive takeover practices and
inadequate takeover bids and to encourage persons seeking to acquire control of
Sunhawk.com to negotiate with us first.

Washington. Chapter 19 of the Washington Business Corporation Act generally
prohibits a "target corporation," with certain exceptions, from engaging in
certain significant business transactions with an "acquiring person," which is
defined as a person or group of persons that beneficially owns 10% or more of
the voting securities of the target corporation, for a period of five years
after the acquisition, unless the transaction or acquisition of shares is
approved by a majority of the members of the target corporation's board of
directors prior to the time of acquisition. Such prohibited significant business
transactions include, among other things:

- a merger or consolidation with, disposition of assets to or issuance or
redemption of stock to or from the acquiring person;

- termination of 5% or more of the employees of the target corporation as a
result of the acquiring person's acquisition of 10% or more of the
shares; or

- allowing the acquiring person to receive any disproportionate benefits as
a shareholder.

After the five-year period, a "significant business transaction" may occur, as
long as it complies with certain "fair price" provisions of the statute. A
corporation may not "opt out" of this statute.

Delaware. Following our Delaware reincorporation, we will be subject to
Section 203 of the Delaware General Corporation Law, which regulates corporate
acquisitions. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years following the date the person became an
interested stockholder, unless:

- the board of directors approved the transaction in which such stockholder
became an interested stockholder prior to the date the interested
stockholder attained such status;

- upon completion of the transaction that resulted in the stockholder
becoming an interested stockholder, he owned at least 85% of the voting
stock of the corporation outstanding at the time the transaction
commenced, excluding shares owned by persons who are directors and also
officers; or

- on or subsequent to such date the business combination is approved by the
board of directors and authorized at an annual or special meeting of
stockholders.

A "business combination" generally includes a merger, asset or stock sale or
other transaction resulting in a financial benefit to the interested
stockholder. In general, an "interested stockholder" is a person who, together
with affiliates and associates, owns, or

50
<PAGE> 52

within three years prior to the determination of interested stockholder status,
did own, 15% or more of a corporation's voting stock.

DIRECTOR AND OFFICER LIABILITY AND INDEMNIFICATION

Our Amended and Restated Articles of Incorporation currently limit the
liability of directors to the fullest extent permitted by the Washington
Business Corporation Act. Consequently, subject to the Washington Business
Corporation Act, no director will be personally liable to us or our shareholders
for monetary damages resulting from his or her conduct as a director of
Sunhawk.com, except liability for:

- acts or omissions involving intentional misconduct or knowing violations
of law;

- unlawful distributions; or

- transactions from which the director personally receives a benefit in
money, property or services to which the director is not legally
entitled.

Our Amended and Restated Bylaws provide for indemnification of our directors,
officers, employees and agents to the maximum extent permitted by Washington
law. Our directors and officers also may be indemnified against liability they
may incur for serving in those capacities pursuant to our liability insurance
policy maintained for such purpose.

Following our Delaware reincorporation, our Delaware Certificate of
Incorporation will limit the liability of directors to the maximum extent
permitted by Delaware law. Delaware law provides that directors of a corporation
will not be personally liable for monetary damages for breaches of their
fiduciary duties as directors, except liability for:

- any breach of their duty of loyalty to the corporation or its
stockholders;

- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- unlawful payments of dividends or unlawful stock repurchases or
redemptions; or

- any transaction from which the director derived an improper personal
benefit.

Such limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission. Our Delaware Certificate of
Incorporation and Delaware Bylaws will also provide that we shall indemnify our
directors and executive officers and may indemnify our other officers and
employees and other agents to the fullest extent permitted by law.

To the extent the provisions of our corporate governance documents provide
for indemnification of directors or officers for liabilities arising under the
Securities Act those provisions are, in the opinion or the Securities and
Exchange Commission, against public policy as expressed in the Securities Act
and are therefore unenforceable.

51
<PAGE> 53

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common
stock. Sales of a substantial amount of common stock in the public market, or
the perception that such sales may occur, could adversely affect the market
price of the common stock prevailing from time to time in the public market and
could impair our ability to raise additional capital through the sale of our
equity securities in the future.

Upon completion of this offering, there will be 3,140,851 shares of our
common stock outstanding (3,320,851 shares if the underwriters' over-allotment
option is exercised in full), consisting of 1,200,000 shares of common stock
being offered in this prospectus (1,380,000 shares if the underwriters'
over-allotment option is exercised in full) and 1,940,851 restricted shares of
common stock. In addition, we have reserved 303,526 shares of common stock for
issuance under our 1996 Stock Option Plan, of which 46,305 shares were subject
to outstanding options and 218,695 shares were available for future issuance as
of March 31, 1999.

The shares of common stock currently being offered will be freely tradable
without restriction or further registration under the Securities Act by persons
other than our affiliates. The restricted shares will be freely tradable if
subsequently registered under the Securities Act or to the extent permitted by
Rules 144 or 701 or some other exemption from registration under the Securities
Act, subject to the "lock-up" provisions to be contained in our Delaware
Certificate of Incorporation and described below.

In general, under Rule 144 as currently in effect, if one year has elapsed
since the date of acquisition of restricted shares from Sunhawk.com or an
affiliate of Sunhawk.com, the holder is entitled to sell, in the public market,
within any three-month period, that number of shares of common stock which does
not exceed the greater of 1% of the total number of then outstanding shares of
common stock or the average weekly trading volume of shares of common stock
during the four calendar weeks preceding the date on which notice of the sale is
filed with the Securities and Exchange Commission. Sales under Rule 144 are also
subject to certain requirements as to the manner of sale, notice and
availability of current public information about Sunhawk.com. If two years have
elapsed, a holder, other than an affiliate of Sunhawk.com, is entitled to sell
restricted shares in the public market under Rule 144(k) without regard to the
volume limitations, manner of sale requirements, public information requirements
or notice requirements.

Rule 701, as currently in effect, permits our employees, officers,
directors or consultants who purchased shares pursuant to a written compensatory
plan or contract to resell such shares in reliance upon Rule 144 but without
compliance with specific restrictions. Rule 701 provides that affiliates may
sell their Rule 701 shares under Rule 144 without complying with the holding
period requirement and that non-affiliates may sell such shares in reliance on
Rule 144 without complying with the holding period, public information, volume
limitation or notice provisions of Rule 144.

Of the restricted shares, 12,331 shares of common stock will be eligible
for sale under Rule 144 under the Securities Act 90 days after the date of this
prospectus, subject to the lock-up provisions described below.

Under our Delaware Certificate of Incorporation to be effective following
our Delaware reincorporation, shareholders who hold shares of our common stock
issued prior to the date of the closing of this offering (or have been granted
options to purchase shares of our common stock prior to such date) will not be
able to, directly or indirectly, offer,

52
<PAGE> 54

sell, announce an intention to sell, contract to sell, pledge, hypothecate,
grant any option to purchase or otherwise dispose of any shares of our common
stock or any securities convertible into or exchangeable or exercisable for
shares of our common stock for a period of 24 months following the closing of
this offering without the prior written consent of the Representative. The
shares of common stock currently being offered will not be subject to this
"lock-up" provision and will be freely tradable. See "Description of
Securities." We have also agreed not to file with the Securities and Exchange
Commission a registration statement under the Securities Act relating to any of
these shares during this 24-month "lock-up" period.

53
<PAGE> 55

UNDERWRITING

Subject to the terms and conditions set forth in the underwriting agreement
among us and the underwriters named below, each of the underwriters has
severally agreed to purchase from us, and we have agreed to sell to the
underwriters, the number of shares of common stock set forth below opposite each
underwriter's name, at the initial public offering price per share less the
underwriting discounts and commissions set forth on the cover page of this
prospectus.

<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
------------ ---------
<S> <C>
Coleman and Company Securities, Inc. .......................
Oscar Gruss & Son Incorporated..............................

Total............................................. 1,200,000
=========
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to pay for and accept delivery of the shares are subject to certain
conditions precedent and that the several underwriters will purchase all of the
shares, if any of the shares are purchased.

The Representative has advised us that the underwriters initially propose
to offer the shares of common stock directly to the public at the initial public
offering price per share set forth on the cover page of this prospectus and to
certain dealers at such price less a concession not in excess of $ per
share. The underwriters may allow, and these dealers may reallow, a concession
not in excess of $ per share to other dealers. After this offering, the
public offering price, concession and re-allowance may be changed.

We have granted to the underwriters an option, exercisable during the
30-day period after the date of this prospectus, to purchase up to an aggregate
of 180,000 additional shares of common stock at the initial public offering
price per share less the underwriting discounts and commissions set forth on the
cover page of this prospectus. The underwriters may exercise this option only to
cover over-allotments, if any, made in connection with the sale of the shares of
common stock offered hereby. To the extent that the underwriters exercise this
option, each underwriter will be obligated, subject to certain conditions, to
purchase the number of additional shares of common stock proportionate to the
underwriters' initial commitment reflected in the preceding table.

We have agreed to pay the Representative a non-accountable expense
allowance equal to 2% of the gross proceeds of this offering, of which $35,000
has already been paid, to cover certain of the underwriting costs and due
diligence expenses relating to this offering.

We have agreed to permit the Representative to have an observer attend
meetings of our board of directors for a period of three years from the
effective date of the Registration Statement of which this prospectus forms a
part. The Representative's observer will be reimbursed for all out-of-pocket
expenses incurred in connection with the observer's attendance at meetings of
our board of directors and will receive cash compensation equal to the cash
compensation payable by us to our outside directors for attendance at meetings
of our board of directors, provided, however, that the per meeting fees payable
to the Representative's observer shall not be less than $1,500 and that there
shall be a minimum of four meetings per year. The Representative shall also
receive the same coverage under

54
<PAGE> 56

our directors and officers insurance policy that is extended to our officers and
directors. Additionally, the Representative has been retained as our investment
banking advisor for a 12-month period commencing upon the closing of this
offering, and, for such services, we have agreed to pay the Representative a
one-time fee of $36,000 at the closing of this offering.

We and the underwriters have agreed to indemnify each other against, or to
contribute to losses arising out of, certain civil liabilities in connection
with this offering, including liabilities under the Securities Act. We and the
underwriters are each aware that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.

The Representative, on behalf of the underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934. Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position. Stabilizing transactions permit bids
to purchase shares so long as the stabilizing bids do not exceed a specified
maximum. Syndicate covering transactions involve purchases of shares in the open
market after the distribution has been completed in order to cover syndicate
short positions. Penalty bids permit the Representative, on behalf of the
underwriters, to reclaim a selling concession from a syndicate member when the
shares originally sold by the syndicate member are purchased in a syndicate
covering transaction to cover syndicate short positions. Such over-allotment,
stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the common stock to be higher than it would otherwise be in
the absence of such transactions. These transactions may be effected on the
Nasdaq SmallCap(R) Market or otherwise and, if commenced, may be discontinued at
any time.

Application will be made for quotation of the common stock on the Nasdaq
SmallCap(R) Market under the symbol "SNHK," and listing on the Pacific Stock
Exchange under the symbol "SNH."

Prior to this offering, there has been no public trading market for our
common stock. The public offering price of the shares of common stock offered
hereby will be determined by negotiation between us and the Representative.
Factors to be considered in determining the initial public offering price, in
addition to prevailing market conditions, include the history of and prospects
for the industry in which we operate, an assessment of our management, our
prospects, our capital structure and such other factors as are deemed relevant.

In connection with this offering, we have agreed to sell the
Representative's warrants to the Representative for a nominal price. The
Representative's warrants entitle the Representative to purchase shares in an
amount equal to 10% of the total number of shares sold in this offering
(excluding shares subject to the Underwriters' over-allotment option). The
shares issuable upon exercise of the Representative's warrants will be in all
respects identical to the shares offered to you. The Representative's warrants
will be limited to a term of five years from the date of this prospectus and
will be exercisable for a four-year period commencing 12 months after the date
of this prospectus, at a per share exercise price equal to 120% of the initial
public offering price per share set forth on the cover page of this prospectus.
The Representative's warrants may not be sold, assigned, transferred, pledged or
hypothecated for a period of 12 months from the date of this prospectus except
to the Representative or its officers. Pursuant to the terms of the underwriting
agreement,

55
<PAGE> 57

we are registering the shares issuable upon exercise of the Representative's
warrants under the registration statement of which this prospectus forms a part
and we have agreed to file, at our expense, during the period beginning one year
from the date of this prospectus and ending five years after such date, on no
more than one occasion at the request of the holders of a majority of the
Representative's warrants and the underlying shares, and to use our best efforts
to cause to become effective, a post-effective amendment to the registration
statement of which this prospectus forms a part or a new registration statement
under the Securities Act as required to permit the public sale of the shares
issued or issuable upon exercise of the Representative's warrants. In addition,
we have agreed to give advance notice to holders of the Representative's
warrants of our intention to file certain registration statements beginning one
year and ending five years after the date of this prospectus and, in such case,
holders of the Representative's warrants or underlying shares shall have the
right to require us to include all or part of the shares underlying the
Representative's warrants in the registration statement at our expense other
than underwriting discounts and commissions, if any. For the term of the
Representative's warrants, the holders thereof are given the opportunity to
profit from a rise in the market price of the common stock, which may result in
a dilution of the interest of other shareholders. As a result, we may find it
more difficult to raise additional equity capital if it should be needed for our
business while the Representative's warrants are outstanding. The holders of the
Representative's warrants might be expected to exercise them at a time when we
would, in all likelihood, be able to obtain additional equity capital on terms
more favorable to us than those provided by the Representative's warrants. Any
profit realized on the sale of the shares issuable upon the exercise of the
Representative's warrants may be deemed additional underwriting compensation.

The preceding description includes a summary of the principal terms of the
underwriting agreement and the Representative's warrant agreement and does not
purport to be complete. The underwriting agreement and the Representative's
warrant agreement are filed as exhibits to the registration statement of which
this prospectus forms a part and should be referenced for the complete contents
of these documents. Each statement is qualified in all respects by reference to
these documents.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is Continental Stock
Transfer and Trust Company.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed on
for us by The Otto Law Group, PLLC of Seattle, Washington. Effective upon the
closing of this offering, The Otto Law Group has been granted options under our
1996 Stock Option Plan to purchase 7,500 shares of our common stock vesting over
five years at an exercise price equal to the initial public offering price per
share of the shares offered in this prospectus.

Certain legal matters related to this offering will be passed on for the
underwriters by Kelley Drye & Warren LLP of New York, New York.

56
<PAGE> 58

EXPERTS

The financial statements of Sunhawk.com at September 30, 1997 and 1998, and
for the years then ended, appearing in this prospectus and registration
statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere in this prospectus, and are
included in reliance given on such report given on the authority of such firm as
experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act with respect to the common stock
being offered. This prospectus, filed as a part of such registration statement,
does not contain all the information set forth in the registration statement,
certain portions of which have been omitted in accordance with the rules and
regulations of the Securities and Exchange Commission. For further information
with respect to us and our common stock we are offering, reference is made to
the registration statement. Statements made in this prospectus as to the
contents of any contract or document are not necessarily complete and, in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the registration statement and each such statement is qualified
in its entirety by such reference. The registration statement, including the
exhibits and schedules thereto, may be inspected without charge at the Public
Reference Room of the Securities and Exchange Commission, Judiciary Plaza
Building, 450 Fifth Street, N.W., Washington D.C. 20549, and the regional
offices of the Securities and Exchange Commission at Seven World Trade Center,
Suite 1300, New York, New York 10048, and at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material may be
obtained at prescribed rates from the Public Reference Room of the Securities
and Exchange Commission at Room 1024, Judiciary Plaza Building, 450 Fifth
Street, N.W. Washington D.C. 20549. You may obtain information regarding the
Public Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. The Securities and Exchange Commission maintains a web site that
contains registration statements, reports, proxy statements and other
information regarding registrants (including Sunhawk.com) that file
electronically with the Securities and Exchange Commission. The address of the
Securities and Exchange Commission's web site is www.sec.gov.

As a result of this offering, we will be subject to the informational
requirements of the Exchange Act. So long as we are subject to the informational
reporting requirements of the Exchange Act, we will provide our shareholders
with annual reports containing audited financial statements and interim
quarterly reports containing unaudited financial information.

57
<PAGE> 59

SUNHAWK.COM CORPORATION

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... F-2
Financial Statements
Balance Sheets as of September 30, 1997 and 1998 and March
31, 1999 (Unaudited)...................................... F-3
Statements of Operations for the Years Ended September 30,
1997 and 1998 and the Six Months Ended March 31, 1998 and
1999 (Unaudited).......................................... F-4
Statements of Shareholders' Equity (Deficit) for the Years
Ended September 30, 1997 and 1998 and the Six Months Ended
March 31, 1999 (Unaudited)................................ F-5
Statements of Cash Flows for the Years Ended September 30,
1997 and 1998 and the Six Months Ended March 31, 1998 and
1999 (Unaudited).......................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>

F-1
<PAGE> 60

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Board of Directors
Sunhawk.com Corporation

We have audited the accompanying balance sheets of Sunhawk.com Corporation
as of September 30, 1997 and 1998, and the related statements of operations,
shareholders' equity (deficit), and cash flows for the years then ended. These
financial statements are the responsibility of Sunhawk.com Corporation
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about 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.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Sunhawk.com Corporation as
of September 30, 1997 and 1998, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles.

ERNST & YOUNG LLP

Seattle, Washington
April 9, 1999, except Note 13
as to which the date is June 10, 1999

F-2
<PAGE> 61

SUNHAWK.COM CORPORATION

BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------- MARCH 31,
1997 1998 1999
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.................................... $ 23,628 $ 59,093 $ 459,720
Cash equivalent from shareholders....... -- -- 1,165,000
CD-ROMs and printed sheet music......... 18,822 16,507 16,260
Prepaid rent............................ -- 27,234 27,234
----------- ----------- -----------
Total current assets............ 42,450 102,834 1,668,214
Property and equipment, net............... 126,610 195,880 209,843
Other assets:
Digital sheet music masters (net of
accumulated amortization of $1,804,
$10,151, and $22,333 in 1997, 1998,
and 1999, respectively).............. 17,385 69,868 235,218
Patent and trademarks, at cost (net of
accumulated amortization of $1,091,
$3,926, and $7,433 in 1997, 1998, and
1999, respectively).................. 26,386 77,240 86,504
Music catalog distribution rights....... -- -- 1,319,118
Deferred offering costs................. -- -- 54,188
Deposits................................ -- 62,694 62,694
----------- ----------- -----------
Total other assets.............. 43,771 209,802 1,757,722
----------- ----------- -----------
Total assets.................... $ 212,831 $ 508,516 $ 3,635,779
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable and accrued expenses... $ 44,202 $ 92,162 $ 105,817
Payable to Eller McConney LLC........... -- 10,850 71,040
Notes payable to shareholder............ 1,513,465 2,927,367 --
Accrued interest to shareholder......... 87,487 286,039 113,928
----------- ----------- -----------
Total current liabilities....... 1,645,154 3,316,418 290,785
Shareholders' equity (deficit):
Preferred stock, no par value:
Authorized shares -- 1,000,000
Outstanding shares -- none........... -- -- --
Common stock, no par value:
Authorized shares -- 20,000,000
Outstanding shares -- 1,232,863,
1,245,194, and 1,940,851 in 1997,
1998, and 1999, respectively....... 97,221 197,221 7,584,745
Accumulated deficit..................... (1,529,544) (3,005,123) (4,239,751)
----------- ----------- -----------
Total shareholders' equity
(deficit)..................... (1,432,323) (2,807,902) 3,344,994
----------- ----------- -----------
Total liabilities and
shareholders' equity
(deficit)..................... $ 212,831 $ 508,516 $ 3,635,779
=========== =========== ===========
</TABLE>

See accompanying notes.

F-3
<PAGE> 62

SUNHAWK.COM CORPORATION

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, SIX MONTHS ENDED MARCH 31,
------------------------ ---------------------------
1997 1998 1998 1999
--------- ----------- ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Sales...................... $ 15,066 $ 27,263 $ 14,372 $ 45,389
Cost of goods sold:
Royalties, materials,
shipping, and credit
card processing
fees.................. 3,210 14,170 3,567 24,741
Amortization of digital
sheet music........... 1,804 8,347 3,074 12,182
--------- ----------- --------- -----------
5,014 22,517 6,641 36,923
--------- ----------- --------- -----------
Gross profit............... 10,052 4,746 7,731 8,466
Selling, general and
administrative........... 854,458 1,353,871 600,310 1,129,166
--------- ----------- --------- -----------
Loss from operations....... (844,406) (1,349,125) (592,579) (1,120,700)
Interest expense on notes
payable to
shareholders............. 66,577 126,454 57,044 113,928
--------- ----------- --------- -----------
Net loss................... $(910,983) $(1,475,579) $(649,623) $(1,234,628)
========= =========== ========= ===========
Net loss per share:
Basic and diluted........ $ (0.78) $ (1.19) $ (0.53) $ (0.97)
========= =========== ========= ===========
Weighted average common
shares for net loss per
share computations:
Basic and diluted..... 1,173,402 1,239,790 1,233,607 1,270,879
========= =========== ========= ===========
</TABLE>

See accompanying notes.

F-4
<PAGE> 63

SUNHAWK.COM CORPORATION

STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
TOTAL
COMMON STOCK SHAREHOLDERS'
----------------------- ACCUMULATED EQUITY
SHARES AMOUNT DEFICIT (DEFICIT)
--------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Balance, October 1, 1996....... 898,963 $ 901 $ (618,561) $ (617,660)
Exercise of common stock
options................... 12,842 -- -- --
Sale of common stock......... 321,058 4 -- 4
Compensation related to sale
of common stock........... -- 96,316 -- 96,316
Net loss..................... -- -- (910,983) (910,983)
--------- ---------- ----------- -----------
Balance, September 30, 1997.... 1,232,863 97,221 (1,529,544) (1,432,323)
Sale of common stock......... 12,331 100,000 -- 100,000
Net loss..................... -- -- (1,475,579) (1,475,579)
--------- ---------- ----------- -----------
Balance, September 30, 1998.... 1,245,194 197,221 (3,005,123) (2,807,902)
Exercise of common stock
options (unaudited)....... 25,684 -- -- --
Issuance of common stock to
acquire music catalog
distribution rights
(unaudited)............... 138,371 1,319,118 -- 1,319,118
Sale of common stock
(unaudited)............... 157,345 1,500,000 -- 1,500,000
Conversion of notes payable
to shareholders, including
notes payable forgiveness
of $1,000,000
(unaudited)............... 374,257 4,568,406 -- 4,568,406
Net loss (unaudited)......... -- -- (1,234,628) (1,234,628)
--------- ---------- ----------- -----------
Balance, March 31, 1999
(unaudited).................. 1,940,851 $7,584,745 $(4,239,751) $ 3,344,994
========= ========== =========== ===========
</TABLE>

See accompanying notes.

F-5
<PAGE> 64

SUNHAWK.COM CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, SIX MONTHS ENDED MARCH 31,
------------------------ --------------------------
1997 1998 1998 1999
--------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss.................................... $(910,983) $(1,475,579) $(649,623) $(1,234,628)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation............................ 42,944 79,683 14,472 15,005
Amortization............................ 2,895 11,182 4,287 15,689
Stock compensation...................... 96,316 -- -- --
Loss on disposal of property and
equipment............................ 16,270 4,061 2,756 --
Changes in operating assets and
liabilities:
Decrease (increase) in CD-ROMs and
printed sheet music................ (2,424) 2,315 (129) 247
Increase in prepaid rent............. -- (27,234) (500) --
Increase in deposits................. -- (62,694) -- --
Increase in accounts payable and
accrued expenses................... 33,940 47,960 31,550 13,655
Increase in payable to Eller McConney
LLC................................ -- 10,850 6,490 60,190
Accrued interest on notes payable to
shareholder........................ 66,577 198,552 57,044 113,928
--------- ----------- --------- -----------
Net cash used in operating activities....... (654,465) (1,210,904) (533,653) (1,015,914)
INVESTING ACTIVITIES
Purchases of property and equipment......... (97,216) (153,014) (77,173) (28,968)
Purchase of digital sheet music masters..... (19,189) (60,830) (26,930) (177,532)
Investment in patents and trademarks........ (27,301) (53,689) (17,642) (12,771)
--------- ----------- --------- -----------
Net cash used in investing activities....... (143,706) (267,533) (121,745) (219,271)
FINANCING ACTIVITIES
Proceeds from sale of common stock to
existing shareholders..................... 4 100,000 100,000 1,500,000
Proceeds from notes payable issued to
shareholders.............................. 794,377 1,413,902 601,000 1,355,000
Increase in deferred offering costs......... -- -- -- (54,188)
--------- ----------- --------- -----------
Net cash provided by financing activities... 794,381 1,513,902 701,000 2,800,812
--------- ----------- --------- -----------
Net increase (decrease) in cash............. (3,790) 35,465 45,602 1,565,627
Cash and cash equivalents at beginning of
period.................................... 27,418 23,628 23,628 59,093
--------- ----------- --------- -----------
Cash and cash equivalents at end of
period.................................... $ 23,628 $ 59,093 $ 69,230 $ 1,624,720
========= =========== ========= ===========
NONCASH SUPPLEMENTARY DISCLOSURE
Issuance of common stock in conjunction with
the acquisition of music catalog
distribution rights....................... $ -- $ -- $ -- $ 1,319,118
Conversion of notes payable and accrued
interest to shareholders to common
stock..................................... -- -- -- (3,568,406)
Forgiveness of notes payable to
shareholder............................... -- -- -- (1,000,000)
</TABLE>

See accompanying notes.

F-6
<PAGE> 65

SUNHAWK.COM CORPORATION

NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998

1. DESCRIPTION OF BUSINESS AND LIQUIDITY

BUSINESS AND ORGANIZATION

Sunhawk.com Corporation (Sunhawk.com) was incorporated in the state of
Washington on August 20, 1992. Sunhawk.com sells interactive digital sheet music
in its proprietary format, traditional printed sheet music and CD-ROMs on their
internet retail site at www.sunhawk.com. Sunhawk.com's internally developed
proprietary technology allows customers to view, play, print and store the
encrypted digital sheet music files.

LIQUIDITY

At September 30, 1998, Sunhawk.com had cash of $59,093 available to fund
operations. For the year ended September 30, 1998, Sunhawk.com recorded a net
loss of $1,475,579, and at September 30, 1998, Sunhawk.com had an accumulated
deficit of $3,005,123 and a shareholders' deficit of $2,807,902.

On March 30, 1999, the Board of Directors of Sunhawk.com approved the sale
of 531,602 shares of common stock to the Eller and McConney 1995 Family Living
Trust in exchange for cash of $335,000, a note receivable of $1,165,000, and the
exchange of outstanding notes payable to a shareholder of $3,568,406 outstanding
at March 31, 1999. ($2,213,406 of notes payable to shareholder, including
accrued interest, as of September 30, 1998 plus additional borrowings provided
to Sunhawk.com during the six months ended March 31, 1999 of $1,355,000). The
note receivable bore interest at an annual rate of 8% and was paid in cash on
April 8, 1999. In addition, on March 31, 1999, The Eller and McConney Family
Living Trust contributed capital of $1,000,000 by forgiving the remaining notes
payable to shareholder outstanding at that date. Without these transactions,
Sunhawk.com would have had a shareholders' deficit of $2,723,412 at March 31,
1999, which includes the loss of $1,234,628 for the period then ended and the
issuance of common stock to acquire music catalog distribution rights of
$1,319,118. However, as a result of this transaction Sunhawk.com is in a
positive equity position of $3,344,994 at March 31, 1999.

Sunhawk.com has financed its operations and capital expenditures through
borrowings from the Eller and McConney 1995 Family Living Trust. Sunhawk.com's
business will require additional equity or debt financing to operate and as such
is dependent on the continued cooperation of the Eller and McConney 1995 Family
Living Trust to provide financing. The loss of such financing could be difficult
or impossible to replace. If funds are not raised from new investors (see Note
13 -- Subsequent Events, Initial Public Offering), the Eller and McConney 1995
Family Living Trust has agreed to continue to finance Sunhawk.com albeit at a
reduced level. As compared to the current level of operating and capital
expenditures, this would require Sunhawk.com to reduce its expenditures. In such
case, Sunhawk.com's expenditures would be lower than what would be planned if
the same or a higher level of funding was available.

F-7
<PAGE> 66
SUNHAWK.COM CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

These financial statements have been prepared in conformity with generally
accepted accounting principles, which require management to make estimates and
assumptions that impact amounts reported in the financial statements and
accompanying notes. Actual results could differ from those amounts reported and
disclosed herein.

UNAUDITED INTERIM FINANCIAL INFORMATION

The financial information as of March 31, 1999 and for the six months ended
March 31, 1998 and 1999 is unaudited, but includes all adjustments (consisting
only of normal recurring adjustments) that Sunhawk.com considers necessary for a
fair presentation of the financial position at such dates and the operations and
cash flows for the periods then ended. Operating results for the six months
ended March 31, 1999 are not necessarily indicative of results that may be
expected for the entire year.

CASH EQUIVALENT FROM SHAREHOLDERS

Cash equivalent consists of a note receivable from shareholders which was
received as partial consideration for the purchase of 157,345 shares of common
stock issued on March 31, 1999. The note had an original maturity date of April
10, 1999 and an interest rate of 8% per annum. It was paid in full on April 8,
1999.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the related assets, which range from three to seven years.

DIGITAL SHEET MUSIC MASTERS

Digital sheet music masters are valued at cost less accumulated
amortization. Digital sheet music masters are amortized over the shorter of (1)
the estimated useful life of the music category, or (2) the estimated useful
life of the related electronic medium, or (3) the remaining term of the
underlying music licensing agreement (for licensed music), which generally
ranges from five to fifteen years. As of September 30, 1998, the estimated
useful life of digital music masters ranged from five to fifteen years.
Amortization expense is included in the cost of goods sold.

PATENTS AND TRADEMARKS

Patents and trademarks are stated at cost less accumulated amortization.
Amortization is calculated on a straight-line basis over fifteen years.
Amortization expense amounted to $1,091 and $2,835 during the years ended
September 30, 1997 and 1998, respectively. Sunhawk.com periodically evaluates
these intangible assets for impairment.

F-8
<PAGE> 67
SUNHAWK.COM CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION

Revenue from product sales is recorded when products are purchased and
downloaded by customers via Sunhawk.com's web site or shipped via regular mail
or overnight courier. Shipping charges are separately charged to the customers
and are included in sales.

ROYALTIES

In conjunction with the various distribution agreements, Sunhawk.com is
required to pay royalties ranging from 10% to 70% on gross receipts less credit
card processing fees to the respective music publishers on each digital music
title sold. Total royalty expense incurred during the years ended September 30,
1997 and 1998 amounted to $0 and $4,183, respectively, and is recorded in cost
of goods sold.

ADVERTISING COSTS

Advertising costs are expensed as incurred. Advertising expense totaled
$21,557 and $36,005 during the years ended September 30, 1997 and 1998,
respectively.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred and are included in
the accompanying financial statements in selling, general and administrative.
Research and development expenses totaled $126,017 and $93,529 during the years
ended September 30, 1997 and 1998, respectively.

STOCK-BASED COMPENSATION

Sunhawk.com accounts for stock-based compensation using the intrinsic value
method and provides pro forma footnote disclosure of the impact of the fair
value method.

NET LOSS PER SHARE

Basic and diluted net loss per share is computed based on the
weighted-average number of common shares outstanding during each period.

F-9
<PAGE> 68
SUNHAWK.COM CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998

3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------- MARCH 31,
1997 1998 1999
-------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Computers and equipment..................... $192,205 $ 302,574 $ 322,454
Furniture................................... 9,219 39,295 45,073
Other....................................... 8,961 17,469 20,779
-------- --------- ---------
210,385 359,338 388,306
Less accumulated depreciation............... (83,775) (163,458) (178,463)
-------- --------- ---------
$126,610 $ 195,880 $ 209,843
======== ========= =========
</TABLE>

4. DISTRIBUTION AGREEMENTS

In May and June 1998, Sunhawk.com entered into distribution agreements with
Warner Bros. Publications U.S. Inc. (Warner) and EMI Christian Music Publishing
(EMIC), respectively. These agreements provide Sunhawk.com with nonexclusive
rights to distribute selected digital sheet music from the respective music
catalogs maintained by Warner and EMIC. The terms of the agreements are
approximately ten and five years, respectively.

The Warner agreement provides Sunhawk.com with nonexclusive right to
distribute selected digital sheet music from the Warner music catalog. As a
nonforfeitable part of the consideration and as inducement to enter into the
agreement, Sunhawk.com agreed to issue 138,371 shares of its common stock to
Warner, contingent upon either the closing of a firmly underwritten public
offering or the private sale or other disposition of 15% or more of
Sunhawk.com's common stock then authorized and outstanding. Upon the contingency
being removed, the shares become fully vested and nonforfeitable.

As a result of the sale of common stock to certain founders on March 31,
1999, the contingency was removed and the shares were issued to Warner. The
value of the shares of common stock issued to Warner were measured at the fair
value of common stock on issuance date and capitalized as a long-term asset,
which will be amortized over the remaining life of the distribution agreement.

5. NOTES PAYABLE TO SHAREHOLDER

Sunhawk.com has entered into two demand note payable agreements with a
shareholder dated September 30, 1998. If no demand for payment is received, then
they are due two years after the execution date of the note. The notes are
updated annually, with the current year borrowings and accrued interest being
added to the total amount outstanding. The ultimate due dates are accordingly
reset to two years from the updated execution date. Unless demand is made, the
notes are due on September 30, 2000. The notes carry interest at the federal
applicable short-term rate, or approximately 6%. To date, no payments (principal
or interest) have been made on the notes.

F-10
<PAGE> 69
SUNHAWK.COM CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998

5. NOTES PAYABLE TO SHAREHOLDER (CONTINUED)
On March 31, 1999, the shareholder exchanged these notes, including
interest accrued through September 30, 1998 for 374,257 shares of common stock.
Interest accrued during the six-month period ended March 31, 1999 of $113,928
was not converted to shares of common stock and is included in accrued interest
on notes payable to shareholder. The accrued interest to shareholder is expected
to be paid on September 29, 1999.

6. SHAREHOLDERS EQUITY

In October 1996, in conjunction with the sale of 321,058 shares of common
stock to an employee for past services for $4.00, Sunhawk.com recorded
compensation expense of $96,316. The compensation expense represented the
difference between the value of consideration paid for the common stock and the
fair market value at the date of issuance.

7. STOCK OPTIONS

STOCK OPTION PLAN

Under the terms of Sunhawk.com's 1996 Stock Option Plan, the Board of
Directors was authorized to issue 513,374 shares of common stock through
incentive and nonqualified stock options to any former, current, or future
employees, officers, directors, agents or consultants, including members of
technical advisory boards, and any independent contractors of Sunhawk.com. On
March 30, 1999, the Board of Directors amended the 1996 Stock Option Plan to
reduce the authorized shares to issue to 303,526. Generally, stock compensation,
if any, is measured as the difference between the exercise price of a stock
option and the fair market value of Sunhawk.com's stock at the date of grant,
which is then amortized over the related service period. Options are granted
with exercise prices equal to the fair market value of the common stock on the
date of the grant, as determined by Sunhawk.com's Board of Directors. Options
vest over a five-year period and expire ten years from the date of grant.

Sunhawk.com applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its stock option plan. Accordingly, no
compensation cost has been recognized for its stock options issued to employees
in the accompanying financial statements because the fair value of the
underlying common stock equals the exercise price of the stock options granted.
Had the stock compensation expense for Sunhawk.com's stock option plan been
determined based on the fair value at the grant dates for options granted in
1997 and 1998, consistent with the fair value method of Statement of Financial
Accounting Standards No. 123, Sunhawk.com's net loss for the years ended
September 30, 1997 and 1998 would have been increased to the following pro forma
amount:

<TABLE>
<CAPTION>
1997 1998
-------- ----------
<S> <C> <C>
Net loss:
As reported................................... $910,983 $1,475,579
Pro forma..................................... $911,609 $1,486,649
</TABLE>

F-11
<PAGE> 70
SUNHAWK.COM CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998

7. STOCK OPTIONS (CONTINUED)
The fair value of each option grant is estimated on the date of grant using
the Minimum Value Option Pricing model using the following weighted-average
assumptions: risk-free interest rate of 6.11% and 5.49% for 1997 and 1998,
respectively; expected life of five years; and dividend yield of 0%.

A summary of the status of Sunhawk.com's stock option plan as of September
30, 1998 and changes during the year then ended is presented below:

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
----------------------
WEIGHTED-
NUMBER AVERAGE
OF EXERCISE
SHARES PRICE
------- -----------
<S> <C> <C>
Balance at October 1, 1996............................. 0 $--
Options granted, at estimated fair value............. 91,180 1.08
Options exercised.................................... (12,842) 0.0000096
-------
Balance at September 30, 1997.......................... 78,338 1.27
Options granted, at estimated fair value............. 18,146 12.65
Options canceled..................................... (11,487) 6.67
-------
Balance at September 30, 1998.......................... 84,997 2.97
Options exercised (unaudited)........................ (25,684) 0.0000096
Options canceled (unaudited)......................... (13,008) 0.21
-------
Balance at March 31, 1999 (unaudited).................. 46,305 5.38
=======
</TABLE>

At September 30, 1998, and March 31, 1999 (unaudited) options to acquire
415,535 and 218,695 shares, respectively, of common stock were available for
future grant.

The following table summarizes information about stock options outstanding
at September 30, 1998:

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
--------------------------------------------------------------------------
WEIGHTED-AVERAGE
REMAINING
NUMBER OF WEIGHTED-AVERAGE CONTRACTED LIFE
EXERCISE PRICE SHARES EXERCISE PRICE (YEARS)
----------------- --------- ---------------- --------------------
<S> <C> <C> <C>
$0.0000096 - $0.30.. 63,356 $ 0.07 8.02
$0.31 - $8.11.... 12,652 $ 8.11 9.20
$8.12 - $16.22... 8,989 $16.22 9.79
------
84,997
======
</TABLE>

As of September 30, 1998 and March 31, 1999 (unaudited), in connection with
the stock option plan, 500,532 and 265,000 shares, respectively, of common stock
were available for future issuance. At September 30, 1998, 25,684 options were
exercisable at an exercise price of $0.0000096 per share.

F-12
<PAGE> 71
SUNHAWK.COM CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998

8. COMMITMENTS

Sunhawk.com leases office space under an operating lease agreement expiring
in 2003. Future minimum lease payments under noncancelable operating leases at
September 30, 1998 are as follows:

<TABLE>
<CAPTION>
OPERATING
LEASES
----------
<S> <C>
Year ending September 30:
1999....................................................... $ 372,390
2000....................................................... 326,808
2001....................................................... 326,808
----------
Total minimum lease payments............................... $1,026,006
==========
</TABLE>

Total rent expense paid during the years ended September 30, 1997 and 1998
amounted to $9,216 and $54,686, respectively.

9. FEDERAL INCOME TAXES

Sunhawk.com, with the consent of its shareholders, elected to be taxed
under the provisions of Subchapter S of the Internal Revenue Code through March
31, 1999, when it became no longer eligible to be taxed as such. Accordingly,
through March 31, 1999, the shareholders of Sunhawk.com were entitled to report
on their personal income tax returns their proportionate share of Sunhawk.com's
operating losses. Effective March 31, 1999, Sunhawk.com became subject to
corporate income taxes and therefore will account for income taxes in accordance
with Statement of Financial Accounting Standard No. 109 "Accounting for Income
Taxes."

10. RELATED-PARTY TRANSACTIONS

Sunhawk.com pays to Eller McConney LLC, which is wholly owned by Marlin
Eller and Mary McConney, executive officers and trustees of a trust which owns a
majority of shares of Sunhawk.com, for certain services in connection with the
production of digital sheet music masters. These services are provided under an
informal agreement to Eller McConney LLC by Avtograf, a Russian joint stock
company in which Eller McConney LLC has a 94% interest. At September 30, 1998,
Sunhawk.com owed $10,850 to Eller McConney LLC for these services. The digital
sheet music masters for which production services were provided represented
approximately 16% of the digital music sheets acquired by Sunhawk.com during the
year ended September 30, 1998.

Marlin Eller, Chairman of the Board, Chief Executive Officer, and
President, and Mary McConney, Treasurer (Chief Financial Officer until June 10,
1999), of Sunhawk.com provided services to Sunhawk.com as officers of
Sunhawk.com. They have received no compensation for these services since the
inception of Sunhawk.com.

F-13
<PAGE> 72
SUNHAWK.COM CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998

11. CONTINGENCIES

From time to time Sunhawk.com is subject to legal proceedings that arise in
the ordinary course of business that have not been fully adjudicated. In
management's opinion, these actions, when finally concluded and determined, will
not have a material adverse effect on the financial position or results of
operations of Sunhawk.com.

12. OTHER

REVERSE STOCK SPLIT

On March 30, 1999, Sunhawk.com's Board of Directors approved a transaction
to give one share for every 6.007 shares of common stock, thereby giving effect
to a 1-for-6.007 reverse stock split effective March 31, 1999. All outstanding
common and common equivalent shares and per-share amounts in the accompanying
financial statements and related notes to the financial statements have been
retroactively adjusted to give effect to the reverse stock split.

13. SUBSEQUENT EVENTS

NAME CHANGE

On June 10, 1999, Sunhawk.com's Articles of Incorporation were amended to
change the company's name to Sunhawk.com Corporation.

INITIAL PUBLIC OFFERING

On June 10, 1999, Sunhawk.com's Board of Directors authorized Sunhawk.com
to file a Registration Statement under the Securities Act of 1933, as amended,
to permit Sunhawk.com to proceed with an initial public offering of its common
stock.

RELATIONSHIP WITH ELLER MCCONNEY LLC

On June 10, 1999, Sunhawk.com's Board of Directors approved, subsequent to
the closing of the initial public offering, entering into a ten-year assignment
and assumption agreement with Avtograf, a Russian joint stock company in which
Eller McConney LLC holds a 94% ownership interest, Eller McConney LLC, and a new
independent Russian production company. The assumption and assignment agreement
will require that Eller McConney LLC assign to Sunhawk.com all of its rights to
receive from Avtograf its services for the production of digital sheet music in
exchange for a one-time payment to Eller McConney LLC of $600,000 in cash from
proceeds of Sunhawk.com's initial public offering. The one-time payment of
$600,000 in cash to Eller McConney LLC is expected to be accounted for as a
prepayment for services to be provided for the production of digital sheet music
from the new independent Russian production company with recourse to Eller
McConney LLC in the event of non-performance. In addition, Avtograf will assign
to the new independent Russian production company its obligation to provide
production services for digital sheet music. Thereafter, the new independent
Russian production company will be obligated to provide production services for
digital sheet music for Sunhawk.com at an anticipated rate of a minimum of 2,250
pages per month, and a total of 270,000 over a period of ten years at no
additional cost to Sunhawk.com. Neither Eller

F-14
<PAGE> 73
SUNHAWK.COM CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998

13. SUBSEQUENT EVENTS (CONTINUED)
McConney LLC, Mr. Eller, Ms. McConney nor Sunhawk.com will have an interest in
the new independent Russian production company.

REINCORPORATION

On June 10, 1999, Sunhawk.com's Board of Directors authorized Sunhawk.com
to incorporate a wholly-owned subsidiary of Sunhawk.com in the State of Delaware
("Sunhawk Delaware") and to purchase on behalf of Sunhawk.com one share of
common stock of Sunhawk Delaware, which shall represent all of the issued and
outstanding shares of capital stock of Sunhawk Delaware. The Board of Directors
deemed it advisable and in the best interests of Sunhawk.com and its
shareholders that Sunhawk.com be merged with and into Sunhawk Delaware for the
purpose of reincorporating Sunhawk.com in the State of Delaware, whereby Sunhawk
Delaware shall be the surviving corporation of the merger. The planned merger
requires shareholder approval and as such, a special shareholders meeting is
scheduled for July 7, 1999 to vote upon the reincorporation merger.

Following shareholder approval of the merger, Sunhawk.com will be
reincorporated into a Delaware corporation. As a result of the reincorporation,
all outstanding shares of Sunhawk.com's common stock will be converted into the
right to receive shares of Sunhawk Delaware's common stock; Sunhawk.com will be
subject to the laws of the State of Delaware; and Sunhawk.com's Articles of
Incorporation will be effectively amended to reduce the number of shares of
common stock that Sunhawk.com has authorized to issue from 20,000,000 to
10,000,000, eliminate Sunhawk.com's preferred stock and impose a two-year
restriction on the transferability of Sunhawk.com's shares issued and
outstanding at the time of such reincorporation. This restriction on Sunhawk.com
shares of common stock would commence on the effective date of any initial
public offering of Sunhawk.com common stock.

Sunhawk.com does not believe that, upon reincorporation in the State of
Delaware, existing shareholders are entitled to dissenters' rights. However, any
claims for dissenters' rights, if successful, could require payment by
Sunhawk.com to dissenting shareholders of the fair value of their shares.

F-15
<PAGE> 74

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

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF OUR COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK. IN THIS PROSPECTUS,
"SUNHAWK.COM," "WE," "US" AND "OUR" REFER TO SUNHAWK.COM CORPORATION.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 3
Risk Factors......................... 7
Use of Proceeds...................... 15
Capitalization....................... 16
Dilution............................. 17
Dividend Policy...................... 17
Selected Financial Data.............. 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 19
Business............................. 24
Management........................... 40
Certain Transactions................. 44
Principal Shareholders............... 46
Description of Securities............ 48
Shares Eligible for Future Sale...... 52
Underwriting......................... 54
Transfer Agent and Registrar......... 56
Legal Matters........................ 56
Experts.............................. 57
Where You Can Find More
Information........................ 57
Index to Financial Statements........ F-1
</TABLE>

UNTIL , 1999 ALL DEALERS THAT BUY, SELL OR TRADE SHARES OF OUR
COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

1,200,000 Shares
LOGO
SUNHAWK.COM CORPORATION
Common Stock
-----------------
PROSPECTUS
-----------------
COLEMAN AND COMPANY
SECURITIES, INC.

OSCAR GRUSS & SON
INCORPORATED
, 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 75

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act (the "WBCA") authorize a court to award, or a corporation's
board of directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). Section 10 of the registrant's Amended and Restated Bylaws
(Exhibit 3.3 hereto) provides for indemnification of the registrant's directors,
officers, employees and agents to the maximum extent permitted by Washington
law. The directors and officers of the registrant also may be indemnified
against liability they may incur for serving in those capacities pursuant to a
liability insurance policy maintained by the registrant for such purpose.

Section 23B.08.320 of the WBCA authorizes a corporation to limit a
director's liability to the corporation or its shareholders for monetary damages
for acts or omissions as a director, except in certain circumstances involving
intentional misconduct, knowing violations of law or illegal corporate loans or
distributions, or any transaction from which the director personally receives a
benefit in money, property or services to which the director is not legally
entitled. Article VII of the registrant's Amended and Restated Articles of
Incorporation (Exhibit 3.1 hereto) contains provisions implementing, to the
fullest extent permitted by Washington law, such limitations on a director's
liability to the registrant and its shareholders.

Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnification to
directors and officers on terms sufficiently broad to permit indemnification
under certain circumstances for liabilities (including reimbursement for
expenses incurred) arising under the Securities Act. Article VII of the
registrant's Delaware Certificate of Incorporation (Exhibit 3.2 hereto) and
Article VI of the registrant's Delaware Bylaws (Exhibit 3.4 hereto) provide for
indemnification of the registrant's directors, officers, employees and other
agents to the maximum extent permitted by Delaware law.

The underwriting agreement (Exhibit 1.1 hereto) provides for reciprocal
indemnification between the underwriters and the registrant from and against
certain liabilities arising in connection with the offering which is the subject
of this registration statement.

II-1
<PAGE> 76

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, other than the
underwriting discounts, payable by the registrant in connection with the sale of
the securities being registered. All amounts are estimates except the Securities
and Exchange Commission registration fee, the NASD filing fee, the Nasdaq
SmallCap(R) listing fee and the Pacific Stock Exchange listing fee.

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 3,391
NASD Filing Fee............................................. 1,604
Nasdaq SmallCap(R) Listing Fee.............................. 17,500
Pacific Stock Exchange Listing Fee.......................... 23,000
Printing Costs.............................................. 60,000
Legal Fees and Expenses..................................... 200,000
Accounting Fees and Expenses................................ 235,000
Blue Sky Fees and Expenses (including legal fees)........... 70,000
Transfer Agent and Registrar Fees........................... 25,000
Miscellaneous............................................... 38,505
--------
Total............................................. $674,000
========
</TABLE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

The following is a description of all securities that the registrant has
sold within the past three years without registering the securities under the
Securities Act:

1. On October 9, 1996, the registrant sold 321,058 shares of the
registrant's common stock at a price of $.0000112 per share to one
accredited investor in a private transaction which was exempt from
registration pursuant to Rule 506 of Regulation D under Section 4(2) of the
Securities Act.

2. On December 4, 1996 and October 5, 1998, 12,842 and 25,684 shares
of the registrant's common stock, respectively, were issued to one
individual upon the exercise of stock options granted pursuant to the
registrant's 1996 Stock Option Plan at a per share exercise price of
$.0000096. Such issuances were exempt from registration pursuant to Rule
701 under the Securities Act.

3. On March 10, 1998, the registrant sold 12,331 shares of the
registrant's common stock at a price of $8.11 per share to one accredited
investor in a private transaction which was exempt from registration
pursuant to Rule 506 of Regulation D under Section 4(2) of the Securities
Act.

4. On March 31, 1999, the registrant issued 138,371 shares of the
registrant's common stock pursuant to the distribution agreement by and
between the registrant and Warner Bros. Publications U.S. Inc. ("Warner").
The transaction was exempt from registration pursuant to Section 4(2) of
the Securities Act.

5. On March 31, 1999, the Eller and McConney 1995 Family Living Trust
converted $3,568,406 of debt owed to it by the registrant into 374,257
shares of the registrant's common stock at a price per share of $9.53. On
this same date, the Eller and McConney 1995 Family Living Trust forgave
$1,000,000 of long-term debt owed to it by the registrant and purchased an
additional 157,345 shares of the registrant's common stock for an aggregate
of $1,500,000, at a price per share of $9.53 per share.

II-2
<PAGE> 77

These transactions were exempt from registration pursuant to Section 4(2)
of the Securities Act.

ITEM 27. EXHIBITS

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
1.1+ Form of Underwriting Agreement.
1.2+ Form of Representative's Warrant Agreement.
3.1 Amended and Restated Articles of Incorporation.
3.2+ Form of Certificate of Incorporation (Delaware).
3.3 Amended and Restated Bylaws.
3.4+ Form of Bylaws (Delaware).
4.1+ Form of Specimen Stock Certificate.
4.2 See Exhibits 3.1-3.4 for provisions defining the rights of
the holders of common stock.
5.1+ Opinion of The Otto Law Group, PLLC (including the consent
of such firm)regarding legality of the securities being
issued.
10.1 1996 Stock Option Plan.
10.2*+ Distribution Agreement dated May 18, 1998 by and between
Sunhawk.com Corporation and Warner Bros. Publications U.S.
Inc., as amended by Amendment No. 1.
10.3*+ Distribution Agreement dated as of June 12, 1998 by and
between EMI Christian Music Publishing and Sunhawk.com
Corporation.
10.4*+ Music Conversion Agreement dated as of April 1, 1998 by and
between Sunhawk.com Corporation and International Music
Engraving Company, as amended by Amendment No. 1.
10.5 Lease dated August 10, 1998 by and between 223 Taylor Corp.
and Sunhawk.com Corporation.
10.6+ Form of Employment Agreement between Sunhawk.com and Marlin
Eller.
23.1 Consent of Ernst & Young, LLP, Independent Auditors.
23.2 Consent of The Otto Law Group, PLLC (contained in Exhibit
5.1).
24.1 Power of Attorney (See Page II-5).
27.1 Financial Data Schedule.
</TABLE>

- -------------------------
* Confidential treatment to be requested.
+ To be filed by amendment.

ITEM 28. UNDERTAKINGS

The registrant will provide to the underwriters at the closing specified in
the underwriting agreement certificates in such denominations and registered in
such names as required by the underwriters to permit prompt delivery to each
purchaser.

II-3
<PAGE> 78

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

The registrant will:

For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant under Rule 424(b)(1), or (4), or
497(h) under the Securities Act as part of the registration statement as of
the time the Securities and Exchange Commission declared it effective.

For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and the offering of the securities at that time as the initial
bona fide offering of those securities.

II-4
<PAGE> 79

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Seattle,
State of Washington, on the 17th day of June, 1999.

SUNHAWK.COM CORPORATION

By: /s/ MARLIN ELLER
-----------------------------------
Marlin Eller,
President and Chief Executive
Officer

POWER OF ATTORNEY

Each person whose individual signature appears below hereby authorizes and
appoints Marlin Eller and Ted Grabowski, and each of them, with full power of
substitution and resubstitution and full power to act without the other, as his
true and lawful attorney-in-fact and agent to act in his name, place and stead
and to execute in the name and on behalf of each person, individually and in
each capacity stated below, and to file, any and all amendments to this
registration statement, including any and all post-effective amendments and
amendments thereto and any registration statement relating to the same offering
as this registration statement that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing, ratifying and confirming all that said attorneys-in-fact
and agents or any of them or their or his substitute or substitutes may lawfully
do or cause to be done by virtue thereof.

In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated below on the 17th day of June, 1999.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ MARLIN ELLER Chairman of the Board, Chief Executive
- ------------------------------------------------ Officer and President (Principal
Marlin Eller Executive Officer)

/s/ TRICIA PARKS-HOLBROOK Chief Financial Officer (Principal
- ------------------------------------------------ Financial and Accounting Officer)
Tricia Parks-Holbrook

/s/ FRED ANTON Director
- ------------------------------------------------
Fred Anton

/s/ PATRICIA TANGORA Director
- ------------------------------------------------
Patricia Tangora

/s/ LUIS F. TALAVERA Director
- ------------------------------------------------
Luis F. Talavera
</TABLE>

II-5
<PAGE> 80

EXHIBIT INDEX

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
1.1+ Form of Underwriting Agreement.
1.2+ Form of Representative's Warrant Agreement.
3.1 Amended and Restated Articles of Incorporation.
3.2+ Form of Certificate of Incorporation (Delaware).
3.3 Amended and Restated Bylaws.
3.4+ Form of Bylaws (Delaware).
4.1+ Form of Specimen Stock Certificate.
4.2 See Exhibits 3.1-3.4 for provisions defining the rights of
the holders of common stock.
5.1+ Opinion of The Otto Law Group, PLLC (including the consent
of such firm) regarding legality of the securities being
issued.
10.1 1996 Stock Option Plan.
10.2*+ Distribution Agreement dated May 18, 1998 by and between
Sunhawk.com Corporation and Warner Bros. Publications U.S.
Inc., as amended by Amendment No. 1.
10.3*+ Distribution Agreement dated as of June 12, 1998 by and
between EMI Christian Music Publishing and Sunhawk.com
Corporation.
10.4*+ Music Conversion Agreement dated as of April 1, 1998 by and
between Sunhawk.com Corporation and International Music
Engraving Company, as amended by Amendment No. 1.
10.5 Lease dated August 10, 1998 by and between 223 Taylor Corp.
and Sunhawk.com Corporation.
10.6+ Form of Employment Agreement between Sunhawk.com and Marlin
Eller.
23.1 Consent of Ernst & Young, LLP, Independent Auditors.
23.2 Consent of The Otto Law Group, PLLC (contained in Exhibit
5.1).
24.1 Power of Attorney (See Page II-5).
27.1 Financial Data Schedule.
</TABLE>

- -------------------------
* Confidential treatment to be requested.
+ To be filed by amendment.

<PAGE> 1
EXHIBIT 3.1

AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SUNHAWK CORPORATION

ARTICLE I

NAME

The name of this Corporation is Sunhawk Corporation.

ARTICLE II

CAPITAL STOCK

2.1 Authorized Capital. The Corporation is authorized to issue a total
of twenty-one million (21,000,000) shares, consisting of twenty million
(20,000,000) shares to be designated "Common Stock" and one million (1,000,000)
shares to be designated "Preferred Stock." Subject to any rights expressly
granted to Preferred Stock issued pursuant to Paragraph B of this Article, the
Common Stock shall have all the rights ordinarily associated with common shares,
including but not limited to general voting rights, general rights to dividends,
and liquidation rights. The Preferred Stock shall have the rights and
preferences described in Paragraph B of this article or in a resolution of the
Board of Directors adopted pursuant to Paragraph B.

2.2 Issuance of Preferred Stock in Series. The Preferred Stock may be
issued from time to time in one or more series in any manner permitted by law
and these Articles of Incorporation, as determined from time to time by the
Board of Directors and stated in the resolution or resolutions providing for its
issuance, prior to the issuance of any shares thereof. The Board of Directors
shall have the authority to fix and determine, subject to the provisions hereof,
the rights and preferences of the shares of any series so established. Unless
otherwise provided in the resolution establishing a series of shares of
Preferred Stock, prior to the issuance of any shares of a series so established
or to be established, the Board of Directors may by resolution amend the
relative rights and preferences of the shares of such series, and, after the
issuance of shares of a series whose number has been designated by the Board of
Directors, the resolution establishing the series may be amended by the Board of
Directors to decrease (but not below the number of shares of such series then
outstanding) the number of shares of that series.

-1-
<PAGE> 2

ARTICLE III

NO PREEMPTIVE RIGHTS

Except as may otherwise be provided by the Board of Directors, no holder
of any shares of this Corporation shall have any preemptive right to purchase,
subscribe for or otherwise acquire any securities of this Corporation of any
class or kind now or hereafter authorized.

ARTICLE IV

NUMBER OF DIRECTORS

4.1 This Corporation shall have at least one director, the actual number
to be fixed in accordance with the Bylaws. The initial Board of Directors shall
consist of two Directors,

4.2 The names and addresses of the first Board of Directors of the
Corporation are as follows:

Marlin J. Eller
800 15th Avenue East
Seattle, WA 98112

Mary E. McConney
800 15th Avenue East
Seattle, WA 98112

ARTICLE V

CUMULATIVE VOTING

There shall be no cumulative voting of shares in this Corporation.

ARTICLE VI

SHAREHOLDER VOTING ON SIGNIFICANT CORPORATE ACTION

Any corporate action for which the Washington Business Corporation Act,
as then in effect, would otherwise require approval by either a two-thirds vote
of the shareholders of the Corporation or by a two-thirds vote of one or more
voting groups shall be deemed approved by the shareholders or the voting
group(s) if it is approved by the affirmative vote of the holders of a majority
of shares entitled to vote or, if approval by voting groups is

-2-
<PAGE> 3

required, by the holders of a majority of shares within each voting group
entitled to vote separately. Notwithstanding this Article, effect shall be given
to any other provision of these Articles that specifically requires a greater
vote for approval of any particular corporate action.

ARTICLE VII

LIMITATION ON DIRECTOR LIABILITY

To the fullest extent permitted by Washington law and subject to the
Bylaws of this Corporation, a director of this Corporation shall not be liable
to the Corporation or its shareholders for monetary damages for his or her
conduct as a director. Any amendment to or repeal of this Article shall not
adversely affect any right of a director of this Corporation hereunder with
respect to any acts or omissions of the director occurring prior to amendment or
repeal.

ARTICLE VIII

INDEMNIFICATION OF DIRECTORS

To the fullest extent permitted by its Bylaws and Washington law, this
Corporation is authorized to indemnify any of its directors. The Board of
Directors shall be entitled to determine the terms of indemnification, including
advance of expenses, and to give effect thereto through the adoption of Bylaws,
approval of agreements, or by any other manner approved by the Board of
Directors. Any amendment to or repeal of this Article shall not adversely affect
any right of an individual with respect to any right to indemnification arising
prior to such amendment or repeal.

ARTICLE IX

REGISTERED OFFICE AND REGISTERED AGENT

The name of the registered agent of this Corporation and the street
address of its registered office are as follows:

Mary E. McConney
800 15th Avenue East
Seattle, WA 98112

SUNHAWK CORPORATION

DATED: June ??, 1996 By: /s/ MARLIN J. ELLER
-------------------------------
Marlin J. Eller, President

-3-

<PAGE> 1
EXHIBIT 3.2

AMENDED AND RESTATED

BYLAWS

SUNHAWK CORPORATION

SECTION I

SHAREHOLDERS AND SHAREHOLDERS' MEETINGS

1.1 Annual Meeting. The annual meeting of the shareholders of this
corporation (the "Corporation") for the election of directors and for the
transaction of such other business as may properly come before the meeting shall
be held each year at the principal office of the Corporation, or at some other
place either within or without the State of Washington as designated by the
Board of Directors, on the day and at the time specified in Exhibit A, which is
attached hereto and incorporated herein by this reference, or on such other day
and time as may be set by the Board of Directors. If the specified day is a
Sunday or a legal holiday, then the meeting will take place on the next business
day at the same time or on such other day and time as may be set by the Board of
Directors.

1.2 Special Meetings. Special meetings of the shareholders for any
purpose or purposes may be called at any time by the Board of Directors, the
Chairman of the Board, the President, a majority of the Board of Directors, or
any shareholder or shareholders holding in the aggregate one-fourth of the
voting power of all shareholders. The meetings shall be held at such time and
place as the Board of Directors may prescribe, or, if not held upon the request
of the Board of Directors, at such time and place as may be established by the
President or by the Secretary in the President's absence. Only business within
the purpose or purposes described in the meeting notice may be conducted.

1.3 Notice of Meetings. Written notice of the place, date and time of
the annual shareholders' meeting and written notice of the place, date, time and
purpose or purposes of special shareholders' meetings shall be delivered not
less than 10 (or, if required by Washington law, 20) or more than 60 days before
the date of the meeting, either personally, by facsimile, or by mail, or in any
other manner approved by law, by or at the direction of the President or the
Secretary, to each shareholder of record entitled to notice of such meeting.
Mailed notices shall be deemed to be delivered when deposited in the mail,
first-class postage prepaid, correctly addressed to the shareholder's address
shown in the Corporation's current record of shareholders.

-1-
<PAGE> 2

1.4 Waiver of Notice. Except where expressly prohibited by law or the
Articles of Incorporation, notice of the place, date, time and purpose or
purposes of any shareholders' meeting may be waived in a signed writing
delivered to the Corporation by any shareholder at any time, either before or
after the meeting. Attendance at the meeting in person or by proxy waives
objection to lack of notice or defective notice of the meeting unless the
shareholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting. A shareholder waives objection to
consideration of a particular matter at a meeting that is not within the purpose
or purposes described in the meeting notice, unless the shareholder objects to
considering the matter when it is presented.

1.5 Shareholders' Action Without a Meeting. The shareholders may take
any action without a meeting that they could properly take at a meeting, if one
or more written consents setting forth the action so taken are signed by all of
the shareholders entitled to vote with respect to the subject matter and are
delivered to the Corporation for inclusion in the minutes or filing with the
corporate records. If required by Washington law, all nonvoting shareholders
must be given written notice of the proposed action at least ten days before the
action is taken, unless such notice is waived in a manner consistent with these
Bylaws. Actions taken under this section are effective when all consents are in
the possession of the Corporation, unless otherwise specified in the consent. A
shareholder may withdraw consent only by delivering a written notice of
withdrawal to the Corporation prior to the time that all consents are in the
possession of the Corporation,

1.6 Telephone Meetings. Shareholders may participate in a meeting of
shareholders by means of a conference telephone or any similar communications
equipment that enables all persons participating in the meeting to hear each
other during the meeting. Participation by such means shall constitute presence
in person at a meeting.

1.7 List of Shareholders. At least ten days before any shareholders'
meeting, the Secretary of the Corporation or the agent having charge of the
stock transfer books of the Corporation shall have compiled a complete list of
the shareholders entitled to notice of a shareholders' meeting, arranged in
alphabetical order and by voting group, with the address of each shareholder and
the number, class, and series, if any, of shares owned by each.

1.8 Quorum and Voting. The presence in person or by proxy of the holders
of a majority of the votes entitled to be cast on a matter at a meeting shall
constitute a quorum of shareholders for that matter. If a quorum exists, action
on a matter shall be approved by a voting group if the votes cast within a
voting group favoring the action exceed the votes cast within the voting group
opposing the action, unless a greater number of affirmative votes is required by
the Articles of Incorporation or by law. If the Articles of Incorporation or
Washington law provide for voting by two or more voting groups on a matter,
action on a

-2-
<PAGE> 3

matter is taken only when voted upon by each of those voting groups counted
separately. Action may be taken by one voting group on a matter even though no
action is taken by another voting group.

1.9 Adjourned Meetings. If a shareholders' meeting is adjourned to a
different place, date or time, whether for failure to achieve a quorum or
otherwise, notice need not be given of the new place, date or time if the new
place, date or time is announced at the meeting before adjournment. When a
determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in these Bylaws, that determination shall apply to any
adjournment thereof, unless Washington law requires fixing a new record date. If
Washington law requires that a new record date be set for the adjourned meeting,
notice of the adjourned meeting must be given to shareholders as of the new
record date. Any business may be transacted at an adjourned meeting that could
have been transacted at the meeting as originally called.

1.10 Proxies. A shareholder may appoint a proxy to vote or otherwise act
for the shareholder by signing an appointment form, either personally or by an
agent. No appointment shall be valid after 11 months from the date of its
execution unless the appointment form expressly so provides. An appointment of a
proxy is revocable unless the appointment is coupled with an interest. No
revocation shall be effective until written notice thereof has actually been
received by the Secretary of the Corporation or any other person authorized to
tabulate votes.

SECTION 2

BOARD OF DIRECTORS

2.1 Number and Qualification. The business affairs and property of the
Corporation shall be managed under the direction of a Board of Directors, the
number of members of which is set forth in Exhibit A. The Board of Directors may
increase or decrease this number by resolution. A decrease in the number of
directors shall not shorten the term of an incumbent director.

2.2 Election - Term of Office. The directors shall be elected by the
shareholders at each annual shareholders' meeting or at a special shareholders'
meeting called for such purpose. Despite the expiration of a director's term,
the director continues to serve until his or her successor is elected and
qualified or until there is a decrease in the authorized number of directors.

2.3 Vacancies, Except as otherwise provided by law, vacancies in the
Board of Directors, whether caused by resignation, death, retirement,
disqualification, removal, increase in the number of directors, or otherwise,
may be filled for the remainder of the term by the Board of Directors, by the
shareholders, or, if the directors in office constitute less than a quorum of
the Board of Directors, by an affirmative vote of a majority of the

-3-
<PAGE> 4

remaining directors. The term of a director elected to fill a vacancy expires at
the next shareholders' meeting at which directors are elected. A vacancy that
will occur at a specific later date may be filled before the vacancy occurs, but
the new director may not take office until the vacancy occurs.

2.4 Quorum and Voting. At any meeting of the Board of Directors, the
presence in person (including presence by electronic means such as a telephone
conference call) of a majority of the number of directors presently in office
shall constitute a quorum for the transaction of business. Notwithstanding the
foregoing, in no case shall a quorum be less than one-third of the authorized
number of directors. If a quorum is present at the time of a vote, the
affirmative vote of a majority of the directors present at the time of the vote
shall be the act of the Board of Directors and of the Corporation except as may
be otherwise specifically provided by the Articles of Incorporation, by these
Bylaws, or by law. A director who is present at a meeting of the Board of
Directors when action is taken is deemed to have assented to the action taken
unless: (a) the director objects at the beginning of the meeting, or promptly
upon his or her arrival, to holding it or to transacting business at the
meeting; (b) the director's dissent or abstention from the action taken is
entered in the minutes of the meeting; or (c) the director delivers written
notice of his or her dissent or abstention to the presiding officer of the
meeting before its adjournment or to the Corporation within a reasonable time
after adjournment of the meeting. The right of dissent or abstention is not
available to a director who votes in favor of the action taken.

2.5 Regular Meetings. Regular meetings of the Board of Directors shall
be held at such place, date and time as shall from time to time be fixed by
resolution of the Board.

2.6 Special Meetings. Special meetings of the Board of Directors may be
held at any place and at any time and may be called by the Chairman of the
Board, the President, Vice President, Secretary or Treasurer, or any two or more
directors.

2.7 Notice of Meetings. Unless the Articles of Incorporation provide
otherwise, any regular meeting of the Board of Directors may be held without
notice of the date, time, place, or purpose of the meeting. Any special meeting
of the Board of Directors must be preceded by at least two days' notice of the
date, time, and place of the meeting, but not of its purpose, unless the
Articles of Incorporation or these Bylaws require otherwise. Notice may be given
personally, by facsimile, by mail, or in any other manner allowed by law. Oral
notice shall be sufficient only if a written record of such notice is included
in the Corporation's minute book. Notice shall be deemed effective at the
earliest of: (a) receipt; (b) delivery to the proper address or telephone number
of the director as shown in the Corporation's records; or (c) five days after
its deposit in the United States mail, as evidenced by the postmark, if
correctly addressed and mailed with first-class postage prepaid, Notice of any
meeting of the Board of Directors may he waived by any director at any time, by
a signed writing, delivered to the Corporation for inclusion in the minutes,
either before or after the meeting. Attendance or participation by a director at
a meeting shall constitute a waiver of any required notice of the meeting unless
the director promptly objects to holding

-4-
<PAGE> 5

the meeting or to the transaction of any business on the grounds that the
meeting was not lawfully convened and the director does not thereafter vote for
or assent to action taken at the meeting.

2.8 Directors' Action Without A Meeting. The Board of Directors or a
committee thereof may take any action without a meeting that it could properly
take at a meeting if one or more written consents setting forth the action are
signed by all of the directors, or all of the members of the committee, as the
case may be, either before or after the action is taken, and if the consents are
delivered to the Corporation for inclusion in the minutes or filing with the
corporate records. Such action shall be effective upon the signing of a consent
by the last director to sign, unless the consent specifies a later effective
date.

2.9 Committees of the Board of Directors. The Board of Directors, by
resolutions adopted by a majority of the members of the Board of Directors in
office, may create from among its members one or more committees and shall
appoint the members thereof. Each such committee must have two or more members,
who shall be directors and who shall serve at the pleasure of the Board of
Directors. Each committee of the Board of Directors may exercise the authority
of the Board of Directors to the extent provided in its enabling resolution and
any pertinent subsequent resolutions adopted in like manner, provided that the
authority of each such committee shall be subject to applicable law. Each
committee of the Board of Directors shall keep regular minutes of its
proceedings and shall report to the Board of Directors when requested to do so.

2.10 Telephone Meetings. Members of the Board of Directors or of any
committee appointed by the Board of Directors may participate in a meeting of
the Board of Directors or committee by means of a conference telephone or
similar communications equipment that enables all persons participating in the
meeting to hear each other during the meeting. Participation by such means shall
constitute presence in person at a meeting.

2.11 Compensation of Directors. The Board of Directors may fix the
compensation of directors as such and may authorize the reimbursement of their
expenses.

SECTION 3

OFFICERS

3.1 Officers Enumerated -- Election. The officers of the Corporation
shall consist of such officers and assistant officers as may be designated by
resolution of the Board of Directors. The officers may include a Chairman of the
Board, a President, one or more Vice Presidents, a Secretary, a Treasurer, and
any assistant officers. The officers shall hold office at the pleasure of the
Board of Directors. Unless otherwise restricted by the Board of Directors, the
President may appoint any assistant officer, the Secretary may appoint one or

-5-
<PAGE> 6

more Assistant Secretaries, and the Treasurer may appoint one or more Assistant
Treasurers; provided that any such appointments shall be recorded in writing in
the corporate records.

3.2 Qualifications. None of the officers of the Corporation need be a
director. Any two or more corporate offices may be held by the same person.

3.3 Duties of the Officers. Unless otherwise prescribed by the Board of
Directors, the duties of the officers shall be as follows:

Chairman of the Board. The Chairman of the Board, if one is
elected, shall preside at meetings of the Board of Directors and of the
shareholders, shall be responsible for carrying out the plans and directives of
the Board of Directors, shall report to and consult with the Board of Directors
and, if the Board so resolves, shall be the Chief Executive Officer. The
Chairman of the Board shall have such other powers and duties as the Board of
Directors may from time to time prescribe.

President. The President shall exercise the usual executive
powers pertaining to the office of President. In the absence of a Chairman of
the Board, the President shall preside at meetings of the Board of Directors and
of the shareholders, perform the other duties of the Chairman of the Board
prescribed in this Section, and perform such other duties as the Board of
Directors may from time to time designate. In addition, if there is no Secretary
in office, the President shall perform the duties of the Secretary.

Vice President. Each Vice President shall perform such duties as
the Board of Directors may from time to time designate. In addition, the Vice
President, or if there is more than one, the most senior Vice President
available, shall act as President in the absence or disability of the President.

Secretary. The Secretary shall be responsible for and shall keep,
personally or with the assistance of others, records of the proceedings of the
directors and shareholders, authenticate records of the Corporation; attest all
certificates of stock in the name of the Corporation; keep the corporate seal,
if any, and affix the same to certificates of stock and other proper documents;
keep a record of the issuance of certificates of stock and the transfers of the
same; and perform such other duties as the Board of Directors may from time to
time designate.

Treasurer. The Treasurer shall have the care and custody of, and
be responsible for, all funds and securities of the Corporation and shall cause
to be kept regular books of account. The Treasurer shall cause to be deposited
all funds and other valuable effects in the name of the Corporation in such
depositories as may be designated by the Board of Directors. In general, the
Treasurer shall perform all of the duties incident to the office of Treasurer,
and such other duties as from time to time may be assigned by the Board of
Directors.

-6-
<PAGE> 7

Assistant Officers. Assistant officers may consist of one or more
Assistant Vice Presidents, one or more Assistant Secretaries, and one or more
Assistant Treasurers. Each assistant officer shall perform those duties assigned
to him or her from time to time by the Board of Directors, the President, or the
officer who appointed him or her.

3.4 Vacancies. Vacancies in any office arising from any cause may be
filled by the Board of Directors at any regular or special meeting.

3.5 Removal. Any officer or agent may be removed by action of the Board
of Directors with or without cause, but any removal shall be without prejudice
to the contract rights, if any, of the person removed. Election or appointment
of an officer or agent shall not of itself create any contract rights.

3.6 Compensation. The compensation of all officers of the Corporation
shall be fixed by the Board of Directors.

SECTION 4

SHARES AND CERTIFICATES OF SHARES

4.1 Share Certificates. Share certificates shall be issued in numerical
order, and each shareholder shall be entitled to a certificate signed by the
President or a Vice President, and attested by the Secretary or an Assistant
Secretary. Share certificates may be sealed with the corporate seal, if any.
Facsimiles of the signatures and seal may be used as permitted by law. Every
share certificate shall state:

(a) the name of the Corporation;

(b) that the Corporation is organized under the laws of the State
of Washington;

(d) the number, class and series (if any) of shares that the
certificate represents; and

(e) if the Corporation is authorized to issue shares of more than
one class or series, that upon written request and without
charge, the Corporation will furnish any shareholder with a
full statement of the designations, preferences, limitations
and relative rights of the shares of each class or series, and
the authority of the Board of Directors to determine
variations for future series.

-7-
<PAGE> 8

4.2 Consideration for Shares. Shares of the Corporation may be issued
for such consideration as shall be determined by the Board of Directors to be
adequate. The consideration for the issuance of shares may be paid in whole or
in part in cash, or in any tangible or intangible property or benefit to the
Corporation, including but not limited to promissory notes, services performed,
contracts for services to be performed, or other securities of the Corporation.
Establishment by the Board of Directors of the amount of consideration received
or to be received for shares of the Corporation shall be deemed to be a
determination that the consideration so established is adequate.

4.3 Transfers. Shares may be transferred by delivery of the certificate,
accompanied either by an assignment in writing on the back of the certificate,
or by a written power of attorney to sell, assign and transfer the same, signed
by the record holder of the certificate. Except as otherwise specifically
provided in these Bylaws, no shares of stock shall be transferred on the books
of the Corporation until the outstanding certificate therefor has been
surrendered to the Corporation.

4.4 Loss or Destruction of Certificates. In the event of the loss or
destruction of any certificate, a new certificate may be issued in lieu thereof
upon satisfactory proof of such loss or destruction, and upon the giving of
security against loss to the Corporation by bond, indemnity or otherwise, to the
extent deemed necessary by the Board of Directors, the Secretary, or the
Treasurer.

4.5 Fixing Record Date. The Board of Directors may fix in advance a date
as the record date for determining shareholders entitled: (i) to notice of or to
vote at any shareholders' meeting or any adjournment thereof; (h) to receive
payment of any share dividend; or (iii) to receive payment of any distribution.
The Board of Directors may in addition fix record dates with respect to any
allotment of rights or conversion or exchange of any securities by their terms,
or for any other proper purpose, as determined by the Board of Directors and by
law. The record date shall be not more than 70 days and, in case of a meeting of
shareholders, not less than 10 days (or such longer period as may be required by
Washington law) prior to the date on which the particular action requiring
determination of shareholders is to be taken. If no record date is fixed for
determining the shareholders entitled to notice of or to vote at a meeting of
shareholders, the record date shall be the date before the day on which notice
of the meeting is mailed. If no record date is fixed for the determination of
shareholders entitled to a distribution (other than one involving a purchase,
redemption, or other acquisition of the Corporation's own shares), the record
date shall be the date on which the Board adopted the resolution declaring the
distribution. If no record date is fixed for determining shareholders entitled
to a share dividend, the record date shall be the date on which the Board of
Directors authorized the dividend.

SECTION 5

BOOKS, RECORDS AND REPORTS

-8-
<PAGE> 9

5.1 Records of Corporate Meetings, Accounting Records and Share
Registers. The Corporation shall keep, as permanent records, minutes of all
meetings of the Board of Directors and shareholders, and all actions taken
without a meeting, and all actions taken by a committee exercising the authority
of the Board of Directors. The Corporation or its agent shall maintain, in a
form that permits preparation of a list, a list of the names and addresses of
its shareholders, in alphabetical order by class of shares, and the number,
class, and series, if any, of shares held by each. The Corporation shall also
maintain appropriate accounting records, and at its principal place of business
shall keep copies of: (a) its Articles of Incorporation or restated Articles of
Incorporation and all amendments in effect, (b) its Bylaws or restated Bylaws
and all amendments in effect; (c) minutes of all shareholders' meetings and
records of all actions taken without meetings for the past three years; (d) the
year-end balance sheets and income statements for the past three fiscal years,
prepared as required by Washington law; (e) all written communications to
shareholders generally in the past three years; (f) a list of the names and
business addresses of its current officers and directors; and (g) its most
recent annual report to the Secretary of State.

5.2 Copies of Corporate Records. Any person dealing with the Corporation
may rely upon a copy of any of the records of the proceedings, resolutions, or
votes of the Board of Directors or shareholders, when certified by the Chairman
of the Board, President, Vice President, Secretary or Assistant Secretary.

5.3 Examination of Records. A shareholder shall have the right to
inspect and copy, during regular business hours at the principal office of the
Corporation, in person or by his or her attorney or agent, the corporate records
referred to in the last sentence of Section 5.1 of these Bylaws if the
shareholder gives the Corporation written notice of the demand at least five
business days before the date on which the shareholder wishes to make such
inspection. In addition, if a shareholder's demand is made in good faith and for
a proper purpose, a shareholder may inspect and copy, during regular business
hours at a reasonable location specified by the Corporation, excerpts from
minutes of any meeting of the Board of Directors, records of any action of a
committee of the Board of Directors, records of actions taken by the Board of
Directors without a meeting, minutes of shareholders' meetings held or records
of action taken by shareholders without a meeting not within the past three
years, accounting records of the Corporation, or the record of shareholders;
provided that the shareholder shall have made a demand describing with
reasonable particularity the shareholder's purpose and the records the
shareholder desires to inspect, and provided further that the records are
directly connected to the shareholder's purpose. This section shall not affect
any right of shareholders to inspect records of the Corporation that may be
otherwise granted to the shareholders by law.

5.4 Financial Statements. Not later than four months after the end of
each fiscal year, or in any event prior to its annual meeting of shareholders,
the Corporation shall prepare a balance sheet and income statement in accordance
with Washington law. The Corporation shall furnish a copy of each to any
shareholder upon written request.

-9-
<PAGE> 10

SECTION 6

FISCAL YEAR

The fiscal year of the Corporation shall be as set forth in Exhibit A.

SECTION 7

CORPORATE SEAL

The corporate seal of the Corporation, if any, shall be in the form
shown on Exhibit A.

SECTION 8

MISCELLANEOUS PROCEDURAL PROVISIONS

The Board of Directors may adopt rules of procedure to govern any
meetings of shareholders or directors to the extent not inconsistent with law,
the Corporation's Articles of Incorporation, or these Bylaws, as they are in
effect from time to time. In the absence of any rules of procedure adopted by
the Board of Directors, the chairman of the meeting shall make all decisions
regarding the procedures for any meeting.

SECTION 9

AMENDMENT OF BYLAWS

The Board of Directors is expressly authorized to make, alter and repeal
the Bylaws of the Corporation, subject to the power of the shareholders of the
Corporation to change or repeal the Bylaws.

SECTION 10

INDEMNIFICATION OF DIRECTORS AND OTHERS

10.1 Grant of Indemnification. Subject to Section 10.2, each person who
was or is made a party or is threatened to be made a party to or is involved
(including, without limitation, as a witness) in any threatened, pending, or
completed action, suit or proceeding, whether formal or informal, civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a director of the Corporation or
who, while a director of the Corporation, is or was serving at the request of
the Corporation as a director, officer, employee or agent of this or another
Corporation or of a partnership, joint venture, trust, other enterprise, or
employee benefit plan, whether the basis of such proceeding is alleged action in
an official capacity as a director or in any other capacity while

-10-
<PAGE> 11

serving as a director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent permitted by applicable law,
as then in effect, against all expense, liability and loss (including attorneys'
fees, costs, judgments, fines, ERISA excise taxes or penalties and amounts to be
paid in settlement) reasonably incurred or suffered by such person in connection
therewith, and such indemnification shall continue as to a person who has ceased
to be a director and shall inure to the benefit of his or her heirs, executors
and administrators.

10.2 Limitations on Indemnification. Notwithstanding Section 10.1, no
indemnification shall be provided hereunder to any such person to the extent
that such indemnification would be prohibited by the Washington Business
Corporation Act or other applicable law as then in effect, nor, except as
provided in Section 10.4 with respect to proceedings seeking to enforce rights
to indemnification, shall the Corporation indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person except where such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation.

10.3 Advancement of Expenses. The right to indemnification conferred in
this section shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition,
except where the Board of Directors shall have adopted a resolution expressly
disapproving such advancement of expenses.

10.4 Right to Enforce Indemnification. If a claim under Section 10.1 is
not paid in full by the Corporation within 60 days after a written claim has
been received by the Corporation, or if a claim for expenses incurred in
defending a proceeding in advance of its final disposition authorized under
Section 10.3 is not paid within 20 days after a written claim has been received
by the Corporation, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, to the extent
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. The claimant shall be presumed to be
entitled to indemnification hereunder upon submission of a written claim (and,
in an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition, where the required undertaking
has been tendered to the Corporation), and thereafter the Corporation shall have
the burden of proof to overcome the presumption that the claimant is so
entitled. It shall be a defense to any such action (other than an action with
respect to expenses authorized under Section 10.3) that the claimant has not met
the standards of conduct which make it permissible hereunder or under the
Washington Business Corporation Act for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
or reimbursement or advancement of expenses to the claimant is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth herein or in the

-11-
<PAGE> 12

Washington Business Corporation Act nor (except as provided in Section 10.3) an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its shareholders) that the claimant is not
entitled to indemnification or to the reimbursement or advancement of expenses
shall be a defense to the action or create a presumption that the claimant is
not so entitled.

10.5 Nonexclusivity. The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final disposition
conferred in this section shall be valid to the extent consistent with
Washington law.

10.6 Indemnification of Officers Employees and Agents. The Corporation
may, by action of its Board of Directors from time to time, provide
indemnification and pay expenses in advance of the final disposition of a
proceeding to officers, employees and agents of the Corporation on the same
terms and with the same scope and effect as the provisions of this section with
respect to the indemnification and advancement of expenses of directors and
officers of the Corporation or pursuant to rights granted pursuant to, or
provided by, the Washington Business Corporation Act or on such other terms as
the Board may deem proper.

10.7 Insurance and Other Security. The Corporation may maintain
insurance, at its expense, to protect itself and any individual who is or was a
director, officer, employee or agent of the Corporation or another Corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against or incurred by the individual in that capacity or arising from
his or her status as an officer, director, agent, or employee, whether or not
the Corporation would have the power to indemnify such person against the same
liability under the Washington Business Corporation Act. The Corporation may
enter into contracts with any director or officer of the Corporation in
furtherance of the provisions of this section and may create a trust fund, grant
a security interest or use other means (including, without limitation, a letter
of credit) to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this section.

10.8 Amendment or Modification. This section may be altered or amended
at any time as provided in these Bylaws, but no such amendment shall have the
effect of diminishing the rights of any person who is or was an officer or
director as to any acts or omissions taken or omitted to be taken prior to the
effective date of such amendment.

10.9 Effect of Section. The rights conferred by this section shall be
deemed to be contract rights between the Corporation and each person who is or
was a director or officer. The Corporation expressly intends each such person to
rely on the rights conferred hereby in performing his or her respective duties
on behalf of the Corporation.

SECTION 11

REPRESENTATION OF SHARES OF OTHER CORPORATIONS

-12-
<PAGE> 13

Unless otherwise restricted by the Board of Directors, the Chairman,
President, and any Vice President of the Corporation are each authorized to
vote, represent and exercise on behalf of the Corporation all rights incident to
any and all shares of other corporations standing in the name of the
Corporation. This authority may be exercised by such officers either in person
or by a duly executed proxy or power of attorney.

-13-
<PAGE> 14

EXHIBIT A

Section 1.1. Date and time of annual shareholders' meeting: The third
Thursday in April

Section 2.1. Number of members of Board of Directors, unless and until
changed by resolution of the Board of Directors: two

Amended 04/28/98 at the Annual meeting of Shareholders to provide for 3
directors

Section 6. Fiscal year: September 30

Section 7. Corporate Seal:

Date Bylaws Adopted: June 4, 1996
-----------------------------

-14-

<PAGE> 1
EXHIBIT 10.1

SUNHAWK CORPORATION

1996 STOCK OPTION PLAN

<PAGE> 1
EXHIBIT 10.5

TABLE OF CONTENTS

LEASE

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. FUNDAMENTAL LEASE PROVISIONS
EXHIBITS, DEFINED TERMS......................... 1

SECTION 2. PREMISES........................................ 2

SECTION 3. LEASE COMMENCEMENT AND EXPIRATION DATES......... 2

SECTION 4. RENT............................................ 3

SECTION 5. SECURITY DEPOSIT................................ 3

SECTION 6. COST OF OPERATIONS AND REAL ESTATE TAXES........ 3

SECTION 7. USES; HAZARDOUS MATERIALS....................... 5

SECTION 8. COVENANTS OF LANDLORD........................... 5

SECTION 9. COVENANTS OF TENANT............................. 6

SECTION 10. ALTERATIONS AND IMPROVEMENTS.................... 7

SECTION 11. DAMAGE OR DESTRUCTION........................... 8

SECTION 12. WAIVER OF SUBROGATION........................... 8

SECTION 13. INDEMNIFICATION AND RELEASE..................... 8

SECTION 14. EMINENT DOMAIN.................................. 9

SECTION 15. ASSIGNMENT AND SUBLETTING....................... 9

SECTION 16. INSOLVENCY AND DEFAULT.......................... 10

SECTION 17. QUIET ENJOYMENT................................. 13

SECTION 18. LANDLORD'S LIABILITY............................ 13

SECTION 19. LANDLORD'S INTEREST IN PREMISES................. 13

SECTION 20. HOLDING OVER.................................... 14

SECTION 21. MISCELLANEOUS PROVISIONS........................ 14

EXHIBIT A Floor Plan

EXHIBIT B Legal Description of Land

EXHIBIT C Rules and Regulations

EXHIBIT D Additional Lease Terms

EXHIBIT E Cleaning Specifications

RIDER 1 Options To Renew
</TABLE>
<PAGE> 2
LEASE

This LEASE (this "Lease") is made and entered into this 10th day of August,
1998, by and between 223 Taylor Corp., a Washington corporation, ("Landlord")
and Sunhawk Corp., a Washington corporation, ("Tenant").

In consideration of the mutual promises and covenants contained in this lease,
Landlord and Tenant do hereby agree:

SECTION 1. FUNDAMENTAL LEASE PROVISIONS, EXHIBITS, DEFINED TERMS

In addition to definitions set forth elsewhere in this Lease and subject to
other provisions of this Lease, the following terms shall have the following
meanings:

(1) BUILDING: 223 Taylor Avenue North

(2) PREMISES: Suite number 200, consisting of the entire second (2nd)
floor(s) of the Building located as indicated on the floor plan(s) attached
hereto as Exhibit A, including the Tenant Improvements, if any.

(3) TENANT'S PERCENTAGE: Fifty and 2/10 percent (50.2%) based upon the
rentable area of the Premises (as defined in Section 3.6), which is
approximately 19,224 rentable square feet, compared to the applicable rentable
area of the Building, which is assumed to be and shall remain 38,286 rentable
square feet. If the rentable area of the Premises or the rentable area of the
Building is altered, Landlord shall adjust Tenant's percentage accordingly.

(4) COMMENCEMENT DATE: The later of mutual execution of this lease or
September 1, 1998

(5) TERM: Sixty (60) full calendar months, plus any partial month
following the Commencement Date, as provided in Section 3.5.

(6) RENT: see exhibit D

(7) ADDITIONAL RENT: All amounts payable by Tenant to Landlord under
this Lease, pursuant to Sections 6, 8, 9.8, and 16.

(8) BASE FISCAL YEAR: The one-year period ended December 31, 1999.

(9) SECURITY DEPOSIT: Twenty seven thousand, two hundred thirty-four
and 00/100 Dollars ($27,234.00).

(10) LANDLORD'S ADDRESS:

C/o Walter Hall Management, Inc.
1200 Westlake Avenue North
Seattle, WA 98109

(11) TENANT'S ADDRESS:

Prior to Commencement Date: After Commencement Date:
318 Terry Avenue North, 223 Taylor Avenue North,
Suite 200 Suite 200
Seattle, WA 98109 Seattle, WA 98109

(12) GUARANTOR: Marlin Eller, and any other Person who hereafter in
whole or in part guarantees Tenant's performance under this Lease.

(13) PERSON: Individuals, partnerships, firms, associations,
corporations and/or any other form of business or legal entity.

(14) LAND: The real property described in Exhibit B hereto.

(15) OCCUPANT: Any Person, including Tenant, entitled to occupy or use
a portion or portions of the Building under a lease or another arrangement with
Landlord.

(16) PERMITTED USES: General office use.

Page 1
<PAGE> 3
(17) PARKING: Tenants shall be permitted, upon payment of the then
prevailing monthly rate (as set by Landlord or Landlord's operator from
time-to-time) to park forty-five (45) cars on a nonexclusive basis in the area
(as designated by Landlord) for parking. Tenant shall abide by any and all
parking regulations and rules established from time-to-time by Landlord or
Landlord's parking operator. Landlord reserves the right to separately charge
Tenant's guests and visitors for parking. The monthly parking arrangements
permit Tenant to select among three pricing options. Choice A -- Monday -
Friday 7 a.m. to 6 p.m.; Choice B -- Monday - Friday 7 a.m. to 6 p.m. and
Saturday 8 a.m. to 12 p.m.; Choice C -- 24 hours per day, 7 days per week.
Tenant may change its choice on 30 days notice to Landlord. Tenant may select
any combination of the choices totaling no more than forty five (45) spaces.

(18) BROKERS:

Landlord's: Curt Ghan and Rod Keefe, Kidder, Mathews & Segner, Inc.

Tenant's: Richard Hesik, Yates, Wood & MacDonald, Inc.

(19) PREPAID RENT: Tenant shall pay the first month's rent upon Lease
execution.

Exhibits: The following exhibits are attached to this Lease and
incorporated herein by this reference as if fully set forth:

Exhibit A -- Floor Plan
Exhibit B -- Legal Description of Land
Exhibit C -- Rules and Regulations
Exhibit D -- Additional Lease Terms
Exhibit E -- Janitorial Specifications
Rider 1 -- Option to Renew

SECTION 2. PREMISES

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, the
interior of the Premises, for the term and subject to and with the benefit of
the covenants and conditions set forth in this Lease. Tenant shall have, for
itself, its employees, agents, and invitees access to the Premises and the
reasonable nonexclusive right of access to and use of the stairways, sidewalks,
elevators (subject to Landlord's installation of the agreed locking mechanism),
passageways, corridors, doors, doorways, lobbies, and other entrances and
common areas in or about the Building, as they may exist from time to time,
subject to Landlord's exclusive control, management, and reasonable discretion.
The perimeter walls, floors, and ceilings of the Premises and any space in the
Premises used for shafts, stacks, pipes, conduits, ducts, electrical or other
utilities or Building facilities and the use thereof, as well as access thereto
throughout the Premises for the purposes of operation, maintenance, decoration,
installation, inspection, repair, and replacement, are expressly reserved to
Landlord and are expressly excluded from the Premises leased hereby, provided
that Tenant shall be permitted to run wiring above the ceiling grid. The
Building is located on a portion of the Land. Tenant will be allowed access to
the boiler/electrical room with Landlord's prior consent and accompanied by
Landlord's representative.

SECTION 3. LEASE COMMENCEMENT AND EXPIRATION DATES

3.1 LEASE COMMENCEMENT DATE: Mutual execution of this lease.

3.2 EARLY ENTRY: If Tenant is permitted entry to the Premises prior to
Commencement Date for the purpose of installing fixtures or any other purpose
permitted by Landlord, such early entry will be a Tenant's sole risk and
subject to all the terms and provisions of this Lease as though the Commencement
Date had occurred, except for the payment of Rent and Additional Rent which
will commence on the Commencement Date. All rights of Tenant under this Section
3.2 will be subject to the requirements of all applicable building codes and
zoning requirements. Landlord has the right to impose such additional
conditions on Tenant's early entry as Landlord, in its sole discretion, deems
appropriate, and will further have the right to require that tenant execute
an early entry agreement containing such conditions prior to Tenant's early
entry.

3.3 TERM: The term of this Lease shall commence on the Commencement
Date and continue for the number of full calendar months specified in Section
(5) unless sooner terminated or extended as provided in this Lease.

3.4 POSSESSION: If Landlord is unable to deliver the Premises or any
portion thereof on or before the projected Commencement Date, Landlord shall
not be liable for any damage caused thereby, nor shall this lease thereby become
void and voidable, but in such event, (i) Tenant shall not be liable for
payment of any Rent or Additional Rent until such time as Landlord delivers
possession, and (ii) the Term shall not commence until the Premises are so
delivered. (iii) if the Premises are not delivered on or before the
Commencement Date, Tenant shall have the option to cancel the Lease and secure
the return of all moneys paid to Landlord.

3.5 CONDITION OF PREMISES: Tenant's taking possession of the Premises
shall be deemed conclusive evidence that, as of the date of taking possession,
the Premises are in good order and satisfactory condition,

Page 2
<PAGE> 4
subject to the "latent defects" provision in Exhibit D. No promise of Landlord
to alter, remodel, repair or improve the Premises, or the Building, and no
representation, express or implied, respecting any matter or thing relating to
the Premises, the Building, or this Lease (including, without limitation, the
condition of the Premises or the Building) have been made to Tenant by Landlord
or its Broker or Sales Agent, other than as may be contained herein or in a
separate exhibit or addendum signed by Landlord and Tenant.

3.6 Confirmation of Rentable Area: The actual rentable area of the
Premises may vary from the amounts set forth in Section 1 (3) (but not to
exceed 20,649 square feet), depending on the final contract documents for the
Premises agreed to between Landlord and Tenant in accordance with the Work
Letter. Within thirty (30) days of the Commencement Date, Landlord shall
determine and notify Tenant in writing of the actual rentable area of the
Premises. If the actual rentable area varies from that stated in Section 1 (3),
and (ii) if base rent is based upon rentable square feet, base rent shall be
adjusted in accordance with the per square foot rental rate stated in Section
1 (6). "Rentable Area" shall have the same meaning as set forth in the "Standard
Method for Measuring Floor Area in Office Buildings" (American National
Standard ANSI -- Z65.1 --1980) published by Building Owners and Managers
Association International.

SECTION 4. RENT

4.1 PAYMENT: Commencing on the Commencement Date, Tenant shall pay
Landlord at Landlord's address, or to such other person or place or account as
Landlord may hereafter from time to time designate in writing, the rent
specified in Section 1 (at times referred to herein as "Rent"), and any other
charges due under this Lease, without notice or demand except as otherwise
specifically provided in this Lease and without deduction or offset or
abatement or counterclaim. Such payment shall be made in lawful money of the
United States in advance on or before the Commencement Date and on or before
the first (1st) day of each succeeding month. Rent and any other payments for
any partial month at the beginning or end of the term of this lease shall be
prorated based upon the actual number of days of such month. Upon execution of
this Lease, Tenant shall deposit with Landlord the first month's Rent.

SECTION 5. SECURITY DEPOSIT

As security for the full and faithful performance of every covenant and
condition of this Lease to be performed by Tenant, Tenant has paid the Security
Deposit to Landlord, and Landlord acknowledges receipt of the Security Deposit.
If Tenant shall default with respect to any covenant or condition of this
Lease, including but not limited to the payment of Rent or any other amount or
charge due hereunder, Landlord may apply all or any part of the Security
Deposit to the payment of any sum in default, or any other sum, which Landlord
may be required to spend or incur by reason of Tenant's default, and any other
sum, which Landlord may in its reasonable discretion deem necessary to spend or
incur on Tenant's behalf or by reason of Tenant's default. In any such event,
Tenant shall within ten (10) days of demand, deposit with Landlord the amount
so applied, expended or incurred. Only if Tenant shall have fully complied
with all of the covenants and conditions of this Lease at the time of
termination, and shall have delivered the Premises to Landlord in the condition
required by the terms of this Lease, but not otherwise, the amount of the
Security Deposit then held by Landlord shall be repaid to Tenant (or, at
Landlord's option, to the last assignee of Tenant's interest hereunder) within
thirty (30) days after the expiration or sooner termination of this Lease.
Tenant shall not assign or encumber the Security Deposit and neither Landlord
nor its successors or assigns shall be bound by any such assignment or
encumbrance. Landlord may comingle the Security Deposit with other funds and
Tenant shall not be entitled to interest or other return thereon.

SECTION 6. COST OF OPERATIONS AND REAL ESTATE TAXES

6.1 DEFINITIONS: The following terms shall have the following meanings:

OPERATING COSTS: Any and all amounts incurred or expended by Landlord in
connection with the management, maintenance, operation, or repair of the
Premises or the Building or the Land or all or any portion thereof, or any
improvements, fixtures, or equipment situation thereon or therein including,
but not by way of limitation, the cost of operating, maintaining and repairing
elevators; wages and salaries of all employees engaged in operation,
maintenance or security of the Building, including all taxes, insurance and
benefits relating to such employees; insurance costs of every kind and nature;
energy costs, including costs of heating, ventilating, air conditioning and
electricity; water, sewer, gas and other utility costs; the total customary
charges of any agent or independent contractor employed in the repair, care,
operation, management, maintenance, or security of the Building or the Land;
Real Property Taxes, as defined below; and any other expenses or charges
whether or not herein above described, which in accordance with generally
accepted accounting and management practices would be considered an expense of
maintaining, managing, operating or repairing the Building. Operating costs
shall not include: (i) initial leasing costs including tenant improvements and
leasing commissions for other tenants; (ii) costs of any special services
rendered to individual tenants (including Tenant) for which a special charge is
collected; and (iii) depreciation or amortization of costs required to be
capitalized in accordance with generally accepted accounting principles and
(iv) payments of principal or interest on mortgages, deeds of trust, ground
leases, or other encumbrances upon the Land or Building or Premises; and (v)
repairs to the structure of the Building, and (vi) any bad debt, rent loss, or
reserves for bad debt or rent loss; and (vii) any expense for which Landlord is
compensated through proceeds of insurance; (viii) cost of repair of the
Building caused by fire or

Page 3
<PAGE> 5

other casualty or due to exercise of eminent domain, (ix) cost of environmental
remediation, clean-up, and repair except as provided in Section 7.2, and (x)
cost of any structural or foundation work. Operating Costs shall include
amortization (including interest at the rate incurred by Landlord in connection
therewith) of items classified as capital expenditures under generally accepted
accounting principles or which are required under any governmental laws
or regulations not applicable to the Building at the time it was constructed.

REAL PROPERTY TAXES: Taxes, charges or any installments of, assessments
(or any installment thereof due during the Fiscal Year) and other impositions,
however denominated, levied from time to time with respect to the Land, the
Building, or any improvements, fixtures and equipment, and all other property of
Landlord, real or personal, used directly in the operation of the Building and
located in, on, or about the Building; any taxes levied or assessed (or any
installment thereof due during the Fiscal Year) in addition to or in lieu of, in
whole or in part, such taxes; any other tax upon leasing of the Building or
rents; any other tax or surcharge such as, for example, payments to or on
account of public transit or carpooling or environmental facilities; and all
costs and expenses incurred by Landlord in connection with the attempt to reduce
any of the foregoing, whether by negotiation or contest. Real Property Taxes,
however, shall not include any franchise or state income tax, inheritance tax,
estate tax, business and occupation tax, or any other similar tax. Real Property
Tax assessments shall be spread over the longest permitted payment period.
Tenant hereby waives any right it may have by statute or otherwise to protest
the amount of any Real Property Taxes.

FISCAL YEAR: The period from January 1 through December 31.

OPERATING COSTS BASE AMOUNT: Tenant's Percentage of Operating Costs
actually incurred or expended by Landlord for the Base Fiscal Year as specified
in Section 1.8. Operating Costs and real property assessments shall be spread
over the longest permitted payment period. If this Lease sets forth an expense
stop in Section 1 (24), then the Operating Costs base amount shall be equal to
the expense stop.

6.2 ADDITIONAL RENT FOR OPERATING COSTS: If, in any year following
calendar year 1999, Operating Costs multiplied by Tenant's Percentage is in
excess of the Operating Costs Base Amount, then, in addition to all other
amounts due hereunder and as additional rent, Tenant shall pay Landlord the
amount of such excess ("Tenant's Share of Operating Costs"), such payments to be
made in accordance with Section 6.3.

6.3 ESTIMATED INCREASES: By January 31st of each fiscal year, Landlord
shall give Tenant written notice of the estimated amount payable by Tenant under
this Section 6.3 for the following fiscal year. On or before the first (1st) day
of each month thereafter, Tenant shall pay Landlord one-twelfth (1/12th) of such
estimated amounts, provided Landlord may, by written notice to Tenant, revise
its estimate whereupon subsequent payments by Tenant for the remainder of the
Fiscal Year shall be based upon such revised estimate. Within ninety (90) days
after the close of each fiscal year during the term of this Lease, or as soon
thereafter as practicable, Landlord shall deliver to Tenant a certified
statement setting forth the total amount of Tenant's share of operating costs
for such fiscal year, whereupon there shall be a final adjustment between
Landlord and Tenant in connection with amounts due Landlord under this Section
6.3 and Tenant shall pay Landlord any amount due Landlord within thirty (30)
days of receipt of such certified statement, and any amount due Tenant shall be
credited to the next accruing amounts due Landlord pursuant to this Section 6.3
or if the Lease has terminated or expired, such amount shall be credited against
any amounts still due Landlord and the balance shall be refunded to Tenant.
Alternatively, Landlord may elect to bill Tenant in arrears for actual increases
rather than collecting estimated payments and adjusting to actual annually.

6.4 FURTHER ADJUSTMENTS:

6.4.1 If less than an average of ninety-five percent (95%) of
the rentable area of the Building is occupied by occupants during all or any
portion of a fiscal year, Landlord shall make an appropriate adjustment of
operating costs for such year, including for purposes of estimated payments
under Section 6.3, employing sound accounting and management principles, to
determine the amount of operating costs that would have been expended or
incurred had ninety-five percent (95%) of the rentable area of the Building
been occupied during the entire fiscal year.

6.4.2 During periods that other tenants of the Building are
not sharing services or utilities, the Operating Costs Base Amount and Tenant's
Percentage shall be appropriately adjusted. For example, during the period that
GST occupies a portion of the Building and provided its own heating and cooling
equipment and service, increases in the cost of operating, maintaining and
repairing the HVAC system used by Tenant shall be spread over the tenants
served by that system based on their relative percentages of the remaining
space. Similarly, GST will be served by its own electrical power and therefore
increases in the cost of the power to the rest of the Building shall be shared
by those other tenants by that service.

6.4.3 For the fiscal year in which the term of this Lease
terminates or expires, Tenant shall pay only that proportion of the amount
otherwise payable under this Section 6 which the number of days of the term of
the Lease falling within such year bears to three hundred sixty-five (365)
days, based upon the estimated amounts due pursuant to Section 6.3 for the
fiscal year of termination or expiration.

6.5 PERSONAL PROPERTY TAXES: Tenant shall pay, prior to delinquency,
all personal property taxes payable with respect to all property of Tenant
located on or about the Premises or the Building and shall, promptly upon
request of Landlord, provide written proof of such payment to Landlord. As used
herein "Property of Tenant" shall include all improvements which are paid for
by Tenant and "Personal Property Taxes"

Page 4
<PAGE> 6
shall include all property taxes assessed against the property of Tenant,
whether assessed as real or personal property. If any portions of Tenant's
property are assessed against the property of Tenant, whether assessed as real
or personal property. If any portions of Tenant's property are assessed and
taxed with the Building, Tenant shall pay Landlord its share of such taxes
within ten (10) days after receipt of a written statement setting forth the
amount of such taxes that Landlord has determined are applicable to Tenant's
property.

SECTION 7. USES; HAZARDOUS MATERIALS

7.1 PERMITTED USES; WASTE: Tenant shall use the Premises only for the
permitted uses and for no other business or purpose without the prior written
consent of Landlord. Tenant shall not commit or allow to be committed any waste
upon the Premises, or any public or private nuisance or other act or thing which
disturbs the quiet enjoyment of any other occupant in the Building, or is
reasonably expected to injure the reputation of the Building, or is unlawful.

7.2 HAZARDOUS MATERIALS: The term "Hazardous Substances", as used in this
Lease shall mean pollutants, contaminants, toxic or hazardous wastes, or any
other substances, the removal of which is required or the use of which is
restricted, prohibited or penalized by an "Environmental Law", which term shall
mean any federal, state or local ordinance relating to pollution or protection
of the environment. Tenant hereby agrees that (i) no activity will be conducted
on the Premises that will produce any Hazardous Substance, except for such
activities (the "Permitted Activities") provided said Permitted Activities are
conducted in accordance with all Environmental Laws and have been approved in
advance in writing by Landlord; (ii) the Premises will not be used in any manner
for the storage of any Hazardous Substances except for the temporary storage of
such materials that are used in the ordinary course of Tenant's business (the
"Permitted Materials") provided such Permitted Materials are properly stored in
a manner and location meeting all Environmental laws and approved in advance in
writing by Landlord; (iii) no portion of the Premises will be used as a landfill
or a dump; (iv) Tenant will not install any underground tanks of any type; (v)
Tenant will not allow any surface or subsurface conditions to exist to come into
existence that constitute or, with the passage of time, may constitute a public
or private nuisance; (vi) Tenant will not permit any Hazardous Substances to be
brought onto the premises except for the Permitted Materials and if so brought
or found located thereon, the same shall be immediately removed, with proper
disposal, and all required cleanup procedures shall be diligently undertaken
pursuant to all Environmental Laws. Tenant shall be solely responsible for and
shall defend, indemnify and hold Landlord, its agents and employees harmless
from and against all claims, costs and liabilities, including attorneys' fees
and costs, arising out of or in connection with Tenant's breach of its
obligations contained in this Section 7.2. Tenant shall be solely responsible
for and shall defend, indemnify and hold Landlord, its agents and employees
harmless from and against any and all claims, costs and liabilities, including
attorneys' fees and costs, arising out of or in connection with the removal,
cleanup and restoration work and materials necessary to return the Premises, the
Building, the Land and any other property, to their condition existing prior to
the appearance of Tenant's Hazardous Substances. Tenant's obligations under this
Section 7.2 shall survive the expiration or other termination of this Lease.

SECTION 8. COVENANTS OF LANDLORD

8.1 BASIC SERVICES: Landlord shall:

8.1.1 Furnish reasonable electricity, heating, ventilating, air
conditioning, and other utilities to the Premises as provided in the Rules and
Regulations, and subject to any limitations imposed by applicable law.

8.1.2 Provide elevator service in the Building as provided in the
Rules and Regulations.

8.1.3 Provide periodic exterior window washing at reasonable
intervals.

8.1.4 Maintain and repair structure, exterior walls, roof,
mechanical, electrical, heating, ventilation and air conditioning and plumbing
systems, as well as the lighting systems in the Premises on the Commencement
Date but excluding lamp replacement.

8.2 EXTRAORDINARY SERVICES: Should Tenant require special services from
time to time on days or hours other than those specified in Rules and
Regulations attached as Exhibit C, Landlord shall upon reasonable advance
notice by Tenant, furnish such additional service and Tenant agrees to pay to
Landlord, concurrently with payment of monthly Rent, as Additional Rent,
Landlord's cost of labor, materials supplied and utilities consumed in
providing such additional service plus reasonable administrative costs. The
amount of such payment and expenses shall be excluded from the determination of
operating costs.

8.3 LANDLORD NOT LIABLE: Landlord does not warrant that any of the
services referred to in this Lease, or any other services which Landlord may
supply, will be free from power surge, interruption, curtailment or suspension,
Tenant acknowledging that any one or more of such events or services may be
suspended by reason of accident or repairs, alterations or improvements, or by
reason of causes beyond the reasonable control of Landlord. No interruption,
curtailment or suspension of service except as caused by Landlord's gross
negligence or willful misconduct shall be deemed an eviction or disturbance of
Tenant's use and possession of the Premises

Page 5

<PAGE> 7
or any part thereof, or render Landlord liable to Tenant for damages, or
relieve Tenant from the full and complete performance of all of Tenant's
obligations under this Lease, nor shall there be any abatement of Rent or other
charges. Notwithstanding anything in this Lease to the contrary, Landlord shall
be liable for any damage to Tenant's personal property resulting from a power
outage or interruption which outage or interruption is caused by the gross
negligence or willful misconduct of Landlord but only to the extent Tenant is
not compensated for such damage through insurance proceeds. Tenant shall have
the right to install a back-up generator on the property in a location to be
determined by Landlord.

8.4 Tenant shall have the right to install a generator in the parking lot
outside the Building and hook the generator up to its Premises for emergency
power subject to the provisions of this section. Tenant must obtain Landlord's
approval of the location of the generator. The generator will occupy at least
one parking space in the parking lot. For each parking space or part thereof
used by Tenant, Tenant shall lease and allocate one of its 45 spaces described
in Section 1(7). Tenant shall take any steps specified by Landlord to insure
that no contamination of the property occurs due to the use of placement of the
generator. Tenant shall not allow any noise from the generator to unreasonably
disrupt other tenants of the building.

SECTION 9. COVENANTS OF TENANT

Tenant agrees, for itself, its employees, agents and invitees, that it
shall:

9.1 RULES AND REGULATIONS: Comply with the Rules and Regulations, and
such reasonable amendments and additions as from time to time may be adopted by
Landlord to govern the use, occupancy and operation of the Building (the
existing rules and regulations, as so amended or supplemented from time to
time, being the "Rules and Regulations"). Landlord shall not be responsible to
Tenant for the noncompliance by any other Occupant with any of the Rules and
Regulations, and any failure by Landlord to enforce any Rules and Regulations
against either Tenant or any other Occupant shall not constitute a waiver
thereof.

9.2 LANDLORD'S RIGHT OF ACCESS: Give Landlord, its agents, employees,
lessors and mortagees and any other person or persons authorized by Landlord,
access to the Premises at all reasonable times, and at any time in the event of
an emergency, to enable them to inspect, examine, show for lease or sale, and to
make such repairs, additions and alterations to the Premises or the Building, or
to the fixtures, appurtenances or equipment therein, as Landlord may deem
advisable; provided that Landlord shall use reasonable efforts to (i) minimize
any disruption of Tenant's business caused by such access and (ii) provide
Tenant reasonable advance notice when feasible. Landlord shall also be entitled
to install and operate at Tenant's cost a monitoring/metering system in the
Premises to measure the added demands on electrical, heating, ventilating and
air conditioning systems, resulting from Tenant's equipment and lights or from
tenant's after hours heating, ventilating and air conditioning service
requirements. There shall be no allowance to Tenant or diminution of Rent and no
liability on the part of Landlord by reason of inconvenience, annoyance or
injury to business arising from such right of access or the making of any
repairs, alterations, additions or improvements in or to any portion of the
Building or the Premises, or in or to the fixtures, appurtenances and equipment
thereof except to the extent such injury is a result of Landlord's gross
negligence or willful misconduct.

9.3 REPAIR: Keep the Premises and all portions thereof in good order and
condition (excluding damage caused by Landlord, casualty, or condemnation), not
damage or deface the Premises or the Building, make all repairs to the Premises
which are not Landlord's obligation pursuant to Section 8 or Section 11,
including repairing damage to the Building or its contents caused by the
failure of Tenant to comply with its obligations under this Lease, and commit
no waste in, about or to the Premises or the Building. In furtherance thereof,
Tenant shall fully and completely maintain the Premises, including the
improvements and shall repair any damage to and, to the extent not repairable,
shall replace the damaged item, including all broken interior glass, whether of
doors, windows, walls or partitions. Tenant shall also be responsible for
repairing any damage to the Premises or the Building arising out of misuse or
negligence of Tenant, its employees, agents, invitees or visitors.

9.4 QUIT AND REMOVE: Upon the termination of this Lease for any reason,
quit and deliver up the Premises to Landlord peaceably and quietly in as good
order and condition as the Premises shall be on the Commencement Date or may
thereafter be improved by Landlord or Tenant, reasonable use and wear and
repairs which are Landlord's obligations and damage caused by Landlord,
casualty or condemnation excepted, and, if Tenant is not in default under the
terms of this Lease, remove Tenant's goods and effects and those of any other
persons claiming under Tenant. Goods and effects not removed by Tenant at the
termination of this Lease (or within 48 hours after a termination by reason of
Tenant's default), shall be considered abandoned and Landlord may dispose of
the same as it deems expedient and for its own account. Tenant shall promptly
upon demand reimburse Landlord for any expenses incurred by Landlord in
disposing of such abandoned goods and effects, and Landlord shall not be liable
to Tenant for any net proceeds from such disposal.

9.5 ADVERTISING: Not place in or on or about the Premises signs,
lettering, displays, advertising or pictures which are visible from outside the
Premises (including public corridors) except an identifying sign next to the
entrance to the Premises which shall be subject to the prior written approval
of Landlord, which approval shall not be unreasonably withheld or delayed.

9.6 LIENS: At its expense, cause to be fully and completely discharged of
record, within ten (10) days of Landlord's demand, any labor or materialman's
lien claim or other lien or claim filed against the Premises or the Building
for work claimed to have been done for, or materials claimed to have been
furnished to, or on behalf of Tenant.

Page 6

<PAGE> 8
9.7 COMPLY WITH LAWS: At its expense, comply with all laws, orders,
ordinances and regulations of federal, state, county and municipal authorities
and with any direction made pursuant to law of any public officer or officers,
which shall, with respect to the use of the Premises or to any abatement of
nuisance, impose any violation, order or duty upon Landlord or Tenant arising
from Tenant's use of the Premises or from conditions which have been created by
or at the instance of Tenant or are required by reason of a breach of any of
Tenant's obligations hereunder. Landlord will be responsible at its expense for
complying with the American's with Disabilities Act in the common areas of the
Building and the exterior areas on the Land, such as the parking lot and
sidewalks. To Landlord's knowledge, the Premises is in compliance with ADA.

9.8 NOT INVALIDATE INSURANCE: Not do or permit to be done any act or
thing upon the Premises which will invalidate or be in conflict with the
Certificate of Occupancy or the terms of the property, boiler, sprinkler, water
damage or other insurance policies covering the Building and the fixtures and
property therein or do or permit anything to be done or upon the Premises or
bring or keep anything for insurance upon the Building or on any Property or
equipment located therein. If Landlord's insurance premiums are increased
because of Tenant's failure to comply with its obligations under this Lease,
then Tenant shall pay the cost of any such increase, as additional rent,
immediately upon demand.

9.9 INSURANCE: At its expense, obtain and carry at all times during the
term of this Lease (i) comprehensive general liability insurance covering the
Premises with combined single limits of at least Two Million Dollars
($2,000,000) per person and per occurrence for personal injury (including bodily
injury and death) and broad form property damage having combined single limits
of at least Five Hundred Thousand Dollars ($500,000) per person and per
occurrence, or such higher amounts as Landlord may from time to time reasonably
designate by not less than thirty (30) days notice to Tenant, for injury to
persons (including death) and property arising out of the ownership,
maintenance, use or occupancy of the Premises, and which insurance shall contain
a contractual liability endorsement covering the matters set forth in Section 10
and Section 13 and shall not contain deductible amounts in excess of Five
Thousand Dollars ($5,000) without Landlord's prior written consent; and (ii)
fire and extended coverage insurance (with endorsements covering vandalism,
malicious mischief, water damage and business interruption) for Tenant's
fixtures, trade fixtures and furniture, and all other property owned or leased
by Tenant and located in the Premises or Building, to their full replacement
value. Such policies shall be written by insurers acceptable to Landlord and
shall name both Landlord and its mortgagees as additional insureds, as their
interest may appear, and all such insurers shall agree not to cancel or amend
(including as to scope or amount of coverage) such policies without at least
thirty (30) days prior written notice to Landlord. Each such policy shall also
provide that no act or default of any person other than Landlord or its agent
shall render the policy void as to Landlord or affect Landlord's right to
recover thereon and shall be written as a primary policy not contributing with
and not in excess of coverage Landlord may carry. Tenant shall furnish Landlord
with certificates of insurance evidencing coverage at all times during the term
of this Lease.

9.10 JANITORIAL SERVICE. Tenant arrange and pay for its own janitorial
service in the Premises. The level and frequency of janitorial service shall be
subject to approval by Landlord and shall comply with the specifications
attached as Exhibit E.

SECTION 10. ALTERATIONS AND IMPROVEMENTS

Tenant shall not make or install any alteration, installation,
addition, hardware, window treatment, floor covering, fixture or other
improvement to the Premises, or add to, disturb or in any way change any
plumbing or wiring, without in each and every of such cases (individually and
collectively "Improvements"), the prior written consent of Landlord, which
consent shall not be unreasonably withheld, conditioned or delayed provided
that Tenant agrees to remove the alterations and repair any damage caused
thereby at the end of the Lease Term at Landlord's request. Landlord's approval
of plans or specifications for Improvements shall not constitute an assumption
of the responsibility for the accuracy or sufficiency of such plans and
specifications, or their compliance with applicable codes, regulations or
statutes, which responsibility shall be solely Tenant's. All such Improvements
shall be made at Tenant's sole cost and expense and any contractor or person
selected by Tenant to make Improvements must first be approved in writing by
Landlord. All Improvements and all repairs required to be made by Tenant shall
be made in a good workmanlike manner and in compliance with all governmental
requirements, codes and rating bureau recommendations, and shall be performed by
competent workmen approved in advance by Landlord. Tenant shall hold Landlord
harmless and indemnified from all injury, loss, claims or damage to any person
or property occasioned by, or in connection with the construction or
installation of Improvements. Tenant shall obtain all necessary permits from
governmental authorities. Tenant shall repair any damage and perform any
necessary clean-up to the Building or its contents resulting from any
Improvements made by Tenant. All Improvements, temporary or permanent, including
wall paneling, built-in cabinets, sinks, doors, floor coverings, or other
built-in units of any kind, however attached (except trade fixtures, furniture
and equipment belonging to Tenant which are removable without causing damage to
the Building) or installed by Tenant in, on or about the Premises, shall, upon
expiration or sooner termination of this Lease, become Landlord's property, and
remain upon the Premises, all without compensation, allowance or credit to
Tenant provided, however, if prior to the expiration or termination of this
Lease or within ten (10) days thereafter Landlord so directs by notice, Tenant
shall at the expiration or termination of this Lease or within three (3) days
after such notice remove any Improvements placed in the Premises by or on behalf
of Tenant and so designated in the notice. If Tenant fails to remove such
designated Improvements, they will be deemed to be abandoned by Tenant and
Landlord may remove the same at Tenant's sole cost and expense.

Page 7
<PAGE> 9
SECTION 11. DAMAGE OR DESTRUCTION

In case of damage to the Premises or the Building by fire, vandalism,
malicious mischief or any other occurrence or casualty, Landlord shall (unless
this Lease shall be terminated as hereinafter provided) diligently proceed to
repair or restore the basic Building structure and all alterations,
installations, additions, hardware, nontrade fixtures and improvements,
temporary or permanent, made or installed by or with the written approval of
Landlord and which are or shall become the property of Landlord (except Tenant
and not Landlord shall fully and completely repair any damage to and shall
replace the contents of the Premises such as trade fixtures, furniture,
equipment or other improvements belonging to Tenant), to the condition in which
they existed immediately prior to such destruction or damage, to the extent of
the applicable insurance proceeds, subject to delays which may arise by reason
of adjustment of loss under insurance policies and delays beyond the reasonable
control of Landlord, provided, however, that Tenant shall have the right to
terminate this Lease by written notice to Landlord if Landlord has not, cannot,
or will not within one hundred fifty days (150) of the occurrence of the damage
or casualty fully repair and restore the Building and Premises. To the extent
that the Premises are rendered untenantable, the Rent and other charges shall
proportionately abate unless such damage resulted from or was contributed to by
the act, fault or neglect of Tenant, Tenant's employees, invitees or agents in
which event there shall be no such abatement. If the damage to the Premises or
the Building shall be so extensive that Landlord, in its sole discretion
decides not to repair or rebuild, Landlord shall give Tenant written notice of
its intent not to repair or rebuild within ninety (90) days of the date of such
damage. Rent and other charges shall be adjusted to the date of such damage and
Tenant shall thereupon promptly vacate the Premises and neither party shall
have any liability to the other under this Lease for any obligations thereof
that would thereafter otherwise occur.

SECTION 12. WAIVER OF SUBROGATION

It is the intention of the parties that each of them shall insure its real
and personal property and interests therein, including economic interests, as
and to the extent it sees fit. Each of Landlord and Tenant on behalf of
insurers and itself hereby fully and completely waives and releases and
relieves the other, its agents, partners, officers, directors and employees,
from responsibility for, and waives its entire claim of recovery against the
other for, any loss of or damage hereafter occurring to that party's real or
personal property located anywhere in, on or about the Building or the Land,
including the Building itself, and from any loss of rental income from the
Building resulting therefrom; except, in any of such cases, to the extent that
loss or damage is caused by the deliberate and intentional wrongdoing of the
other, its agents, partners, officers, directors or employees.

SECTION 13. INDEMNIFICATION AND RELEASE

(a) TENANT'S INDEMNITY: Tenant shall, at its expense, indemnify, defend
(using legal counsel acceptable to Landlord) and hold harmless Landlord, its
Mortgagees, partners, officers, agents, and employees from and against any and
all claims, damages, expenses (including attorneys' fees), or other
liabilities, arising out of or in connection with the occupancy or use of the
Premises by Tenant, its agents, customers, or employees (including, without
limitation, any work undertaken or contracted for by Tenant, its agents or
employees, whether pursuant to Section 10, any Exhibit to this lease, or
otherwise). The indemnity and hold harmless provisions of this Section 13 shall
survive expiration or termination of this Lease and shall include, but not be
limited to, all claims against Landlord by any employee or former employee of
Tenant, and Tenant hereby waives all immunity and limitation on liability of
any industrial insurance act, including Title 51 of the Revised Code of
Washington as now or hereafter amended, or other worker's compensation act,
disability benefit act, or any other employee benefit act of any jurisdiction
which would otherwise be applicable in the case of such a claim, but such
waiver is not intended and shall not be construed or interpreted as applying to
or benefiting any Person except Landlord or Tenant. LANDLORD AND TENANT HEREBY
CERTIFY AND AGREE THAT THIS SECTION 13 HAS BEEN FREELY AND MUTUALLY NEGOTIATED.

(b) RELEASE OF CERTAIN CLAIMS: Tenant hereby fully and completely waives
and releases all claims against Landlord for any losses or other damages
sustained by Tenant or any Person claiming through Tenant resulting from any
accident or occurrence in or upon the Premises, including but not limited to:
any equipment or appurtenances becoming out of repair; any defect, failure,
surge in, or interruption of, electrical heating, ventilating, air
conditioning, gas, water, or storm sewer or sanitary sewer facilities or
service; any defect in or failure of the plumbing, or failure of stairs,
railings or walks; broken glass; water being upon or coming into the Premises
or the Building; the falling of any fixture, plaster, tile or stucco; or any act
of Persons or occupants of the Building, or of an adjacent property.

(c) MODIFICATION OF INDEMNITIES: In compliance with RCW 4.24.115 as in
effect on the date of this Lease, all provisions of this Lease including
Exhibit B pursuant to which Landlord or Tenant (the "Indemnitor") agrees to
indemnify the other (the "Indemnitee") against liability for damages arising
out of bodily injury to Persons or damage to property relative to the
construction, alteration, repair, addition to, subtraction from, improvement
to, or maintenance of, any building, road, or other structure, project
development, or improvement attached to real estate, including the Premises and
the Building, (i) shall not apply to damages caused by or resulting from the
sole negligence of the Indemnitee, its agents or employees, and (ii) to the
extent caused by or resulting from the concurrent negligence of (a) the
Indemnitee or the Indemnitee's agents or employees, and (b) the Indemnitor or
the Indemnitor's agents or employees, shall apply only to the extent of the
Indemnitor's negligence; PROVIDED, HOWEVER, the limitations of indemnity set
forth in this Section shall

Page 8

<PAGE> 10
automatically and without further act by either Landlord or Tenant be deemed
amended so as to remove any of the restrictions contained in this Section no
longer required by then applicable law.

SECTION 14. EMINENT DOMAIN

If the whole or substantially the whole of the Building or of the Premises
shall be condemned or taken in any manner for any public or quasi-public use or
purpose, including any purchase or other acquisition in lieu of condemnation,
this Lease and the term and estate hereby granted shall cease and terminate as
of the date of taking of possession for such use or purpose. If less than the
whole or substantially the whole of the Building or of the Premises shall be so
condemned or taken, then Landlord (whether or not the Premises be affected) may,
at its option, by notice to Tenant, terminate this Lease and the term and
estate hereby granted as of the date of the taking of possession for such use
or purpose. If a taking of a part of the Premises materially interferes with
Tenant's ability to continue its business operations in substantially the same
manner and space then Tenant may terminate this Lease on the earlier (a) the
date when title vests; or (b) the date when Tenant is dispossessed by
condemning authority, by giving written notice to Landlord within 60 days after
learning of the extent of the taking. If neither Landlord nor Tenant elects to
terminate this Lease, then as to that portion of the Premises not so taken or
condemned, the Rent and the Operating Costs Base Amount shall be reduced
prorata in accordance with the floor area of the Premises which may be so
condemned or taken, tenant's Percentage shall be equitably adjusted, and
Landlord shall, at its expense, proceed with reasonable diligence to repair,
alter and restore the remaining part of the Premises to substantially their
former condition to the extent that the same may be reasonably feasible.
Landlord shall be entitled to receive the entire award in any condemnation
proceeding, including any award for the value of any unexpired term of this
Lease, and Tenant shall have no claim against Landlord or against the proceeds
of the condemnation (and Tenant shall also execute and deliver to Landlord such
documents, in recordable form, as Landlord may require to confirm the same)
except that Tenant shall have the right to claim and recover from the
condemning authority compensation for Tenant's moving expenses, business
interruption or taking of Tenant's personal property (not including Tenant's
leasehold interest); provided that such damages may be claimed only if they are
separately awarded and not out of or as part of the damages recoverable by
Landlord.

SECTION 15. ASSIGNMENT AND SUBLETTING

15.1 ASSIGNMENT OR SUBLEASE: Tenant shall not voluntarily, involuntarily
or by operation of law, assign, sell, pledge, transfer, mortgage or encumber
this Lease or any interest therein, or sublet the whole or any part of the
Premises (any of which events being a "Transfer" for purposes of this Section
15) without first obtaining Landlord's written consent, which shall not be
unreasonably withheld, conditioned or delayed if all of the following
conditions precedent are fully and completely satisfied:

(a) The Proposed Transferee is at least as creditworthy as Tenant
when Tenant entered into this Lease, and satisfies Landlord's then current
credit standards for tenants of the Building, and in Landlord's opinion has the
financial strength and stability to perform all obligations under this Lease to
be performed by Tenant as and when they fall due.

(b) The proposed Transferee will use the Premises for a purpose
which in Landlord's opinion (i) is lawful, (ii) is consistent with the
permitted use of the Premises under this Lease, (iii) is consistent with the
general character of business carried on by tenants of a comparable office
building, (iv) does not conflict with any exclusive rights or covenants not to
compete in favor of any other tenant or proposed tenant in the Building, (v)
will not increase the likelihood of damage or destruction, (vi) will not
increase the rate of wear and tear to the Premises or common areas, (vii) will
not likely cause an increase in insurance premiums for insurance policies
applicable to the Building (unless the proposed Transferee agrees to pay such
additional cost), and (viii) will not require new tenant improvements
incompatible with then existing Building systems and components.

(c) Tenant pays Landlord's reasonable attorneys' fees and costs
incurred in connection with negotiation, review and processing of the Transfer,
plus a processing fee not to exceed Five Hundred Dollars ($500.00) for each
such request.

(d) Landlord is paid any increase in the Security Deposit required
by Landlord and permitted by law.

(e) At the time of the proposed Transfer, Tenant is not in default
under or in breach of any term provision or covenant of this Lease.

(f) The Transfer will not otherwise have or cause a material adverse
impact on Landlord's interest in the Building or the Premises.

Tenant shall have the burden of demonstrating that each of the foregoing
conditions is satisfied. No Transfer shall relieve Tenant of any liability
under this Lease. Consent to any Transfer shall not operate as a waiver of the
necessity of a consent to any subsequent Transfer, and the terms of such
consent shall be binding upon any Person holding by, under or through Tenant.

Page 9

<PAGE> 11
15.2 ENTITY OWNERSHIP: Any changes in the ownership of Tenant resulting
from a public offering of the stock of Tenant or any parent of Tenant shall not
be deemed a Transfer. Any transfer of stock or assets from Tenant to an
affiliate or subsidiary corporation or other entity, or as a result of any
merger, consolidation or other reorganization of Tenant to any parent of Tenant
shall not be deemed a Transfer for purposes of this Section 15 unless, (a) the
combined net worth of the Guarantor and the Tenant entity is not less than $2.5
million, or, (b) Tenant posts a Letter of Credit as set forth in Section 15.5
below.

15.3 RECOVERY BY LANDLORD: If Tenant at any time desires to Transfer this
Lease, it shall give notice (a "Tenant Transfer Notice") to Landlord of its
desire to do so which notice shall state the rent at which it proposes so to
Transfer and shall contain full and complete financial and business information
on its intended Transferee. Such information shall be deemed confidential and
shall be provided pursuant to the terms of a mutually acceptable non-disclosure
agreement. In addition to Landlord's rights under Section 15.1, and if Tenant's
business does not remain operating in the Premises, Landlord may elect by
notice to Tenant (a "Landlord's Repossession Notice"), within forty-five (45)
days of receipt of the Tenant Transfer Notice, to terminate this Lease as to
that portion of the Premises subject of the Tenant Transfer Notice. If Landlord
exercises such right to terminate, Landlord shall be entitled to recover
possession of the portion of the Premises subject to the Tenant Transfer Notice
on the later of (i) the proposed date for possession by such Transferee, as set
out in the Tenant Transfer Notice, or (ii) forty-five (45) days after the date
of Landlord's Repossession Notice. All costs incurred by Landlord in
constructing improvements, such as doors or partitions, separating the
remaining Premises from the repossessed area of the Premises shall be paid by
Tenant within thirty (30) days of demand. If Landlord does not exercise such
right to terminate, Tenant may thereafter Transfer this Lease or a portion of
the premises subject thereof, but at a rental not less than that offered to
Landlord in the Tenant Transfer Notice and not later than forty-five (45) days
after delivery of the Tenant Transfer Notice to Landlord, unless a further
notice is given pursuant to this section, provided (i) Landlord consents
thereto pursuant to Section 15.1, (ii) Tenant delivers to Landlord prior to the
effective date of any such Transfer duplicate originals of any instrument
effecting such Transfer, in form and content satisfactory to Landlord, and
(iii) all amounts received by Tenant from the Transferee in excess of the Rent
payable hereunder for the area of the Premises so Transferred shall belong to
and shall immediately be paid to Landlord as Additional Rent. No action or
inaction by Landlord in connection with its rights under this Section 15.2
shall constitute or be deemed to constitute an approval of a proposed Transfer
for purposes of Section 15.1 except as specifically set forth in a notice from
Landlord to Tenant.

15.4 ASSIGNEE OBLIGATION: An assignee or purchaser approved by Landlord
shall assume all obligations of Tenant and shall be jointly and severally
liable with Tenant for the payment of Rent, Additional Rent and other charges
and performance of all of tenant's obligations under this Lease. Tenant shall
provide Landlord with full and complete duplicate originals of all instruments
of assignment, sublease or assumption. If an assignee of Sunhawk Corporation
defaults under this Lease, Landlord agrees to send a copy of the notice of
default to Landlord's last known address for Sunhawk Corporation and Landlord
shall accept a cure of the default by Sunhawk Corporation if the cure is
performed within the cure period available pursuant to Section 16.2, as
measured from the date notice is sent to the assignee.

15.5 LETTER OF CREDIT: If Tenant elects to post a letter of credit ("LOC")
in order to not be required to obtain Landlord's consent to a Transfer, the
letter of credit shall comply with the provisions of this Section 15.5. The LOC
shall be a standby, irrevocable letter of credit in the amount equal to the
rent due under the Lease for the then remaining term (base rent and estimated
payments for increases in Operating Costs), issued by a bank or other
financial institution reasonably acceptable to Landlord (the "Bank") as
security for the performance by Tenant of the provisions of this Lease. Tenant
shall maintain the LOC in effect at all times during the remaining term of this
Lease and any extensions. The LOC shall (i) provide that if Landlord notifies
the Bank that a default has occurred which was not cured within the applicable
cure period and the amount owed by Tenant to Landlord as a result of such
default (the "Delinquent Amount"), the Bank shall pay to Landlord the
Delinquent Amount, (iii) be issued for a minimum of one year. Tenant shall
cause the existing LOC to be extended or renewed for an additional year or a
replacement LOC be issued to Landlord and delivered to Landlord at least 30
days prior to the expiration date of the then existing LOC. Simultaneously with
delivery of the replacement letter, Landlord shall deliver the existing LOC to
Tenant. The replacement LOC shall be in a reduced amount equal to the remaining
total rent due under this Lease from the date of the replacement LOC forward.
If a renewal or replacement LOC is not timely delivered to Landlord, Landlord
shall be permitted to draw the full amount under the LOC (which shall be
returned to Tenant upon Landlord's receipt of a replacement LOC). The sole
condition to payment by the Bank under the LOC's shall be receipt by the Bank
of a written certification from Landlord either (a) that a default has occurred
under this Lease which has not been cured within any applicable grace period,
or (b) that the existing LOC will expire within 30 days and has not been
renewed or replaced by a new LOC acceptable to Landlord. If Tenant posts an LOC
and it is later established to Landlord's reasonable satisfaction that the
combined net worth of the assignee and the Guarantor exceeds $2.5 million,
Landlord will return the LOC to Tenant.

SECTION 16. INSOLVENCY AND DEFAULT

16.1 INSOLVENCY: The continuing rights granted to Tenant under this Lease
are expressly made conditional upon the Tenant remaining solvent and capable of
meeting the financial and other obligations imposed upon the Tenant under this
Lease at all times during the Term. Failure of the Tenant to satisfy this
condition shall constitute a default entitling Landlord to cancel and terminate
this Lease as hereinafter provided. Without limitation upon the right of the
Landlord to demonstrate noncompliance by the Tenant with the provisions of this
Section 16.1, Tenant shall be deemed to be in default under this Section 16.1
upon the occurrence of one or more of the following events: (i) any judicial
determination of the insolvency of the Tenant or any guarantor of the

Page 10
<PAGE> 12
Tenant's obligations hereunder ("Tenant's Guarantor") including, without
limitation, the entry of an Order for Relief pursuant to the provisions of the
Bankruptcy Code whether voluntary of involuntary; (ii) appointment of a receiver
or a custodian or other similar officer for any portion of the Tenant's property
or the property of any Tenant's Guarantor; (iii) the assignment for the benefit
of creditors of any portion of the Tenant's property or the property of any
Tenant's Guarantor; (iv) a determination, judicial or otherwise, that the Tenant
or any Tenant's Guarantor is not generally paying its debts as such debts become
due; or (v) any fact, event or circumstance which is the reasonable opinion of
the Landlord indicated that the Tenant or any Tenant's Guarantor is insolvent or
otherwise incapable of meeting the financial and other obligations imposed upon
the Tenant under this Lease; [provided, however, that if any such action, case
or petition has been commenced against Tenant or any Tenant's Guarantor and the
same is dismissed within a period of sixty (60) days, then the event of default
shall be deemed cured for purpose hereof] whereupon Landlord may elect, by
notice to Tenant, to cancel and terminate this Lease, in which event neither
Tenant nor any Person claiming through or under Tenant by virtue of any statute
or of an order of any court shall be entitled to possession or to remain in
possession of the Premises but shall forthwith quit and surrender the same, and
Landlord, in addition to the other rights and remedies Landlord has by virtue of
this Lease or any statute or rule of law, may retain as security for its damages
any Rent, Security deposit or monies received by Landlord from Tenant or others
on behalf of Tenant. This Lease is upon the further condition that if a petition
for relief under any chapter of the Bankruptcy Code is filed by or against
Tenant or any Tenant's Guarantor and the trustee or debtor in possession has not
cured all defaults hereunder and assigned or assumed this Lease under the
Bankruptcy Code within sixty (60) days after the entry of the Order for Relief,
then this Lease shall automatically terminate without the necessity of further
action by or notice from either party. In case of termination pursuant to any of
the foregoing provisions of this Section 16.1, Tenant shall indemnify Landlord
against all costs and expenses and loss of Rent and Additional Rent, including,
without limitation, amounts due under Section 16.3.

16.2 OTHER DEFAULTS: Tenant shall be in default of this Lease if:

(i) Tenant fails to pay any installment of Rent or Additional Rent
or other charges hereunder when due; or

(ii) Tenant fails to perform any other covenant, term, agreement or
condition of this Lease when such performance becomes due; or

(iii) Tenant abandons or ceases to do business in the Premises for
reasons within Tenant's control.

If Tenant fails to timely cure any such default, after notice as set forth
in the last paragraph of this Section 16.2, Landlord may, immediately or at any
time thereafter, elect to terminate this Lease by notice, lawful entry or
otherwise, whereupon Landlord shall be entitled to recover possession of the
Premises from Tenant and those claiming through or under Tenant. Such
termination of this Lease and any repossession of the Premises shall be without
prejudice to any remedies which Landlord might otherwise have for arrears of
Rent or for a prior breach of any of the provisions of this Lease. Landlord and
Tenant agree that a notice by Landlord requesting cure of a pre-existing default
hereunder shall constitute a statutory notice to quit.

In case of such termination, Tenant shall indemnify Landlord against all
costs and expense including the amounts due under Section 16.3 and loss of Rent.
This Lease is upon the further condition that if Tenant shall neglect or fail to
perform or observe any of Tenant's covenants which Tenant has neglected or
failed to perform or observe at least twice previously in any 12 month period
(although Tenant shall have cured any such previous breach or breaches after
notice from Landlord, and within the notice period), then Landlord lawfully
may, but shall not be obligated to, immediately or at any time thereafter and
without demand or further notice avail itself of and/or exercise any remedies
and/or avail itself of any benefits permitted by this Section 16 or by law,
excluding the right to terminate this lease.

With respect to a default occurring under clause (i) of the first sentence
of this Section 16.2, Tenant shall have five (5) business days following receipt
of written notice to cure from the Landlord within which to cure any such
default. With respect to a default arising under clause (ii) of the first
sentence of this Section 16.2, Tenant shall have ten (10) business days
following the receipt of notice to cure from the Landlord within which to cure
any such default; provided, however, that if the nature of such default is such
that the same cannot reasonably be cured within such 10 day period, Tenant shall
be deemed to have cured the default if Tenant shall commence such cure within
said 10 day period and thereafter diligently prosecute the same to completion
and shall furnish Landlord with such assurances and indemnities that Landlord
may require to ensure completion thereof and fully and completely protect
Landlord from any loss or liability by reason of any delay. With respect to a
default arising under clause (iii) of the first sentence of this Section 16.2,
Landlord be required to provide two (2) business days notice to cure prior to
exercising Landlord's right to termination.

16.3 EXPENSE RECOVERY. Items of expense for which Tenant shall indemnify
Landlord shall include but not be limited to all costs and expenses incurred in
collecting amounts due from Tenant under this Lease (including attorneys' fees,
litigation expenses and the like); the unamortized portion of (i) amounts in the
nature of commissions paid by Landlord to leasing agents in connection with
this Lease and (ii) all costs and expenses incurred by Landlord to improve the
Premises pursuant to this Lease and (iii) any additional amount furnished in the
nature of an allowance (all of such amortization to be based upon the assumption
that such costs and expenses are amortized on a straight line bases over the
initial Lease Term); and all Landlord's other reasonable expenditures
proximately caused by the termination. All sums due in respect of the foregoing
shall be due and

Page 11

<PAGE> 13
payable immediately upon notice from Landlord that a cost or expense has been
incurred without regard to whether the cost or expense was incurred before or
after the termination of this Lease. In the event proceedings are brought under
the Bankruptcy Code, including proceedings brought by Landlord, which relate in
any way to this Lease including, without limitation, proceedings for the
termination, assumption or assignment thereof or proceedings to secure adequate
protection for Landlord or proceedings involving objections to the allowance of
Landlord's claim (in any of such cases a "Proceedings"), then Landlord shall be
paid in addition to any and all amounts due Landlord pursuant to the terms of
this Lease such further amount as shall be sufficient to cover all costs and
expenses incurred by Landlord with respect to the Proceeding, which costs and
expenses shall include the reasonable compensation, costs, expenses,
disbursements and advances of Landlord, its agents and attorneys.

16.4 DAMAGES: Notwithstanding termination of this Lease and reentry by
Landlord pursuant to section 16.1 or Section 16.2, the liability of tenant for
Rent and other charges provided for herein shall not be extinguished for the
balance of the Term, and Landlord shall be entitled to recover from Tenant:

(i) The worth at the time of an award (including interest at the
rate set forth in Section 16.8), of any unpaid Rent which had been earned by
Landlord at the time of termination; plus

(ii) The worth at the time of an award (including interest at the
rate set forth in Section 16.8), of the amount by which unpaid Rent which would
have been earned after termination until the time of an award exceeds the
amount of loss of Rent that Tenant proves could have been reasonably avoided;
plus

(iii) The worth at the time of an award of the amount by which the
unpaid Rent for the balance of the term of this Lease (as extended, if at all
prior to termination) exceeds the amount of such loss of Rent that Tenant
proves could have been reasonably avoided (including interest at the rate set
forth in Section 16.8 from the date of the award until paid). Such worth at the
time of award shall be computed at the discount rate of the Federal Reserve
Bank of San Francisco, or successor Federal Reserve Bank, on the date of
termination. For the purposes of this calculation only, the last Lease Years'
Rent shall be deemed to be constant for each Lease Year thereafter; plus

(iv) Any other amount necessary to compensate Landlord for all the
damage proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, including amounts due and payable pursuant to Section 16.3.

16.5 NONTERMINATION OF LEASE: Landlord's reentry of the Premises
pursuant to Section 16.1 or Section 16.2 shall not constitute a termination of
this Lease unless Landlord so notifies Tenant in writing. Without any previous
notice or demand, separate actions may be maintained by Landlord against Tenant
for time to time to recover any damages which, at the commencement of any
action, have then or theretofore become due and payable to Landlord under this
Section 16 without waiting until the end of the original Term of this Lease.

16.6 RELETTING: In the event that this Lease shall be terminated as
herein above provided or by summary proceedings or otherwise, Landlord may at
any time and from time to time relet the Premises in whole or in part either in
its own name or as agent of Tenant for any period equal to or greater or less
than the remainder of the then-current Term of this Lease for any rental which
it may deem reasonable to any tenant it may deem suitable and satisfactory and
for any use and purpose which it may deem appropriate, consistent with the
operation of the Building in a first-class manner. Upon each reletting, all
rentals received by Landlord from such reletting shall be applied first to the
payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord; second, to the payment of any costs and expenses of such reletting and
of such alterations and repairs; third, to the payment of Rent due and unpaid
hereunder; and the residue, if any, shall be held by Landlord and applied in
payment of future Rent as the same may become due and payable hereunder. Upon a
reletting of the Premises, Landlord shall not in any event be required to pay
Tenant any surplus of any sums received by the Landlord in excess of the Rent
payable in accordance with this Lease.

16.7 RIGHT OF LANDLORD TO CURE DEFAULTS: If Tenant shall default in the
observance or performance of any term or covenant on its part to be performed
under this Lease, or if tenant shall fail to pay any sum of money (other than
Rent or other charges) required to be paid by Tenant hereunder, Landlord may,
but shall not be obligated to, and without waiving or releasing Tenant from any
obligations to make any such payment or perform any such other act on Tenant's
part to be made or performed as provided in this Lease, remedy such default for
the account and at the expense of Tenant, immediately and without notice in
case of emergency, or in any other case only upon Tenant's failure to remedy
such default within ten (10) days after Landlord shall have notified Tenant in
writing of such default. If Landlord makes any expenditures or incurs any
obligations for the payment of money in connection with Tenant's default
including, but not limited to attorneys' fees, in instituting, prosecuting or
defending any action or proceeding, Tenant shall pay to Landlord as Additional
Rent such sums paid or obligations incurred, with interest. Landlord shall
have, in addition to any other right or remedy, the same rights and remedies in
the event of the nonpayment of sums due under this Section as in the case of
default by Tenant in the payment of Rent.

16.8 UNPAID SUMS AND SERVICE CHARGE: Any amounts owing from Tenant to
Landlord under this Lease shall bear interest at the higher of (i) eighteen
percent (18%) per annum or (ii) four percent (4%) in excess of the rate of
interest announced on the first (1st) day of each month by Seattle First
National Bank, its successors or assigns, as its prime rate for short term
unsecured loans, calculated from the date due until the date of payment. In
addition, if any payment of Rent, Additional Rent, or other charges, is not
paid within ten (10) days of its due

Page 12
<PAGE> 14
date, Tenant shall pay a late charge equal to five percent (5%) of the amount
of such overdue payment per month or portion thereof as liquidated damages for
Landlord's extra expense and handling of such past due account.

16.9 LANDLORDS' DEFAULT: Landlord shall not be deemed in default of any
obligation to be performed by it until it has failed to perform such obligation
within thirty (30) days after written notice by Tenant specifying Landlord's
failure; provided that if Landlord's obligation is such that more than thirty
(30) days are required for its performance, Landlord shall not be deemed in
default if it commences such performance within such thirty (30) day period and
diligently prosecutes the same to completion.

SECTION 17. QUIET ENJOYMENT

Landlord covenants that upon Tenant's paying Rent, Additional Rent, and
all other amounts and charges due hereunder and observing and performing all
the terms, covenants and conditions of this Lease on its part to be observed
and performed, Tenant may peaceably and quietly enjoy the Premises, subject,
however, to the terms and conditions of this Lease.

SECTION 18. LANDLORD'S LIABILITY

The liability of Landlord to Tenant for any default by Landlord under this
Lease shall be limited to the interest of Landlord in the Land and Building
(and the proceeds thereof). Tenant agrees to look solely to Landlord's interest
in the Land and Building (and the proceeds thereof) for the recovery of any
judgment against Landlord, and Landlord shall not be personally liable for any
such judgment or deficiency after execution thereon. Notwithstanding the
foregoing, however, Landlord shall have personal liability for insured claims
beyond Landlord's interest in the Land and Building (and the proceeds thereof)
but only to the extent of proceeds of Landlord's liability insurance coverage
respecting such claims.

SECTION 19. LANDLORD'S INTEREST IN PREMISES

19.1 PRIORITY: This Lease shall be subordinate to any first mortgage or
deed of trust or sale and leaseback used for financing purposes, now existing
or hereafter placed upon the Land, Building or the Premises, created by or at
the Instance of Landlord, and to any and all advances to be made thereunder and
to interest thereon and all modifications, renewals, replacements or extensions
thereof (a "Landlord's Mortgage"); this provision shall be self-operative and
no further instrument or subordination shall be required by any landlord's
mortgagee. Notwithstanding the foregoing, so long as Tenant is not in default
under this Lease Tenant's rights under this Lease shall not be disturbed, and,
Tenant shall have the continued enjoyment of the Premises free from any
disturbance or interruption by any holder of Landlord's Mortgage or any
purchaser at a foreclosure or private sale of the Land, Building, or the
Premises as a result of Landlord's default under a Landlord's Mortgage. Tenant
shall execute subordination agreements required by Landlord's lender and
Landlord shall obtain non-disturbance agreements to evidence the foregoing
agreement, provided that the subordination agreement shall not reduce Tenant's
rights or increase Tenant's obligations under this Lease.

19.2 ESTOPPEL CERTIFICATES: Tenant shall, within ten (10) days of demand,
execute, acknowledge and deliver to Landlord or its designee a written
statement certifying: (i) the date the Lease Term commenced (the "Commencement
date") or will commence and the date it expires; (ii) the date Tenant entered
into occupancy of and commenced business operations in the Premises; (iii) the
amount of Base Rent and the date to which Rent has been paid; (iv) that this
Lease is in full force and effect and has not been assigned, modified,
supplemented or amended in any way (or specifying the date and terms of each
agreement so affecting this Lease) and that no part of the Premises has been
sublet (or to the extent such is not the case, the extent and nature of such
default); (vii) that all required advances by Landlord to Tenant on account of
Tenant Improvements have been made (or the extent that such is not the case);
(viii) on the date of such certification there are no existing defenses or
claims which Tenant has against the enforcement of this Lease by Landlord (or
if such is not the case, the extent and nature of such defenses or claims; (ix)
the amount of the Security Deposit paid to Landlord and (x) any other fact or
representation that a mortgagee or purchaser may reasonably request. It is
intended that any such statement delivered pursuant to this Section 19.2 shall
be fully and completely binding upon Tenant for all purposes of this Lease, may
be relied upon by a prospective purchaser or mortgagee of Landlord's interest,
or any assignee of any mortgage upon Landlord's interest in the Building or the
Land. If Tenant shall fail to respond within ten (10) days of receipt of a
written request by Landlord therefor, Tenant shall be deemed to have given a
certificate as above provided without modification and shall be conclusively
deemed to have admitted the accuracy of any information supplied by Landlord to
a prospective purchaser or mortgagee, that this Lease is in full force and
effect, that there are no uncured defaults in Landlord's performance, that the
Security Deposit is as stated in this Lease and that not more than one month's
Rent has been paid in advance.

19.3 TRANSFER OF LANDLORD'S INTEREST" In the event of any transfer,
assignment, sale or foreclosure of Landlord's interest in the Premises, the
Building or the Land, other than a transfer for security purposes only, the
transferor shall automatically be relieved of any and all obligations and
liabilities on the part of Landlord accruing from and after the date of such
transfer and Tenant shall attorn to the transferee, assignee or purchaser, and
will recognize such transferee, assignee or purchaser as Tenant's landlord
under this Lease. In the event such

Page 13

<PAGE> 15
transferee, assignee or purchaser shall further transfer its interest as
landlord under this Lease, Tenant covenants and agrees to attorn to such
transferee, assignee or purchaser and to recognize such transferee, assignee or
purchaser as Tenant's landlord under this Lease. Tenant agrees within ten (10)
days of demand to execute and deliver, at any time and from time to time, upon
the request of Landlord or any mortgagee, or purchaser or other transferee of
Landlord's interest to whom Tenant has previously attorned, any instrument which
may be necessary or appropriate to evidence any such attornment.

SECTION 20. HOLDING OVER

If Tenant shall retain possession of the Premises after termination or
expiration of this Lease, then (i) if such retention of the Premises is without
the express or implied consent of Landlord, for each day, or part thereof the
Tenant so retains possession of the Premises, Tenant shall pay Landlord one and
one-half times the amount of the daily rate of Rent and Additional Rent and
other charges payable by Tenant hereunder during the calendar month immediately
preceding such termination or expiration together with any damages sustained by
Landlord as a result thereof, and (ii) if such retention of the Premises is
with the express or implied consent of Landlord, (1) such tenancy shall be from
month to month (and in no event from year to year or any period longer than
month to month), and (2) Landlord may terminate any such month to month tenancy
upon twenty (20) days notice to Tenant, and (3) Tenant shall pay landlord
rental which shall be the greater of either the then quoted rates for similar
space in the Building or the monthly Rent and Additional Rent and other charges
payable by Tenant hereunder during the calendar month immediately preceding
such termination or expiration.

SECTION 21. MISCELLANEOUS PROVISIONS

21.1 HEADINGS: The titles to sections of this Lease and the table of
contents are for convenience only and shall not be considered in construing or
interpreting the scope or intent of this Lease.

21.2 WORDS: Words of any gender used in this Lease shall be deemed to
include the other gender or the neuter and words in the singular shall be
deemed to include the plural and the plural to include the singular where the
sense requires. The adverbs "herein", "hereof", "hereunder", "hereto",
"hereby", "hereinafter", and the like, wherever the same appear herein, mean
and refer to this Lease in its entirety and not to any specific section. The
term "person" includes a firm or partnership or corporation. The term
"Occupant" shall mean any person entitled to occupy a portion or portions of
the Building under a lease or other arrangement with Landlord.

21.3 HEIRS AND ASSIGNS: All of the covenants, agreements, terms and
conditions contained in this Lease shall inure to the benefit of and be binding
upon Landlord and Tenant and their respective heirs, executors, administrators,
successors and assigns. If more than one person or entity executes this Lease
as Tenant, the liability of each to pay Rent, and all other costs and charges
and to perform all other obligations hereunder shall be deemed to be joint and
several.

21.4 NONWAIVER: Failure of Landlord to insist, in any one or more
instances, upon strict performance of any term, covenant or condition of this
Lease, or to exercise any option herein contained, shall not be construed as a
waiver, or a relinquishment for the future, of such term, covenant, condition
or option, but the same shall continue and remain in full force and effect. The
receipt by Landlord of Rent with knowledge of a breach of any of the terms,
covenants or conditions of this Lease to be kept or performed by Tenant shall
not be deemed a waiver of such breach, and Landlord shall not be deemed to have
waived any provision of this Lease unless expressed in writing and signed by
Landlord.

21.5 REAL ESTATE BROKERS: Tenant represents and warrants to Landlord
that it has not engaged any broker, finder or other person entitled to any
commission or fee in respect of the negotiation, execution or delivery of this
Lease other than Kidder, Mathews & Segner, Inc. and Yates, Wood & MacDonald,
and Tenant shall indemnify and hold harmless Landlord against any loss, cost,
liability or expenses incurred by Landlord as a result of any claim asserted by
any other such broker, finder or other person on the basis of any arrangements
or agreements made or alleged to have been made by or on behalf of Tenant.

21.6 ENTIRE AGREEMENT: This Lease contains the entire agreement of the
parties with respect to the subject matter hereof and no representations,
promises or agreements, oral or otherwise, between the parties not embodied
herein shall be of any force or effect. No provisions of this Lease may be
changed, waived, discharged or terminated orally, tub only by instrument in
writing executed by Landlord and Tenant concurrently with or subsequent to the
date of this Lease.

21.7 SEVERABILITY: Any provision of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate an other
provision hereof and the remaining provisions hereof shall remain in full force
and effect.

21.8 FORCE MAJEURE: Time periods for Landlord's or Tenant's performance
under any provisions of this Lease (except for the payment of money) shall be
extended for periods of time during which the nonperforming party's performance
is prevented due to circumstances beyond the party's control, including,
without limitation, strikes, embargoes, governmental regulations, inclement
weather and other acts of God, war or other strife.

Page 14

<PAGE> 16

21.9 NO ACCORD OR SATISFACTION: No payment by Tenant or receipt by
Landlord of a lesser amount than the Rent and other charges stipulated herein
shall be deemed to be other than on account of the earliest stipulated Rent or
other charges, nor shall any endorsement or statement of any check or any
letter accompanying any check or payment as Rent or other charges be deemed an
accord and satisfaction, and Landlord's acceptance of such check or payment
shall be without prejudice to Landlord's right to recover the balance of such
Rent and other charges or pursue any other remedy to which it is entitled.

21.10 GOVERNING LAW: This Lease shall be construed and governed by
the laws of the State of Washington.

21.11 NOTICES: All notices under this Lease shall be in writing and
delivered in person or sent by private courier or registered or certified mail
return receipt requested to Landlord at Landlord's Address, and to Tenant at
Tenant's Address as may hereafter be designated by either party in writing.
Notices shall be deemed given when hand delivered or, if mailed as aforesaid,
shall be deemed given 3 days after mailing.

21.12 TAX ON RENT: The Rent herein is exclusive of any sales,
business and occupation, gross receipts or other tax based on Rents, or tax on
Tenant's property or tax upon or measured by the number of employees of Tenant,
or any similar tax or charge. If any such tax or charge be hereinafter enacted,
and imposed upon Landlord, Tenant shall pay Landlord the amount thereof
concurrently with each monthly Rent payment. If it shall not be lawful for
Tenant so to reimburse Landlord, the monthly Rent payable to Landlord under
this Lease shall be revised to net Landlord the same net rental after
imposition of any such tax or charge upon Landlord as would have been payable
to Landlord prior to the imposition of such tax or charge. Tenant shall be
liable to reimburse Landlord for any federal income tax or other income tax of
a general nature applicable to Landlord's income.

21.13 RIGHT TO CHANGE PUBLIC SPACES AND BUILDING DIRECTORY: Landlord
reserves the right at any time after completion of the Building, without hereby
creating an actual or constructive eviction or incurring any liability to
Tenant, to change the arrangement or location of public areas of the Building
not contained within the Premises or any part thereof, including entrances,
passageways, doors and doorways, corridors, stairs, toilets, and other public
service portions of the Building. Nevertheless, in no event shall Landlord
diminish any service, change the arrangement or location of the elevator
serving the Premises, or make any change which shall diminish the area of the
Premises. Landlord shall maintain in the lobby of the Building, a directory
which shall include the name of Tenant and such other names reasonably
requested by Tenant in proportion to the number of listings given to comparable
Occupants of the Building.

21.15 CORPORATE AUTHORITY: If Tenant is a business entity, then each
individual signing this Lease on behalf of Tenant represents and warrants that
he/she is duly authorized to execute and deliver this Lease on behalf of such
business entity, and that this Lease is binding on Tenant in accordance with its
terms.

21.16 MORTGAGEE REQUIREMENTS: Tenant shall within ten (10) days of
request by Landlord deliver an executed and acknowledged instrument amending
this Lease in such respect as may be required by any present or future
mortgagee, provided that such amendment does not materially alter or impair
Tenant's right or remedies under this Lease or increase its rental burdens.

21.17 COSTS AND ATTORNEYS' FEES: In the event of litigation between
the parties hereto, declaratory or otherwise, for the enforcement of any of
the covenants, terms or conditions of this Lease, the nonprevailing party shall
pay the costs thereof and attorneys' fees actually incurred by the prevailing
party, in such suit, at trial and on appeal, at those attorneys' normal hourly
rates. In addition, if the prevailing party utilizes in-house counsel, the
non-prevailing party shall reimburse the prevailing party at the normal hourly
rates for outside counsel.

21.18 CHANGES: Landlord does not guarantee the continued present
status of light or air over any property adjoining or in the vicinity of the
Building. Any diminution or shutting of light, air or view by any structure
which may be erected near or adjacent to the Building shall in no way affect
this Lease or impose any liability on Landlord.

21.19 NO RESERVATION: The submission of this Lease for examination
does not constitute a reservation or option to Lease the Premises and this
Lease becomes effective as a Lease only upon execution and delivery thereof by
Landlord and Tenant.

21.20 RECORDING: This Lease shall not be recorded by either party.
Upon request of Landlord, Tenant shall acknowledge and deliver a memorandum of
this Lease for recording.

21.21 TIME: Time is of the essence of each and every provision of
this Lease.

21.22 RIDERS: The provisions of the Riders are hereby incorporated by
this reference as if fully here set forth. Capitalized terms in any Rider or
Exhibit have the same meaning as set forth in this Lease. Time is particularly
of the essence with respect to the provision of every Rider.

Page 15
<PAGE> 17

IN WITNESS WHEREOF this Lease has been executed as of the day and year
set forth above.

LANDLORD:

223 Taylor Corp.
a Washington Corporation

BY: /s/ LANCE HASLUND
------------------------------------

ITS: TREASURER
-----------------------------------

DATE: 9/8/98
----------------------------------
BY:
------------------------------------
ITS:
-----------------------------------
DATE:
----------------------------------

TENANT:

Sunhawk Corp.
a Washington Corporation

BY: /s/ MARLIN J. ELLER
------------------------------------

ITS: Chairman
-----------------------------------

DATE: Sept. 4, 1998
----------------------------------
BY:
------------------------------------
ITS:
-----------------------------------
DATE:
----------------------------------

TENANT'S ACKNOWLEDGEMENT

STATE OF WASHINGTON )
) SS.
COUNTY OF KING )

I certify that I know or have satisfactory evidence that MARLIN ELLER
and ______________________ are the persons who appeared before me, and said
persons acknowledged that they signed this instrument, on oath stated that
they were authorized to execute the instrument and acknowledged it as the
CHAIRMAN and ___________________, respectively, of SUNHAWK CORP. to be the free
and voluntary act of such party for the uses and purposes mentioned in
the instrument.

Dated: 9/9/98

[SEAL] /s/ RICHARD J. HESIK
----------------------------------------
(Signature)

Title NOTARY

My appointment expires 9/9/01

Page 16
<PAGE> 18

LANDLORD'S ACKNOWLEDGEMENT

CORPORATE:

STATE OF WASHINGTON )
) SS.
COUNTY OF KING )

I certify that I know or have satisfactory evidence that LANCE F.
HASLUND and ______________________ are the persons who appeared before me, and
said persons acknowledged that they signed this instrument, on oath stated that
they were authorized to execute the instrument and acknowledge it as the
TREASURER and ___________________, respectively, of 225 Taylor Corp. to be the
free and voluntary act of such party for the uses and purposes mentioned in
the instrument.

Dated: Sept. 8, 1998

[SEAL] /s/ DINAH A. QUICK
----------------------------------------
(Signature)

Title Notary Public

My appointment expires 11/12/99

Page 17

<PAGE> 19

EXHIBIT A

LEASE

DIAGRAM OF FLOOR(S) WITH APPROXIMATE LOCATION OF PREMISES MARKED:

Page 18
<PAGE> 20

EXHIBIT B

LEASE

DESCRIPTION OF LAND:

223 Taylor Avenue North, a two story office building with an adjacent parking
lot, legally described as Block, 60, Lots 1-6 Denny's DT Park Addition to North
Seattle.

Exhibit B Page 1

<PAGE> 21
EXHIBIT C
TO
LEASE

RULES AND REGULATIONS

SECTION 1. Landlord shall have the right to control and operate the
public portions of the Building, the public facilities, and the facilities
furnished for the common use of the Occupants, including, but not limited to,
entrances, corridors, elevators and facilities of the Building (individually
and collectively, the "Common Areas") in such manner as is reasonable for the
benefit of the Occupants generally. Tenant shall not invite to its Premises, or
permit the visit of persons in such numbers or under such conditions as to
interfere with the use and enjoyment of the Common Areas by other Occupants. No
portion of the sidewalks, doorways, entrances, passages vestibules, halls,
lobbies, elevators or stairways in or adjacent to the Building shall be
obstructed or used for any purpose other than the ingress and egress to and
from the Premises. Except as otherwise provided in the Lease, tenant, its
employees or invitees shall not go upon the roof of the Building. Landlord
reserves the right from time to time to reduce, increase, enclose or otherwise
change the size, number, location, layout and nature of the Common Areas and
facilities, to construct additional stores, buildings and storage, and to
create additional rentable areas through use or enclosure of Common Areas. When
reasonably necessary, Landlord may either temporarily or permanently change the
location of, or close entrances, doors, corridors, elevators or other
facilities without liability by Tenant by reason of such closure and without
such action by Landlord being construed as an eviction of Tenant or release of
tenant from the duty of observing and performing any of the provisions of this
Lease.

SECTION 2. During such hours as Landlord may from time to time reasonably
determine, Landlord may: (i) require all persons entering or leaving the
Building to identify themselves to a watchman by registration or otherwise and
to establish their right to enter or leave the Premises or the Building; and
(ii) limit entries into and departures from the Building to such one or more
entrances as Landlord shall from time to time designate.

Landlord reserves the right to exclude or reject from the Building all
solicitors, canvassers and peddlers, or any person who, in the judgment of
Landlord's security officer or employee in charge, is under the influence of
intoxicants or drugs, or any person who shall in any manner do any illegal act
or any act in violation of any of the Rules and Regulations.

In no event shall Landlord be liable for damages for any error with regard
to the admission to or exclusion from the common areas of the Building of any
person, except for Landlord's gross negligence or willful misconduct.

SECTION 3. Subject to the terms and conditions of the Lease, Landlord
shall provide heat and air conditioning as reasonably required for reasonable,
comfortable occupancy of the Building and the Premises under normal business
operations. Wherever heat generating machines or equipment are used in the
Premises which affect the temperature otherwise maintained by the hearing and
air conditioning systems, Landlord reserves the right, at its option, either to
require Tenant to discontinue use of such heat generating machines or equipment
or to install supplementary air conditioning equipment in the Premises. If
supplementary air conditioning equipment is installed, then Tenant shall, within
ten (10) days of invoice, pay Landlord (i) the cost of any such installation and
(ii) the cost of operation and maintenance of such supplementary equipment at
such rates as Landlord may reasonably determine.

Tenant must obtain the written consent of Landlord prior to using any
lights or equipment in the Premises which will exceed normal and customary
electrical loads for the Premises. Regardless of whether such consent has been
obtained, Tenant shall, within ten (10) days of invoice, pay Landlord the costs
of electrical systems or modifications necessitated by such equipment,
including installation.

Tenant shall conserve energy, water, heat and air conditioning and shall
cooperate fully with Landlord to assure the most efficient operation of the
heating and air conditioning systems in the Building. Tenant shall also comply
with Landlord's instruction for the use of drapes and thermostats in the
Building.

Exhibit C Page 1
<PAGE> 22
SECTION 4. Landlord shall provide janitorial service to the common areas
of the Building including the entry doors, lobby and elevators.

SECTION 5. All deliveries of large or bulky articles shall be delivered
to and removed from the Premises only in elevators which have been properly
padded by Landlord. All deliveries of the above-mentioned items must be
scheduled with the Landlord to ensure the elevator used for delivery is
properly padded. Objects of unusual or extraordinary size or weight shall not
be brought into or removed from the Building without the prior written consent
of Landlord and, where such consent is obtained, shall be brought into or
removed from the Building at the time and place and in the manner and shall be
placed and maintained in such location and position in the Premises as Landlord
may designate. The firm employed to move Tenant's equipment, material,
furniture or other property in or out of the Building must be a professional
mover, reasonably acceptable to Landlord and insurance must be sufficient
to cover all personal liability, theft or damage to the Building. All damage to
the Building (including any elevator) or the Premises by the delivery,
installation, use or removal of freight, furniture, business equipment,
merchandise, safes or other articles shall be paid for by Tenant. Except to the
extent of Landlord's gross negligence or willful misconduct, Landlord shall not
be responsible for damage to any of Tenant's property delivered to or left in
any receiving area or elsewhere in the Building or to any property moved or
handled anywhere in the Building by any agent, employee or representative of
Landlord as an accommodation to Tenant, Landlord being under no obligation to
accept delivery of, or to move or handle, any property of Tenant.

SECTION 6. Tenant shall not place a load upon any floor of the Premises
which exceeds the carrying capacity of the Building. Landlord reserves the
right to prescribe the weight and position of all safes, files and heavy
installations which Tenant wishes to place in the Premises in order to properly
distribute the load. Business machines and mechanical equipment belonging to
Tenant which cause noise or vibration that may be transmitted to the structure
of the Building or to any space therein as to be objectionable to Landlord or
to any other Occupant in the Building shall be placed and maintained by Tenant
at Tenant's expense, on vibration eliminators or other devices sufficient to
eliminate noise or vibration.

SECTION 7. Tenant, Tenant's employees, agents or invitees shall not,
without prior written consent of Landlord:

7.1 Install, maintain or operate any vending machine or any other
machines of any description whatsoever (other than customary office machines
including computers and computer peripherals, microwaves, electronic keyboards
and similar small office machines and a refrigerator), either on the Premises
or elsewhere in the Building.

7.2 Attach, hang or use any curtain, blind, shade, awning or
screen in connection with any window, door or entrance in the Premises or the
Building, or attach or install any aerials or other projections from the
Premises or the Building.

7.3 Use the name of the Building for any purpose other than that
of Tenant's business address, or use any picture of the Building.

7.4 Alter any lock or install a new or addition lock or any bolt
on any door of the Premises. If Landlord shall give its consent thereto, Tenant
shall in each case furnish Landlord with a key for any such lock, and upon
termination of its tenancy, Tenant shall deliver to Landlord all keys to the
Premises and to all other rooms or offices furnished to Tenant or which Tenant
shall have had made. Landlord will provide Tenant with additional keys for any
lock in the Premises upon payment therefor by Tenant.

7.5 Bring or keep in or about the Premises or the Building any
animals, birds or other pets (except seeing-eye dogs) or other vehicles, except
at such areas as Landlord may designate, temporarily or otherwise. Tenant shall
be permitted to bring bicycles up the stairs into the Premises. In addition, if
Tenant wishes, it may use one or more of its parking spaces leased in the
parking lot to install and use a bicycle rack for its employees.

7.6 Make or permit to emanate from the Premises or the Building
any objectionable noise, odor, nor keep in the Premises or the Building any
inflammable or combustible fluid or material, or in any manner annoy, disturb
or interfere with other Occupants or their employees and invitees.

7.7 Install telegraphic or telephonic connections or other wire
services, or bore or cut for such wires or instruments incident thereto, unless
Landlord has approved the location and method of installation, introduction and
placement of such wires and instruments. Landlord will respond promptly to any
request and shall act reasonably, subject to the requirements in the GST lease
floor penetrations.

7.8 Drive spikes, hooks, screws or nails or other devices in the
walls or woodwork (except for hanging small pictures or similar items) or drill
holes in the floor of the Premises.

7.9 Place any boxes, cartons or other rubbish in the corridors or
other public areas of the Building.

7.10 No Tenant will use or keep in the Premises or the Building
any kerosene, gasoline or inflammable or combustible or explosive fluid or
material or chemical substance other than limited quantities of

Exhibit C Page 2
<PAGE> 23
such materials or substances reasonably necessary for the operation or
maintenance of office equipment or limited quantities of cleaning fluids and
solvents required in Tenant's normal operations in the Premises. Without
Landlord's prior written approval, no Tenant will use any method of heating or
air conditioning other than that supplied by Landlord.

7.11 Not paint, display, inscribe, maintain or affix any sign,
placard, picture, advertisement, name, notice, lettering or direction on any
part of the outside or inside the Property, or on any part of the inside of the
Premises which can be seen from the outside of the Premises without the prior
consent of Landlord, and then only such name or names or matter and in such
color, size, style, character and material as may be first approved by Landlord
in writing. Landlord shall prescribe the suite number and identification sign
for the Premises (which shall be prepared and installed by Landlord at Tenant's
expense). Landlord reserves the right to remove at Tenant's expense all matter
not so installed or approved without notice to Tenant.

7.12 Not place anything or allow to be placed in the Premises near the
glass of any door, partition, wall or window which may be unsightly, in
Landlord's discretion, from outside the Premises, and Tenant shall not place or
permit to be placed any article of any kind on any window ledge or on the
exterior walls. Blinds, shades, awnings or other forms of inside or outside
window ventilators or similar devices, shall not be placed in or about the
outside windows in the premises except to the extent, if any, that the
character, shape, color, material and make thereof is first approved by the
Landlord.

SECTION 8. Tenant shall be liable for any damage to the fixtures and
systems located in the Building resulting from the abuse or misuse of any
nature or character whatever by Tenant, or Tenant's employees, agents or
invitees.

SECTION 9. Tenant will refer to all contractors, contractor's
representatives and installation technicians rendering any service to Tenant,
to Landlord's building manager for approval before performance of any work.
Notwithstanding such approval, Landlord shall not be liable in any manner for
the work so performed by Tenant's contractors, contractor's representatives and
installation technicians. This Section shall apply to all work performed in the
Building including installation of telephones, telegraph equipment, electrical
devices and attachments and installations of any nature affecting floors,
walls, woodwork, trim, window, ceilings, equipment or any other part of the
Building.

SECTION 10. Tenant shall give prompt written notice to Landlord of any
accidents to or defects in Plumbing, electrical fixtures, heating or air
conditioning systems or improvements in the Premises or the Building, to enable
Landlord to repair such damage or defects.

SECTION 11. Landlord reserves the right from time to time to amend and to
make such further reasonable Rules and Regulations as, in the reasonable
judgment of the Landlord, may be necessary or desirable for the safety, care or
cleanliness of the Building or the preservation of good order therein, or the
maintenance and promotion of the high class character and reputation of the
Building. Such further Rules and Regulations and such amendments shall be
binding upon Tenant, effective upon Tenant's receipt of a copy thereof. Waiver
by Landlord of any breach of any Provision of the Rules and Regulations by any
other Occupant shall not be deemed to be a waiver of such Rules and Regulations
as to Tenant or all Occupants.

SECTION 13. In addition to definitions set forth in these Rules and
Regulations, capitalized terms herein shall have the same meaning as set forth
in the lease to which this is an Exhibit.

Exhibit C Page 3

<PAGE> 24

EXHIBIT D
ADDITIONAL LEASE TERMS

RENT: $17.00 per rentable square foot (RSF) per year during the
initial 36 months and $18.00 per RSF for the last 24 months.

IMPROVEMENTS: Landlord shall provide a Tenant Improvement allowance of
$5.00 per RSF for reimbursement of tenant improvements to be
made by Tenant. The funds will be provided to Tenant upon
completion of improvements and receipt of lien releases from
all contractors. Tenant will initially occupy the Premises
in its AS-IS condition, except as set forth in the next
paragraph, but broom clean. Landlord will be responsible for
putting all systems in the Premises in good working order
and will use good faith efforts to accomplish that by the
Commencement date. All improvements to be made by Tenant are
subject to Section 10 of the Lease.

LATENT DEFECTS: If any latent defects in the Building or Premises
interfere with Tenant's use of the Premises for normal
office uses, Landlord, at its expense (not included in
Operating Costs) shall be responsible for correcting the
defect. If, when Tenant alters the Premises, it encounters
unknown conditions or defects, and if the condition would
not be required to be addressed but for Tenant's
alterations, Tenant shall be responsible for dealing with
those conditions or defects in connection with its
alterations at its expense. If the discovered defect would
require repair irrespective of Tenant's work, Landlord will
correct the defect at its expense.

UTILITIES AND
SERVICES: a. UTILITIES, SERVICES: Landlord shall furnish to the
Premises HVAC and maintenance services customary in similar
buildings and suitable for the intended use of the Premises,
and all charges for such shall be included in Operating
Costs. Landlord's service shall not include replacement of
lamps in the lighting fixtures.

b. ELECTRICITY: The Landlord will provide, at Landlord's
expense, electricity for normal office purposes including
fluorescent and incandescent lighting, task and ambient
lighting systems, copy and facsimile machines, computers,
computer peripherals and computer network systems,
terminals, printers, communications and audiovisual
equipment, vending machines and kitchen equipment.

c. HVAC: The Landlord shall provide, as part of Operating
Costs, HVAC for the Premises Monday through Friday from 7:00
a.m. to 7:00 p.m. and Saturday from 8:00 a.m. to 2:00 p.m.
In the event Tenant requires after hours HVAC, there will be
an hourly charge for this service and Landlord may require
the installation of the necessary equipment to meter the
usage and Tenant shall reimburse Landlord for the cost of
such meter, if required. The hourly charge for the service
shall be reflective of the cost to Landlord of providing the
service.

EARLY TERMINATION: Tenant shall have the right to terminate the Lease effective
at the end of any month after the 36th month by giving the
Landlord nine (9) month's prior written notice accompanied
by the Termination Payment. The "Termination Payment" shall
be equal to the sum of the unamortized Tenant Improvement
Allowance, unamortized real estate commissions and a penalty
equal to three (3) months Base Rent. For example, the
earliest the Lease term would end would be the last day of
the 36th month of the Lease Term, and to terminate as of
that date, Tenant would need to provide the termination
notice and Termination Payment (based on the rental rate of
$18.00 per rentable square foot per year) to Landlord by the
end of the 27th month of the Lease term. The $18.00 rental
rate is applicable because the 3 month payment relates to
the 3 month period after the effective date of the
termination.

<PAGE> 25
COMMENCEMENT: September 1, 1998. Tenant shall have the right of
early occupancy at no rent immediately on full Lease
execution.

ACCESS: Tenant shall have access to the Premises on a 24-hour
basis subject to repairs, maintenance and emergencies.

RIGHT OF REFUSAL: If, after the remaining space on the first floor of
the Premises is leased out, that space becomes
available, then before Landlord enters into a new
lease with a third party, Landlord will notify GST
Telecom and work with them to determine whether they
wish to lease the space. If Landlord and GST do not
reach agreement on a lease for the available space,
then Landlord will notify Tenant that the space is
available and Tenant shall have 3 business days to
notify Landlord whether or not it is interested in
leasing the space. If Tenant gives the notice within
that period, Landlord agrees to negotiate in good
faith with Tenant for 7 days to reach agreement on a
lease for the space. If they do not reach agreement,
Landlord shall be free to lease the space to a new
tenant. The space will not be considered "available"
if a current tenant of that space wishes to extend
their lease and they reach agreement with Landlord on
an extension.

TELECOMMUNICATIONS: Tenant will install its own telecommunications cabling
subject to the restrictions under the "GST Lease"
paragraph below. Tenant shall be permitted to install
a two (2) microwave dish mast (the "Mast") on the roof
of the Building subject to compliance with the
provisions of this section. The mast will not exceed a
total height, including dishes, of five (5) feet from
the roof surface. The Dishes on the mast shall not
exceed forty (40) inches in diameter or 120 pounds in
weight. The mast shall be installed in a location
reasonably selected by Landlord and shall not be
visible from Taylor Avenue. All specifications for the
installation shall be subject to Landlord's approval.
Tenant shall be responsible for obtaining any
governmental approvals required. Tenant shall place
roof pads around the mast and on the route from the
roof access point to the mast to protect the roof
membrane. Tenant or its agents or employees must stay
on the pads when servicing, repairing or removing the
mast and its dishes. If any roof leaks develop in the
vicinity of the roof pads or mast, Tenant shall
promptly reimburse Landlord for the cost of
investigation and fixing those leaks. Tenant shall
have a key to the roof, but shall not allow any person
to go on the roof except the Tenant's employees who
are designated to have responsibility for the mast and
its dishes and Tenant's contractors and their
employees in connection with their work on the mast
and its dishes. Tenant shall adhere to industry
standards for installation and workmanship for the
installation of the Tenant Equipment, the installation
and design of which shall be at Tenant's sole expense.
Landlord will lock the roof access and shall only
provide keys to those who need access such as Tenant,
Landlord's contractors, and other tenants with
equipment on the roof. Tenant shall not penetrate the
roof for installation of the mast unless it is
necessary to do so. If it is necessary, then the
penetration shall be (a) performed by Landlord's
roofing contractor if Landlord so requires, or if not,
by a contractor approved by Landlord, and (b)
installed in a manner which does not invalidate
Landlord's current roof warranty. Tenant shall remove
the mast and its dishes prior to termination or
expiration of the Lease and shall reseal any
penetration to Landlord's satisfaction. If Tenant
wishes to install a second two dish mast, it shall be
subject to Landlord's prior approval. Landlord may
condition installation of the second mast on payment
of an additional $200 per month rent per additional
mast and all aspects of the second mast and its dishes
shall be subject to Landlord's approval.

GST LEASE: Landlord lease to GST Telecom contains the following
provisions:

(a) other equipment installed on the roof may not
block the reception by GST's antenna;

(b) strict limitations on any core drilling in
the floor of the Premises and installation of any new
utility lines through GST's premises;

<PAGE> 26
(c) GST will have an emergency generator outside
the Building to generate emergency power;

(d) the right to bore under the land around the
Building to bring in fiber optic cable;

(e) installation of a new cooling system on the
roof of the Building with ducting on the exterior
of the Building; and

(f) GST agrees to cooperate with other tenants
of the Building with regard to its buildout.

(g) GST agrees not to interfere with other
tenants of the Building (by sound, vibration or
electromagnetic fields or otherwise) and other
tenants of the Building are required not to
interfere with GST.

Tenant acknowledges that its rights under this
Lease are subject to the above conditions and
restrictions. In addition, GST will be making
significant changes to its premises. Tenant also
acknowledges that it recognizes that some
disruptions may occur in connection with GST's
construction and that Tenant will work
cooperatively with GST to manage or minimize those
disruptions. Tenant agrees not to interfere with
other tenants of the Building by sound, vibration
or electromagnetic fields or otherwise.

BUILDING STANDARD: Tenant agrees to conform the Premises to Landlord's
Building Standard for lighting fixtures, lamps in those
fixtures and window coverings.

OPTICAL CABLE: If at a future date, Tenant requests the right to bring
a separate fiber optical cable into its Premises,
Landlord agrees to consider the request and apply
commercially reasonable standards in replying to the
request.

RECYCLE BINS: Landlord will consider allowing Tenant to replace
recycle bins outside the Building if (a) the number,
size, location and upkeep and servicing of the bins is
acceptable to Landlord, (b) the cost is borne by Tenant,
and (c) they will immediately be removed if any
operations or management problems arise, including
refuse outside bins or any odor or pests are found to
occur.

SECURITY ALARM: If Landlord trips Tenant's security alarm by entering
the Premises without notice to Tenant, then unless the
entry was due to an emergency, Landlord shall reimburse
Tenant for the fee charged by Tenant's security
monitoring company.
<PAGE> 27
RIDER 1
TO
LEASE

OPTION TO RENEW

Provided Tenant is not in default on exercise of the option or on
commencement of the option period, Tenant shall have an option to extend the
lease term for a period of 60 months (the "Option Term"), upon the same terms
and conditions as are set forth in the Lease, except the Base Rent shall be
increased to the then current fair market rent but in no event shall the rent
at the beginning of the Option Term be less than the Base Rent payable for the
last month of the initial term, determined as described below. The option shall
be exercised, if at all, by written notice to Landlord at least 12 months prior
to the expiration of the initial term. Exercise of the option shall be
conditioned upon (a) none of the space in the Premises being subleased at the
time of exercise of the option or commencement of the option term, and (b) the
Lease not having been assigned by Tenant to any other person or entity.

If Tenant exercises an option, Landlord shall give Tenant notice of
Landlord's estimation of fair market rent schedule for the Option Term not
later than 10 months before the beginning of the Option Term. If Tenant
disagrees with the rent schedule specified by Landlord, it shall advise
Landlord in writing thereof within 20 days after receipt of Landlord's notice,
and the parties shall promptly meet to attempt to resolve their difference. If
the difference is not resolved within 30 days after Landlord's notice of the
New Rent, then the parties shall submit the matter to arbitration.

Each party shall notify the other in writing of the name and address
of its arbitrator. The arbitrator(s) shall be qualified real estate brokers
familiar with rental rates in the Seattle area. If, within 10 days after
receipt of a notice from the initialing party (the "Instigator") designating
its arbitrator, the other party (the "Recipient") fails to give notice to
Instigator specifying the name and address of the person designated by
Recipient to act as its arbitrator, then the arbitrator appointed by Instigator
shall be the sole arbitrator and shall determine the issue. The duty of the
arbitrator(s) shall be to determine the fair market rent schedule based on
rental rates for the comparable space in the Seattle area. The 2 arbitrators so
chosen shall meet within 10 days after the second arbitrator is appointed and,
if within 10 days after such first meeting the two arbitrators are unable to
agree promptly upon the fair market rent schedule, the arbitrators shall
appoint a third arbitrator, who shall be a competent and impartial person with
qualifications similar to those required of the first two arbitrators. When the
third arbitrator has been appointed, the first two arbitrators shall each state
in writing its determination of the fair market rent schedule supported by the
reasons therefor with counterpart copies to each party. The first two
arbitrators shall arrange for a simultaneous exchange of such proposed
resolutions. The role of the third arbitrator shall be to select which of the
two proposed resolutions most closely approximates the third arbitrator's
determination of fair market rent. The third arbitrator shall have no right to
propose a middle ground or any modification of either of the two proposed
resolutions. The resolution selected shall constitute the decision of the
arbitrators and be final and binding upon the parties. If any arbitrator fails
or refuses to act, a successor shall be appointed by that arbitrator. The
arbitrators shall attempt to decide the issue within 10 days after the
appointment of the third arbitrator. The arbitrator(s)' decision shall be
binding and conclusive upon the parties. Each party shall pay the fee and
expenses of its respective arbitrator and both shall share equally the fee and
expenses of the third arbitrator. The arbitrators shall have no power to modify
the provisions of this Lease.

The right to terminate on a 9 months' notice, set forth in Exhibit D
shall not apply during the Option Term.
<PAGE> 28
GUARANTY

THIS GUARANTY is given by The Eller and McConney 1995 Family Living Trust
("Guarantor") whose address is c/o Marlin Eller, Manager at, 800 - 15th Avenue
East, Seattle, WA 98112 to 223 Taylor Corporation ("Landlord").

Guarantor has a financial interest in Sunhawk Corp. ("Tenant") and
Guarantor gives this guaranty to induce Landlord to enter into that certain
Industrial Real Estate Lease with Tenant dated concurrently herewith (the
"Lease").

1. Guarantor hereby unconditionally guarantees the full and prompt
performance of such obligation of Tenant under the Lease. If Tenant defaults
under the Lease, Guarantor will immediately cure the default, including payment
to Landlord of any amounts in default, and including all damages and expenses
arising in connection with Tenant's default.

2. Guarantor's liability hereunder is independent of the liability of
Tenant and a separate action may be brought against Guarantor whether or not
Tenant is joined in any such action and whether or not Landlord has first
pursued any other remedies to which it may be entitled.

3. This Guaranty shall remain in effect as to any extension,
modification, or amendment of the Lease and irrespective of any assignment of
the Lease and Guarantor waives notice of any and all such extensions,
modifications, amendments or assignments.

4. Guarantor's obligations hereunder shall remain fully binding (a)
although Landlord may have waived one or more defaults by Tenant, extended the
time of performance by Tenant, released, returned of misapplied other collateral
given later as additional security (including other guaranties) or released
Tenant from performance of particular obligations under the Lease, and (b)
notwithstanding the institution by or against Tenant of bankruptcy,
reorganization, receivership or insolvency proceedings of any nature, or the
disaffirmance of said Lease in any such proceedings or otherwise. Guarantor
hereby waives all suretyship defenses.

5. Guarantor agrees to promptly pay, fully and completely, in addition
to any and all amounts otherwise due hereunder, all costs, expenses and
charges, including attorney's fees, actually incurred or expended, in
collecting or enforcing this Guaranty, including in connection with litigation.

6. This Guaranty shall be governed by Washington law and jurisdiction
and venue shall be in King County, Washington and Guarantor hereby expressly
and irrevocably submits to the jurisdiction of such courts in any suit, action
or proceeding relating to this Guaranty.

/s/ Marlin J. Eller
- -------------------------------------------------------------------------------
Marlin Eller as Manager of the Eller and McConney 1995 Family Living Trust

Dated: September 4, 1998
<PAGE> 29
EXHIBIT A

[FLOOR PLAN]

<PAGE> 30
[DEPENDABLE BUILDING MAINTENANCE COMPANY LETTERHEAD]

EXHIBIT E

CLEANING SPECIFICATIONS

I. Entire Second Floor

A. Daily Services (To be performed five days per week, Sunday through
Thursday)

1. Empty all waste receptacles replacing trash liners as needed to
prevent odors, spills, or any offensive appearance. Trash to be
removed to dumpster provided on site.

2. Dust ledges and other horizontal surfaces within reach.

3. Dust counters, spot wash where required.

4. Dust horizontal surfaces of desks, chairs, tables, file
cabinets, and other office furniture. If glass, use glass
cleaner.

5. Vacuum all carpeted traffic areas in offices, conference rooms,
lobby, and corridors.

6. Spot clean minor carpet stains. Report any large/major carpet
stains to Client.

7. Remove finger marks and smudges from doors, frames, light
switches, relights, and partitions.

8. Remove lint and physical dirt from fabric upholstered chairs and
couches.

9. Brush all conference room chairs and reposition under conference
tables, being careful to not damage table/chair edges.

10. Return all chairs and waste baskets to proper position for next
day's use.

11. Lunchroom:

a. Vacuum all carpeted areas.

b. Sweep all hard surface floors and damp mop.

c. Wash and wipe serving area counter tops and fronts.

d. Collect all trash and remove from the premises. Place in
dumpster provided on site.

12. Do not move items on desks or credenzas while cleaning. Do not
unplug computers, typewriters, copy machines, or other
electrical equipment.

13. If recycle program is in effect, remove recycle materials to
containers provided on site.

14. Do not assist the entry of anyone other than authorized
Dependable employees into occupant space.

Page 1

<PAGE> 31
15. Report to Client any broken fixtures or other items needing building
management attention.

16. Maintain neat and orderly janitor supply closet or area to be provided
by Client. All chemicals will have MSDS information in janitor closet.

17. Secure all doors after service. Unlock only one office or area at a
time to clean so as to preclude unauthorized entry.

B. Monthly Services (To be performed a minimum of one time per month unless
otherwise designated)

1. Dust high surfaces (i.e. tops of picture frames, partition tops,
mouldings, cabinets, wall hangings, and other wall accessories).

2. Dust baseboards.

C. Quarterly Services (To be performed a minimum of four times per year unless
otherwise designated)

1. Vacuum or dust air diffuser grills.

2. Damp wipe all telephone with an approved germicidal cleaner. Do not
spray solution directly on phone equipment.

III. Restroom - Second Floor

A. Daily Services (To be performed five days per week, Sunday through
Thursday)

1. Check and refill towel, soap, toilet paper, seat cover, and sanitary
napkin dispensers. Dependable may provide and bill separately if
requested by Client.

2. Sweep or dust mop floor surfaces.

3. Wet mop floor surfaces with disinfectant solution.

4. Dust horizontal surfaces within reach.

5. Empty and clean all waste containers. Place trash for disposal in
dumpster provided on site.

6. Empty and clean all sanitary napkin disposal containers.

Page 2

<PAGE> 32
7. Clean and polish all soap, towel, toilet paper, and seat
cover dispensers.

8. Clean and polish all mirrors, frames, and shelves.

9. Clean and polish all wash basins.

10. Clean and sanitize counters, toilets, toilet seats and
urinals.

11. Clean and polish chrome fixtures.

12. Spot clean walls around sinks, towel dispensers, urinals,
partitions, and door frames.

13. Remove gum, tar, and other foreign substances from floor
surfaces.

14. Report any fixture not working properly to Client.

B. Monthly Services (To be performed a minimum of one time per month
unless otherwise designated)

1. Dust or vacuum air diffusers.

2. Wash walls, partitions, and doors.

3. Dust or vacuum light fixtures.

IV. Services Provided on Request, Beyond Current Scope of Contract (Performed
at Extra Cost)

A. Strip or machine scrub and refinish floor surfaces.

B. Carpet cleaning, steam/shampoo -- $0.12 per square foot per service
with a minimum charge of $66.00.

C. Window cleaning -- Quoted and service fee provided at Client's
request.

D. Fluorescent light changing.

V. Other Services Available -- As Requested

A. Upholstered furniture cleaning.

B. Applying special carpet soiling retardant and anti-stat to
carpeting.

C. Wall washing service.

D. Oil treatment for wood, desks, tables, paneling, etc.

E. Levilor blind cleaning, including removal, ultrasonic washing,
drying, and rehanging. Minor repairs also available.

Page 3

<PAGE> 1

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our report dated April 9, 1999,
except for note 13, as to which the date is June 10, 1999 in the Registration
Statement (Form SB-2) and related prospectus of Sunhawk.com Corporation dated
June 16, 1999 for the registration of 1,200,000 shares of its common stock.

ERNST & YOUNG LLP

Seattle, Washington
June 16, 1999

<ARTICLE> 5

<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> SEP-30-1998 SEP-30-1999
<PERIOD-START> OCT-01-1997 OCT-01-1998
<PERIOD-END> SEP-30-1998 MAR-31-1999
<CASH> 59,093 1,624,720
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 16,507 16,260
<CURRENT-ASSETS> 102,834 1,668,214
<PP&E> 359,338 388,306
<DEPRECIATION> 163,458 178,463
<TOTAL-ASSETS> 508,516 3,635,779
<CURRENT-LIABILITIES> 3,316,418 290,785
<BONDS> 0 0
0 0
0 0
<COMMON> 197,221 7,584,745
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 508,516 3,635,779
<SALES> 27,263 45,389
<TOTAL-REVENUES> 27,263 45,389
<CGS> 22,517 36,923
<TOTAL-COSTS> 22,517 36,923
<OTHER-EXPENSES> 1,353,871 1,129,166
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 126,454 113,928
<INCOME-PRETAX> (1,475,579) (1,120,700)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,475,579) (1,120,700)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,475,579) (1,120,700)
<EPS-BASIC> (1.19) (0.97)
<EPS-DILUTED> (1.19) (0.97)

</TABLE>