STARTRONIX INTERNATIONAL INC, 10-K, 1996-12-16

STARTRONIX INTERNATIONAL INC
10-K, 1996-12-16
COMMUNICATIONS SERVICES, NEC

Previous: ROCHEM ENVIRONMENTAL INC, NT 10-K, 1996-12-16

Next: STARTRONIX INTERNATIONAL INC, 10-Q, 1996-12-16

<PAGE> 1

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549

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

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.

FOR THE FISCAL YEAR ENDED JUNE 30, 1996 COMMISSION FILE NUMBER 1-9190

STARTRONIX INTERNATIONAL INC.
(FORMERLY GOLD EXPRESS COMMUNICATIONS, INC.
AND GOLD EXPRESS CORPORATION)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

<TABLE>
<S> <C>
DELAWARE 91-1263272
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

2402 MICHELSON DRIVE, SUITE 160, IRVINE, CA 92612-1314
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>

Registrant's telephone number, including area code: (714) 474-1700

Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- -------------------------------------------- ---------------------
<S> <C>
Common Stock, $.001 par value NASDAQ
</TABLE>

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days: YES X NO
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the voting stock of the registrant held by
non-affiliates was approximately $16,419,854 at October 31, 1996 (determined by
reference to the average bid and asked prices on the NASDAQ Exchange on October
31, 1996).

COMMON SHARES OUTSTANDING AS OF OCTOBER 31, 1996: 23,625,690

PREFERRED SHARES OUTSTANDING AS OF OCTOBER 31, 1996: 395,500

DOCUMENTS INCORPORATED BY REFERENCE HEREIN: Not applicable.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

STARTRONIX INTERNATIONAL INC.

FORM 10-K -- JUNE 30, 1996

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I
Item 1 Business................................................................... 3
Item 2 Properties................................................................. 6
Item 3 Legal Proceedings.......................................................... 7

PART II
Item 4 Submission of Matters to a Vote of Security Holders........................ 7
Item 5 Market for the Registrant's Common Stock and Related Stockholder Matters... 7
Item 6 Selected Financial Data.................................................... 8
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................. 8
Item 8 Financial Statements and Supplementary Data................................ 11
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure................................................................. 11

PART III
Item 10 Directors and Executive Officers of the Registrant......................... 13
Item 11 Executive Compensation..................................................... 14
Item 12 Security Ownership of Certain Beneficial Owners and Management............. 18

PART IV
Item 13 Certain Relationships and Related Transactions............................. 18
Item 14 Exhibits, Financial Statements, Schedules, and Reports on Form 8-K and
S-8........................................................................ 19

PART V
SIGNATURES............................................................................. 21
</TABLE>

2
<PAGE> 3

STARTRONIX INTERNATIONAL INC.

FORM 10-K -- JUNE 30, 1996

PART 1
ITEM 1. BUSINESS

(a) General Development of Business

StarTronix International Inc., formerly Gold Express Communications Inc.
and Gold Express Corporation, (hereinafter "the Company" or "StarTronix" or "the
Registrant") was originally incorporated in the State of Washington on June 26,
1984, as a mining and natural resource company. In June of 1986, the Company
sold 511,634 shares of its common stock to the public for gross proceeds
totaling $2,558,170, which were used to fund the Company's limited operations.

Since its incorporation through December 1994, the Company had limited
operations and no operating revenues. Effective April 14, 1994, the Company
acquired all of the outstanding stock of StarTronix Inc. ("StarTronix Inc."),
formerly SmartCom International, Inc. and StarTronix International Inc., an
emerging company in the on-line services business. In April 1994, the Company
issued 2,800,000 shares of its common stock in exchange for all the outstanding
shares of common stock of StarTronix Inc. StarTronix Inc., an entity in the
development stage since its formation in January 1994, is a marketing company of
new on-line service and screen phone for user friendly access to the Internet.
StarTronix Inc. has had limited operations to date and its ability to achieve
future profitable operations is dependent on obtaining sufficient funds to
initiate its business plans. Concurrently with the issuance of the 2,800,000
shares by StarTronix, certain stockholders of the Company entered into separate
agreements with a party related to the former stockholder of StarTronix Inc.
Under the terms of these agreements the Company's stockholders sold one-half of
their shares of the Company common stock (approximately 1,165,000 shares) to
this party. This exchange of stock resulted in voting control of StarTronix
transferring to the former stockholder of StarTronix Inc.

In December 1994, the Company issued 500,000 shares of its common stock in
exchange for all of the outstanding stock of GlobalTelCom Inc. ("GlobalTelCom"),
a provider of products and services relating to long distance telephone and
debit card services. With this change in ownership and the acquisition of
GlobalTelCom, the Board of Directors changed the business focus and orientation
of the Company out of mining and natural resources and into on-line services and
hardware/software products for user friendly access to the Internet.

Subsequent sales of stock have been used to fund operations through fiscal
1996. In September 1995, the Company took the following actions: changed the
state of incorporation from the State of Washington to the State of Delaware,
changed the name of the corporation from Gold Express Communications Inc. to
StarTronix International Inc., increased the authorized common stock to
50,000,000 shares and created a class of preferred stock in the amount of
10,000,000 shares. During fiscal 1996, the Company initiated two separate
preferred stock offerings, with rights, allowing for conversion into common
stock to raise $6,000,000, as more fully discussed in Part II, Liquidity and
Capital Resources. During fiscal 1996, the Company also changed the name of its
subsidiary from StarTronix USA Inc. to StarTronix Inc. As discussed further
below, the Company is still considered to be in the development stage.

The Company expects completion of a $2.5 million private placement in
December 1996 followed by a $5 million private placement in January 1997. An
agreement has been signed to provide the Company an additional $10 million
equity investment at the Company's request.

StarTronix International's business strategy is to develop and market "easy
to use", "plug and play" high-technology electronic products and on-line
services through the Internet to the home-based business industry. Through its
wholly owned subsidiary, StarTronix Inc., it is scheduled to begin distribution
of its Internet screen-phone, STARSCREEN, to its home-based distributors in the
fall of 1996. STARSCREEN is a multi functional screen phone that integrates a
telephone with a speaker phone and answering machine, PC, fax/modem,
debit/credit card reader that provides on-line services through the Internet.
The company has also begun marketing its first proprietary product, the
STARVOICE PHONE, a voice recognition dialing, state-of-the-art

3
<PAGE> 4

phone with the following features: 40 voice trigger dialing, large LCD directory
display, 10 number speed dialing capability, 3 one touch dialing, automatic
redial every 4 minutes and an outgoing dialing data log. In addition, StarTronix
Inc. provides a range of "How To" training programs for its distributors;
instructing them on running a home-based business.

OTHER BUSINESS

Eagle Claw Mining Company, Inc. The Company is the sole shareholder of
Eagle Claw Mining Company, Inc., an Idaho corporation ("Eagle Claw"), which was
engaged in preliminary exploration of minerals on properties located in Idaho.
All of the Company's operations in these properties was terminated during fiscal
year ended June 30, 1988, and the remaining equipment was sold during fiscal
year ended June 30, 1990. As part of the StarTronix Inc. acquisition, the
ownership of the Vulcan/Gold Dike Property and the subordinated debentures
receivable obtained by the Company through the sale of the Copper Flat Property,
were to be transferred to Eagle Claw Mining Company, Inc. This transfer did not
take place and remains on the books of StarTronix and does not have any impact
on the consolidated financial statements. In December 1995, the assets were
transferred to Globex-Nevada, Inc. and there are no remaining assets on the
books of Eagle Claw Mining Company, Inc.

StarTronix Inc. The Company is the sole shareholder of StarTronix Inc., a
Delaware corporation which is a marketing company that is concentrating on the
development and marketing of home-based services and products, including
personal communications and telecommunications products. StarTronix Inc. is in
the development stage and has reported limited operations to date. Necessary
funding required to commence its operations is being raised by the Company.

GlobalTelCom Inc. The Company is the sole shareholder of GlobalTelCom, a
Georgia corporation which is a primary provider of long-distance telephone
communications and debit card services. GlobalTelCom lost its primary customers
during fiscal 1995 and has since had little activity. At the end of the 1996
fiscal year, the company ceased operations.

StarTronix TelCom Inc. The Company is the sole shareholder of StarTronix
TelCom Inc., (formerly GoldTone Communications, Inc.), a new subsidiary formed
in August 1995 and which changed its name in November 1995 for the purpose of
providing specialized long distance telephone and debit card services. There has
been no activity as of the date of this report.

StarTronix On-Line Inc. The Company formed this new subsidiary in November
1995 to provide on-line services and Internet access to StarTronix. StarTronix
On-Line Inc. provides home banking, shopping, bill paying, news, financial
services, email and distributor services through the Internet via local dial-up.
It is continually expanding its services to meet the emerging needs of its
users. No substantial operations will occur until the Company begins to deliver
its premier product.

StarTronix Marketing N.A. Inc. The Company formed this new subsidiary, a
Canadian company, on June 4, 1996 to market the products and services of
StarTronix Inc. in the Canadian marketplace. As of June 30, 1996, this entity
has had little activity.

(b) Financial Information On Industry Segments

No information is presented as to industry segments, as the Company was
engaged in a single line of business through June 30, 1994, that being the
development and mining of mineral properties. Subsequent to June 30, 1994, the
Company entered into the telecommunications industry through its subsidiaries,
StarTronix Inc. and GlobalTelCom, but limited operations have been conducted to
date and the Company is still in the development stage.

(c) (i) StarTronix International Inc. is a holding company in the
development stage in the high technology electronic products and on-line service
industry and has limited operating history to date. StarTronix Inc. is an
independent distributor network company marketing on-line services, screen-based
phones, software training and telecommunications products to run a home-based
business and discount long distance telephone service through its sister
company, StarTronix TelCom Inc., using the least cost routing method. StarScreen
is the first screen-phone that integrates a telephone and computer capability to
provide

4
<PAGE> 5

home shopping, banking, E-mail and unlimited Internet access and bill paying or
shopping by using the debit/credit card reader feature on the StarScreen.

(ii) As part of the StarTronix Inc. acquisition, StarTronix announced the
details of its new proposed infomercial and network marketing plans for its
products and services. StarTronix Inc. has arranged for the StarScreen to be
manufactured by an independent unrelated company. Full scale sales and marketing
of the products and services are dependent on the Company's ability to raise
funds independent of the Company's assets. To date, StarTronix Inc. has signed
up approximately 18,000 distributors to sell its products and services. The
sources and availability of product components are expected to be from various
suppliers, which are both domestic and International. One of our major products
is currently being manufactured in China by Golden Source Electronics Ltd. The
Company is aware that the political climate may change; however the Company is
exploring alternate sources for future needs.

(iii) StarTronix On-Line is engaged in the business of providing on-line
services and Internet Access in addition to developing premium on-line services
by the Company or through strategic alliances.

StarTronix TelCom Inc. and GlobalTelCom are aggregators that purchase large
blocks of telephone time. As an aggregator, these companies buy time at
discounts and then resell it at higher prices.

(iv) StarTronix has no patents, licenses, franchises, or concessions which
are considered by the Company to be important. StarTronix Inc. has negotiated
with Golden Source Electronics Ltd., a Hong Kong based company to manufacture
the StarScreen system.

(v) The primary business of StarTronix is marketing on-line services and
products and is not affected by seasonal changes.

(vi) The Company will require certain levels of inventory to be maintained
to meet increased growth of the distribution base. This growth will require
additional working capital to be generated through additional debt and equity
offerings (Note 2). Additionally, the growth of the number of distributors will
provide additional capital through the purchase of the distributor contracts.

(vii) StarTronix International Inc. is in the development stage and has
limited operations to date.

StarTronix Inc. is also in the development stage and has limited revenues
to date. Due to its anticipated mass marketing efforts and use of distributors,
StarTronix Inc. does not foresee a dependence on a single or small group of
customers.

During the year ended June 30, 1996, the Company generated revenues of
approximately $98,000, mostly from the long distance and debit card operations
of its subsidiary GlobalTelCom. During the year ended June 30, 1995, the Company
generated revenues of approximately $819,000 through its subsidiary,
GlobalTelCom. More than 90% of such revenues were generated from one customer,
Megatrend Telecommunications ("Megatrend"). Due to a dispute between the Company
and Megatrend, the Company lost Megatrend and filed an arbitration against
Megatrend. This arbitration is pending and management does not believe that the
outcome will materially affect the Company.

(viii) Not applicable.

(ix) The Company has no contracts with the Federal or any state
government.

(x) The StarScreen is the first portable user-friendly multifunctional
interactive terminal that can be utilized as a telephone, a speaker phone,
fax/modem and debit/credit card reader. In addition it provides access to
on-line services for home shopping, banking, E-mail, bill paying via the
Internet. The StarScreen has been designed with additional ports and connections
for additional future peripheral equipment to provide printing, scanning, and
connections for a TV set to be used as a monitor. In addition, it will access
premium services such as video conferencing, Internet phone calling, and
numerous unlimited specialized services. The StarScreen has no competitors at
this time, there are many large company's who do sell computers, software,
on-line services and connectivity but none that have combined all aspects to run
a home-based business. There are several companies such as Oracle, Sony, and
Apple that have announced their future version of a Internet Terminal. All of
these companies are relying on a TV set top box. These units are not independent
and need

5
<PAGE> 6

other appliances such as a TV in order to work. In addition, they do not provide
expandability or portability like the StarScreen and are not packaged in a
familiar appliance already in the home -- the telephone.

The Company's competitors current marketing plans calls for a traditional
approach, selling their units in retail outlets. They are in the hardware
business. By using this approach they do not provide many important things that
StarTronix does. StarTronix provides a complete package for its users and
marketers eliminating the confusion of compatibility, software, hardware, modems
and connectivity issues for the user.

StarTronix marketing plan is to allow average individuals to participate in
the information age without the need to learn how to use a computer or other
unfamiliar devices. At the same time, provide a business opportunity and income
generator for the individuals marketing the program. StarTronix feels by using
this residual income marketing approach it will retain a much higher degree of
its customers and users than the traditional marketing approach.

(xi) StarTronix is in the business of developing on-line services, screen
phones and software training products through its subsidiaries. The approximate
amount expended on research and development at June 30, 1996 was $160,000. There
was no material expenditures in 1995 and 1994.

(xii) As of June 30, 1996, the Company had sold all of its mining and
natural resource properties and had expended no funds for environmental control
related activities with respect to its properties and does not expect to ever
expend any monies for these same activities.

(xiii) At June 30, 1995 and 1994, the Company had no salaried employees.
Certain employees in the office of Robert E. Sterling, former President and
Chairman of the Board, performed administrative duties for the Company. For
those services for the fiscal years ended June 30, 1995 and 1994, the Company
paid $2,500 and $82,900, respectively, to Robert Sterling Enterprises, Inc.

As of June 30, 1996, the Company has employment agreements with the
following officers and key personnel, where they are paid on a month-to-month
basis:

<TABLE>
<CAPTION>
ANNUAL
NAME/TITLE TERM BEGIN DATE BASE SALARY
---------------------------------------------------- -------- ------------- -----------
<S> <C> <C> <C>
Greg Gilbert -- President/CEO 5 years July 1995 $ 120,000
Gerald Fitch -- VP/COO 5 years October 1995 $ 120,000
James Valle -- V.P./CFO 5 years August 1996 $ 120,000
Norman M. Shink -- President of StarTronix Inc. 5 years March 1996 $ 144,000
J. Michael Sellards -- Exec.V.P. of StarTronix, Inc. 5 years June 1996 $ 120,000
</TABLE>

As of September 30,1996 there are 41 employees in the Company.

(d) The Company has recently formed a Canadian subsidiary, StarTronix
Marketing N.A. Inc., but as of June 30, 1996 currently has no operations or
export sales outside the United States.

ITEM 2. PROPERTIES

Location and Nature of Company's Interests

Corporate Offices. The Company maintains its corporate offices in Irvine,
California. The premises, consisting of approximately 13,273 square feet, are
currently leased at a monthly rental of $14,600 for a thirty-six (36) month
period which expires in April 1999. Currently the property utilized is meeting
the Company requirements, however as the distributor base and sales volume
increases, it may require additional space for expansion for our growing
products and services.

In addition, the Company leases office space in Atlanta Georgia for the
operations of GlobalTelCom. The lease requires a monthly rental of $3,450
through November 1996 and the Company does not expect to renew the lease.

6
<PAGE> 7

ITEM 3. LEGAL PROCEEDINGS

The Company had been involved in a legal proceeding with a former officer
and director related to a dispute as to balances owing on an employment
contract. A lawsuit was filed in District Court, County of Douglas, State of
Colorado on March 25, 1994 and was dismissed with prejudice. The matter was
settled by an arbitration agreement dated May 22, 1996 in favor of the former
officer and director. As a result, the Company has expended an amount of
$103,882 as final settlement. For further discussion, see Part III, Item 11,
"Executive Compensation."

On November 7,1996 a suspension of conversion of the Series "C" Convertible
Preferred stock was announced to preferred stockholders as a result of
irregularities in the trading of StarTronixs' Common Stock which management
believes is related to the conversion terms of the Regulation S private
placement. A shareholder has brought an action against the Company to compel the
conversion of certain class "C" Preferred Stock to Common stock or to rescind
the subscription agreement and recover the shareholders' original investment in
the amount of $1,337,500. The Company has answered and counter claimed denying
the allegations of the complaint and asserting counter claims against the
plaintiff for misrepresentations and security law violations. No evaluation can
be made at this time as to the ultimate outcome.

In December 1996, a second action was filed by a shareholder group in the
Superior Court of the State of California in Los Angeles County related to the
suspension of the conversion feature of the Series "C" Preferred Stock. The
action seeks to compel the Company to resume conversion of the Series "C"
Preferred Stock or, in the alternative, to rescind the subscription agreement
and recover the shareholders' original investment in the amount of $2,367,500,
plus interest and punitive damages. As discovery has not commenced, the ultimate
outcome of any litigation on this matter cannot be determined at this time;
however, management intends to vigorously defend its position.

PART II

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of Company's shareholders during the
fourth quarter of the fiscal year covered by this report.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

(a)(1)(I)-(iii) The Company's common stock was traded on NASDAQ National
Market until October 22, 1993. Effective on that date, the NASDAQ removed the
Company from the National Market System because the Company no longer met the
price per share qualifications for such listing. This action pertained to the
Company's NASDAQ/NMS status only. The Company's common Stock is still reported
on NASDAQ. All available quarterly high and low sales prices of the Company's
stock for the past two years, are listed in the table below, as reported by the
NASDAQ Exchange. The sales prices, is as reported by the National Quotation
Bureau Inc., and have been adjusted to reflect a 10 for 1 reverse stock split
January 20, 1994.

<TABLE>
<CAPTION>
FISCAL
QUARTER HIGH SALES LOW SALES
ENDED PRICE PRICE
- ---------- ---------- ---------
<S> <C> <C>
*09/30/94 $ 0.88 $0.88
*12/31/94 $ 0.56 $0.56
*03/31/95 $ 1.38 $1.38
*06/30/95 $ 1.31 $1.31
</TABLE>

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

* The four quarters of fiscal 1995 are reported from the prior years Form 10K.

(iv) Not applicable.

(v) On October 31, 1996, the closing bid and asked prices of the common
stock, as reported on the NASDAQ Exchange, were $0.69 and $0.70,
respectively.

(a) (2) Not applicable.

7
<PAGE> 8

(b) As of October 31, 1996, there were approximately 3,800 holders of
record of the Company's common stock.

(c) The Company has paid no common stock dividends since its formation and
does not anticipate paying dividends on its common stock in the
foreseeable future. As of June 30, 1996 the amount of Preferred Stock
dividends earned, based on the conversion formula of the Series "B"
Convertible Preferred Offering, was not material to the Financial
Statements.

ITEM 6. SELECTED FINANCIAL DATA

The following is a summary of selected financial data for the fiscal years
ended June 30, 1996, 1995, 1994, 1993, 1992 and cumulative results from the date
of inception through June 30, 1996.

<TABLE>
<CAPTION>
CUMULATIVE CUMULATIVE 1996 1995 1994 1993 1992
- -------------------------------- ------------ ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sales........................... $ 916,276 $ 97,654 $ 818,622 -- -- --
Interest income................. 914,042 297,887 301,137 -- -- --
Interest expense................ 702,424 194,918 174,592 $ 233,900 $ 4,347 $ 9,075
Loss before cumulative effect of
change in accounting
principle..................... (12,861,505) (6,021,898) (1,602,576) (478,930) (855,525) (199,403)
Cumulative effect of change in
accounting principle.......... 181,250 -- -- -- -- (181,250)
Net loss........................ (12,680,255) (6,021,898) (1,602,576) (478,930) (855,525) (18,153)
------------ ----------- ----------- ---------- ---------- ----------
Loss per common share........... -- (.48) (.22) (.12) (.32) (.01)
Total assets.................... 3,595,387 5,376,953 4,579,332 5,481,627 5,235,772
Long-term debt.................. -- 2,782,265 2,782,265 -- 1,664,651
Stockholders' equity............ 1,723,088 1,330,008 1,559,850 2,023,780 2,151,805
Cash dividends.................. None None None None None None
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Results of Operations

During the year ended June 30, 1996, the Company reported revenues of
$97,654 and a net loss of $6,021,898 compared to revenues of $818,622 and a net
loss of $1,602,576 in fiscal 1995. The source of revenues was from the sale of
telephone debit cards and long distance services provided by GlobalTelCom. The
decrease in revenues was mostly attributable to the down sizing of long distance
services provided by GlobalTelCom due to the loss of its major customers, with a
slight revenue gain generated by StarTronix Inc. as it began to sign up
distributors for its home-base business activity.

During fiscal 1995, with the acquisition of GlobalTelCom in December 1994
and the sale of its remaining mining properties, the Company moved from mining
and natural resources to technology based on-line services with user friendly
access to the Internet. As a result of this change in business, the Company
generated revenues and incurred a sizable loss for the fiscal year. The on-line
services industry is an expanding marketplace for low cost screen-based phones
that provide on-line services and access to the Internet.

During the year ended June 30, 1995, the Company reported revenues of
$818,622 and a net loss of $1,602,576, compared to no revenues and a net loss of
$478,930 in the prior year. The source of revenues for fiscal 1995 was from the
sale of telephone debit cards and long distance services provided by the newly
acquired subsidiary, GlobalTelCom. At the end of fiscal year 1996, the Company
ceased operations. More than 90% of the revenues generated by GlobalTelCom in
fiscal 1995 were to a single customer, Megatrend Telecommunications. The
companies disputed the cost of services provided and arbitration commenced,
however no further action has resulted. The Company has written off a previously
recorded 100% reserve on balances due from Megatrend in the amount of $337,494
and established a reserve account for potential arbitration.

8
<PAGE> 9

Cost of sales of $95,417 for fiscal 1996 were primarily from switching
services from the long distance business and a small amount attributed to costs
associated with the start-up distributor activity in StarTronix Inc.

The operating loss for 1996 includes start-up costs for equipment,
facilities, personnel, professional services and sales and marketing efforts to
launch StarTronix Inc. On June 28, 1996, the Company reached a Settlement
Agreement with Alta Gold Company whereby the companies agreed to the following:
StarTronix surrendered to Alta Gold the 1996 and 1998 Debentures with a value of
$3,000,000 in return for 400,000 shares of Alta Gold. The original Zero Coupon
Debenture and Provisional Copper Production Royalty Agreement, dated June 14,
1994, currently held by StarTronix shall remain in full effect. StarTronix
assigned its rights to the stock and warrants of Alta Gold common stock and
warrants to purchase up to 400,000 shares of Alta Gold common stock to N.A.
Degerstrom in exchange for the release of secured and unsecured debt of
$2,782,265. The Company incurred a loss of $234,065 in the liquidation of the
Degerstrom debt. Additionally, the write-off of goodwill for GlobalTelcom of
$475,911 and the additional cost of arbitration settlement for the King lawsuit
of $103,882 was included in the loss from operations for fiscal 1996.

Cost of sales for fiscal 1995 consists primarily of third party contracted
switching services for the debit card and long distance revenues generated by
GlobalTelCom. Included in the 1995 results of operations are normal
administrative operating expenses of GlobalTelCom of $458,392, the write-off of
the $350,000 remaining value of the Vulcan/Gold Dike property and increases in
general, administrative and selling expenses for StarTronix, and GlobalTelCom
and start-up expenses of $302,155 for StarTronix Inc.

The Company had interest income of $297,887 during fiscal 1996 related to
the Alta Gold Debentures, which was offset by interest expense of $166,936,
related to the notes payable to N.A. Degerstrom and had other interest expense
of $27,982.

Interest income of $301,137 for fiscal 1995 was generated by the
convertible debentures and zero coupon debenture and was partially offset by the
interest expense of $174,592 from the associated notes payable to N. A.
Degerstrom.

During the year ended June 30, 1994, the Company incurred a loss of
$478,930 compared to a loss of $855,525 for the comparable prior fiscal year.
The decrease in loss from 1994 to 1993 was due to several factors. First, the
Company realized a gain of $182,739 on the sale of the Copper Flat Property.
Secondly, the Company reflected a significantly reduced write down in the
carrying value of its Vulcan/Gold Dike Property. For the year ended June 30,
1994, the write down was $35,213 compared to $762,837 for the prior year.
Increases in general and administrative expenses included higher professional
fees of $258,689, officers salaries and directors fees of $82,000 and
exploration costs of $35,213. Interest expense increased by $229,553 in 1995
over 1994. In addition as the mining properties were no longer being carried as
development properties, the Company ceased capitalizing expenses to the mining
properties.

During the years ended June 30, 1996, 1995 and 1994, the Company incurred
salaries to its officers in the amounts of $601,706, $0 and $44,500,
respectively, none of which was capitalized to the Copper Flat project. The
decrease in officers salaries for the years ended June 30, 1995 and 1994 was due
to the termination of all salaried officers during fiscal 1994 and the use of
consulting arrangements during fiscal 1995 and employment contracts during
fiscal 1996, which are expensed to selling, general and administration expenses
as paid.

On October 9, 1995 the Company effected an agreement with Amwest
Environmental Group Inc. and exchanged 1,500,000 shares of common stock to
finance joint venture activities between the companies to enter into three
business segments on the Chinese mainland. As of June 30, 1996, the Company
wrote down the original valuation by $1,166,250 to reflect the decrease in the
per share price of the Amwest stock.

LIQUIDITY AND CAPITAL RESOURCES

During fiscal 1996, the Company initiated two Preferred Stock offerings in
order to raise working capital for the product and services launch of StarTronix
Inc. The Series "B" Preferred Stock authorized the issuance of 200,000 shares of
preferred stock at $10.00 per share. The registered holders of outstanding
shares of Series "B" Preferred Stock are entitled to a number of privileges and
rights including the right to receive cumulative

9
<PAGE> 10

dividends at the annual rate of $0.60 per share payable in common stock,
conversion rights according to a pre-determined formula and liquidation rights
in the event of a liquidation, dissolution or winding up of the Company. As of
June 30, 1996, the Company had received $900,000 less fees of $90,015 and issued
90,000 shares of Series "B" Preferred Stock.

The Series "C" Preferred Stock authorized the issuance of 400,000 shares at
$10.00 per share. This was subsequently increased to 650,000 shares. The
registered holders of outstanding shares of Series "C" Preferred Stock are also
entitled to a number of privileges and rights including the right to receive
cumulative dividends at the annual rate of $0.60 per share payable in common
stock, conversion rights according to a pre-determined formula and liquidation
rights in the event of a liquidation, dissolution or winding up of the Company.
As of June 30, 1996, the Company had received cash of $150,000 less fees of
$24,018 and issued 15,000 shares of Series C Preferred Stock. The conversion
rights under this series of stock have been suspended.

Cash of $2,335,982 was provided by financing activities during fiscal 1996
along with non-cash financing of $5,245,145. Of this total, approximately $3.1
million came from the issuance of common stock for the payment of debt and
services, $1.05 million from the issuance of Preferred Stock, $1.4 million from
the issuance of Common Stock and $2.1 million from investment in common stock
for joint venture activities. The cash was used for the purchase of fixed assets
of approximately $340,000, the purchase of Common and Preferred Stock for $2.1
million and operating expenses of approximately $5.6 million. The net cash
decreased by $3,795 for the fiscal year.

During fiscal 1995, the Company used approximately $604,000 in its
operating activities. The approximate principal components of the net funds
used, consisted of the 1995 net loss of approximately $1,603,000, offset by the
$158,000 accretion of zero coupon bond discount and interest receivable on the
debentures, write down of the Vulcan/Gold Dike property by $350,000 and the
increase in accrued liabilities of $472,900. The Company used approximately
$71,000 in its investing activities, primarily attributed to the investment in
the Common Stock of an unrelated company of $150,000. The Company raised
$650,000: $400,000 from borrowings and $250,000 from the issuance of Common
Stock. The resulting overall effect was a net decrease of $25,596 in cash for
the year ended June 30, 1995.

As a result of the completion of its public stock offering in June 1986,
the Company ultimately received approximately $2,138,000 of net cash proceeds.
During the eight years ended June 30, 1994, the Company used these proceeds to
pay existing liabilities and fund exploration and development activities at the
various mine properties, all of which have now been abandoned or sold. During
fiscal 1994, the Company used approximately $499,000 in its operating
activities. The principal components of the net funds used, consisted of the
1994 net loss of $479,000, offset by the $183,000 gain from the sale of Copper
Flat and increase in accounts payable and due to related parties of $158,000.
The Company generated $1,095,000 through its investing activities. These
activities included $1,401,000 raised through the sale of the Copper Flat
Property and $321,000 of additions to the Company's mineral properties. The
Company used approximately $565,000 in financing activities, primarily as the
result of repaying approximately $584,000 of Company debt. Overall, the Company
had a net increase in cash of $32,000 for the year ended June 30, 1994.

As of June 30, 1996, the Company has net operating loss ("NOL") carry
forwards of approximately $10,627,600 for Federal income tax purposes. The
Federal NOLs are available to offset future years taxable income and expire
during the year ended June 30, 2006 through the year ending June 30, 2011. Such
NOLs could have a positive effect on the Company's cash flow in future
profitable years resulting from reduced income tax liabilities. Federal tax
rules impose limitations on the use of NOLs following certain changes in
ownership. Of this amount, utilization of approximately $3,800,000 of such NOLs
has been limited to approximately $149,000 per year, over the statutory period
as a result of such changes. If additional ownership changes were to occur the
utilization of the NOLs could be further limited and thereby reduce the amount
of these benefits that would be available to offset future taxable income each
year starting with the year of ownership change.

At June 30, 1996, the Company has total deferred income tax assets of
approximately $3,871,000. Such potential income tax benefits, a significant
portion of which relates to NOLs discussed above, have been

10
<PAGE> 11

subjected to a 100% valuation allowance since management could not determine
that it was more likely than not that the net deferred tax asset would be
realized.

The Company's independent certified public accountants' report on the June
30, 1996 consolidated financial statements contained an explanatory paragraph
expressing substantial doubt as to the Company's ability to continue as a going
concern. The Company has suffered recurring losses from operations since its
inception; has recorded limited revenues to date as a result of its acquisition
of GlobalTelCom, Inc. in December 1994; has recorded significant realized and
unrealized losses on investment write downs; and continues to rely on its
capital raising efforts to fund continuing operations. The success of
management's plan for the continuation of the Company as a going concern is
dependent upon the Company's ability to raise working capital and successfully
market its premier product, the StarScreen telephone.

During fiscal 1996, the Company was able to offset the secured debentures
receivable against the notes payable to N.A. Degerstrom and still retain the
zero coupon debentures due in the year 2008 and continued to raise additional
capital through the issuance of common and preferred stock. Although the
Company's present liquidity is almost non-existent, the forbearance of the
Company's creditors should provide enough cash to continue operations until one
or all of the foregoing events occur. On September 20, 1995, the Company signed
an exclusive proposed offering with Buckhead Financial Corporation to privately
place up to $15 million of the Company's securities. The agreement was
subsequently terminated.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and notes thereto, together with a report of
independent Certified Public Accountants thereon, are attached hereto and made a
part of this Form 10K. The applicable schedule and reports are included therein
and are located at the following pages in this report:

<TABLE>
<CAPTION>
THIS REPORT
PAGE NUMBER
-------------
<S> <C>
Reports of Independent Certified Public Accountants................... F-1 - F-2
Consolidated Balance Sheets -- June 30, 1996 and 1995................. F-4 - F-5
Consolidated Statements of Loss -- Years Ended June 30, 1996, 1995,
and 1994 and Cumulative amounts from Date of Inception to June 30,
1996................................................................ F-6
Statements of Changes in Stockholders' Equity (Deficit) for the Period
from the Date of Inception to June 30, 1996......................... F-7 - F-11
Consolidated Statements of Cash Flows -- Years Ended June 30, 1996,
1995, and 1994 and cumulative amounts from date of inception to June
30, 1996............................................................ F-12 - F-13
Notes to Consolidated Financial Statements............................ F-14 - F-32
Independent Certified Public Accountants' Reports on Financial
Statement Schedule.................................................. F-33 - F-34
Schedule II -- Valuation and Qualifying Accounts and Reserves......... F-35
</TABLE>

The financial statement schedules, other than those listed above, are
omitted for the reason that they are not required or are not applicable.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Change in Accountant

Effective September 20, 1996, the independent accounting firm of BDO
Seidman, LLP ("BDO"), previously engaged as the principal accountant to audit
the financial statements of the Company resigned. BDO informed the Company that
it believed it could no longer rely on management's representations due to the
following facts, which were discussed with the Company's Board of Directors:

1. BDO raised issues regarding amounts reported by the Company for
the quarters ended September 30, 1995, December 31, 1995, and March 31,
1996, relating to goodwill, stock compensation and disbursement items;

2. The Company failed to notify BDO of the Company's use of financial
statements audited by BDO as part of its private placement memorandums,
and;

3. The Company did not have the internal controls necessary to
develop reliable financial statements.

11
<PAGE> 12

BDO's reports on the consolidated financial statements for the fiscal years
ending June 30, 1994 and 1995 contained an explanatory paragraph as to the
Company's ability to continue as a going concern. The reports for both such
fiscal years also noted that the Company changed its method for accounting for
income taxes effective July 1, 1993. The report on the consolidated financial
statements for the fiscal year ended June 30, 1995 referenced a matter discussed
in Note 5 to the financial statements regarding a demand letter from the
purchaser of gold mine property alleging breaches in the terms of the sales
contract and seeking a reduction in the sales price and in the corresponding
amount due to the Company in the form of debentures.

Effective October 24, 1996, the Company's Board of Directors engaged the
independent accounting firm of Strabala, Ramirez and Associates ("Strabala") as
the principal accountant to audit the financial statements of the Company
through and as of June 30, 1996. Strabala agreed to audit the financial
statements of the Company based on the following facts:

1. The Company has initiated changes in the management structure and
internal control environment, including hiring a new CFO, establishing an
accounting department with segregation of duties, and reorganization of
management to take control away from officers and executives who were
primarily responsible for the presentation of financial information which
was one of several factors which lead to the resignation of BDO Seidman
LLP.

2. The Company has agreed to propose to its shareholders to take
action to expand the current Board of Directors from three (3) to five (5)
individuals, with two (2) of the new directors to be independent members of
the community, and to replace two of the existing directors, and;

3. The Company has agreed to amend the Forms 10-Q filed for the first
three quarters of fiscal 1996 to correct the misstatements contained
therein, and;

4. The Company has assured Strabala that it will obtain its consent
to use the audited financial statements of Strabala in future registration
statements and private placement memorandums.

BDO was authorized to fully respond to Strabala's inquiries concerning the
subject matter of each reportable event. BDO was authorized by the Board of
Directors to expand the scope of their audit as a result of such issues. Due to
BDO's resignation, however, BDO did not expand the scope of its audit.

12
<PAGE> 13

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The names, ages, business experience for the last five years and positions
of the directors and executive officers of the Company as of September 30, 1996
are set out below. The Company's Board of Directors consists of three members.
All directors serve until the next annual meeting of the Company's shareholders
or until their successors are elected and qualified. Officers are appointed by
the Board of Directors. There are no family relationships among these officers,
nor any arrangements or understandings between any officer and any other person
pursuant to which the officer is elected.

<TABLE>
<CAPTION>
NAME AND POSITION AGE BUSINESS EXPERIENCE
- ---------------------------- ---- --------------------------------------------------------
<S> <C> <C>
Greg Gilbert 55 Mr. Gilbert has been CEO of StarTronix and a Director
Chairman & CEO since April 15, 1994 and is also owner of Gilbert &
of StarTronix Intl. Associates, a financial investment and consulting firm
since 1971.
James Valle 37 Mr. Valle is a Certified Public Accountant who joined
Vice-President & the firm in late August 1996. Prior to joining
Chief Financial Officer StarTronix International Inc., he was Chief Operating
of StarTronix Intl. Officer and Chief Financial Officer of a national
internet server provider, and was Chief Financial
Officer of a multi-million dollar service and
manufacturing organization.
Gerald Fitch 63 Mr. Fitch joined the Company in May 1995 as COO and was
Chief Operating Officer elected a Director in August 1995. Prior to joining
of StarTronix Intl. StarTronix, he was Senior V.P. and Chief Financial
Officer for Astech/MCI during the period from 1992 to
1995 and was Chief Financial Officer for Jermar
Industries Inc. from 1984 to 1992.
Norman Shink 44 Mr. Shink joined the Company in March 1996 as President
President, StarTronix Inc. of StarTronix Inc. From 1990 through February 1996 Mr.
Shink was Executive Vice President for Applied
Electronics. Concurrently, Mr. Shink was Executive Vice
President of Quorum International, an Applied
Electronics related company. In September 1996, Quorum
International Applied Electronics filed a petition for
protection under Chapter 11 of the United States
Bankruptcy Code.
J. Michael Sellards 48 Mr. Sellards has been Executive Vice President of
Executive Vice President StarTronix Inc. a Director of the Company since 1994.
of StarTronix Inc., Mr. Sellards has worked for Mr. Gilbert for twenty years
Director providing a wide range of operating support.
Christopher Reid 40 Mr. Reid joined the Company in September 1996 as Senior
Senior Vice President Vice President, General Counsel of StarTronix Inc. From
General Counsel of 1992 through September 1996 Mr. Reid served as Vice
StarTronix Inc. and President and General counsel for Quorum International
Canadian General Manager Applied Electronics. Prior to that, he served as Vice
President of the Edper Group.
</TABLE>

13
<PAGE> 14

COMPLIANCE

Section 16 (a) of the Securities Exchange Act of 1934, and the regulations
thereunder, require the Company's directors, executive officers and persons who
own more than 10% of a registered class of the Company's equity securities to
file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company, and to furnish the Company with copies of all Section 16 (a)
forms they file. To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company, the following directors and
officers of the Company failed to file on a timely basis reports required by
section 16 (a) during the fiscal year ended June 30, 1996:

<TABLE>
<CAPTION>
NAME OF PERSON NUMBER OF LATE REPORTS
- ----------------------------------------------- -----------------------
<S> <C>
Greg Gilbert................................. three
J. Michael Sellards.......................... two
Norman Shink................................. two
Gerald Fitch................................. two
</TABLE>

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth information for
the last three fiscal years concerning compensation paid to the Company's Chief
Executive Officer and the four most highly compensated executive officers of the
Company. For services rendered to the Company during the fiscal years ended June
30, 1996, 1995 and 1994. No other Executive Officers compensation exceeded
$100,000 for such years.

<TABLE>
<CAPTION>
SECURITIES RESTRICTED
FISCAL UNDERLYING STOCK ALL OTHER
EXECUTIVE OFFICER YEAR SALARY BONUS OPTIONS AWARDS* COMPENSATION*
- -------------------------------------- ----- -------- ------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Greg Gilbert -- Chief Executive....... 1996 $164,650 $0
Officer & President(1) 1995 0 $0
1994 0 $0
James Valle(2)........................ 1996 $ 0 $0
Gerald Fitch(3)....................... 1996 $115,000 $0 $162,500(9)
1995 18,650 $0
Norman M. Shink(4).................... 1996 47,031 $0 100,000 $ 16,000(11)
J. Michael Sellards(5)................ 1996 $104,500 $0 130,000(10)
1995 15,000 $0
Christopher Reid(6)................... 1996 0 0
Michael F. LaFleur(7)................. 1994 $ 55,000 $0
John R. King(8)....................... 1994 $ 24,103 $0
</TABLE>

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

* The shares of Common Stock received by Fitch, Sellards and Shink are valued at
closing market bid price on date of grant. The stock issuances have not been
reduced in value, however; all shares issued are unregistered and subject to
rule 144 requiring a long-term holding period and the Registrant is a
development stage Company during fiscal year 1996.

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
NUMBER OF POTENTIAL REALIZABLE VALUE
UNDERLYING PERCENT TO EXERCISE MARKET ------------------------------------------
OPTIONS TOTAL OPTIONS PRICE PRICE AT EXPIRATION AT 0% AT 5% AT 10%
NAME GRANTED GRANTED PER SHARE DATE OF GRANT DATE APPRECIATION APPRECIATION APPRECIATION
- ------------------ --------- ------------- ---------- ------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Norman Shink...... 100,000 100% $1.50 $1.66 May 28, 1997 $16,000 $24,000 $32,600
</TABLE>

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

(1) Pursuant to a five year employment agreement, which expires on July 1,
2000, between the Company and Greg Gilbert, Mr. Gilbert is currently
entitled to an annual salary of $120,000. The agreement also provides that
Mr. Gilbert is entitled to a salary adjustment and eligible for a bonus on
a graduating scale

14
<PAGE> 15

based on the performance of the Company. Such salary adjustment and bonus
eligibility become effective when the company's net income exceeds
$1,000,000. In addition to salary and bonus, under the terms of his
employment agreement the company is required to provide Mr. Gilbert with
other benefits including automobile expense allowance, unallocable expense
allowance and health and dental insurance coverage. Pursuant to the
employment agreement, Mr. Gilbert is required to devote his full productive
time to the business of the Company, as reasonably directed by the Board of
Directors. If Mr. Gilbert is terminated by the Company under certain
circumstances, including a change in control of the Company, he will be
entitled to severance pay under the employment agreement of up to one year
of his then current salary and group health insurance. Mr. Gilbert's salary
was accrued but not paid in fiscal 1996 and he declined to take any salary
in fiscal 1995. During fiscal 1996, the Company granted performance
oriented options to Greg Gilbert as part of his employment agreement. Mr.
Gilbert may receive options based on 1% of pre-tax income according to a
pre-determined formula.

(2) Mr. Valle was hired in August 1996. Pursuant to a five year employment
agreement, which expires on August 15, 2001, between the Company and James
Valle, Mr. Valle is currently entitled to an annual base salary of
$120,000. The agreement also provides that Mr. Valle is entitled to a
salary adjustment and eligible for a bonus on a graduating scale based on
the performance of the Company. Such salary adjustment and bonus
eligibility become effective when the company's net income exceeds
$1,000,000. In addition to salary and bonus, under the terms of his
employment agreement the company is required to provide Mr. Valle with
other benefits including automobile expense allowance, unallocable expense
allowance, and health and dental insurance coverage. Under the terms of his
employment agreement, the Company is required to provide Mr. Valle with
other benefits consistent with those provided similarly situated employee.
As an incentive to join the Company, Mr. Valle was awarded a stock option
for 100,000 shares of Common Stock, vested immediately and exercisable for
up to 5 years. Mr. Valle is also a participant in the Company Executive
Stock Option Plan. Pursuant to the employment agreement, Mr. Valle is
required to devote his full productive time to the business of the Company,
as reasonably directed by the Board of Directors. If Mr. Valle is
terminated by the Company under certain circumstances, including a change
in control of the Company, he will be entitled to severance pay under the
employment agreement of one year of his then current salary plus adjustment
bonus and group health insurance. Mr. Valle will also be eligible for a
payment of at least $250,000 two years after separation of service,
provided he complies with certain confidentiality and non-competition terms
of his agreement.

(3) Pursuant to a five year employment agreement, which expires on September
30, 2000, between the Company and Gerald Fitch, Mr. Fitch is currently
entitled to an annual base salary of $120,000. Pursuant to the employment
agreement the Company also issued 250,000 shares of Common Stock to Mr.
Fitch. Such Common Stock is subject to repurchase by the Company upon the
terms set forth in the employment agreement. The agreement also provides
that Mr. Fitch is entitled to a salary adjustment and eligible for a bonus
on a graduating scale based on the performance of the Company. Such salary
adjustment and bonus eligibility become effective when the Company's net
income exceeds $1,000,000. In addition to salary and bonus, under the term
of his employment agreement the Company is required to provide Mr. Fitch
with other benefits including automobile expense allowance, and health and
dental insurance coverage. Pursuant to the employment agreement, Mr. Fitch
is required to devote his full productive time to the business of the
Company, as directed by the Board of Directors. If Mr. Fitch is terminated
by the Company under certain circumstances, including a change in control
of the Company, he may be entitled to severance pay under the employment
agreement of up to one year of his then current salary and group health
insurance coverage.

(4) Pursuant to a five year employment agreement, which expires on February 28,
2001, between the Company and Norman M. Shink, Mr. Shink is entitle to an
annual base salary of $144,000. The agreement also provides that Mr. Shink
is entitled to a salary adjustment and eligible for a bonus on a
graduating- scale based on the performance of the Company. In addition to
salary and bonus, under the terms of his employment agreement the Company
is required to provide Mr. Shink with other benefits including health and
dental insurance coverage. Mr. Shink was granted a stock option to purchase

15
<PAGE> 16

100,000 shares at an exercise price of $1.50 per share. Pursuant to the
employment agreement, Mr. Shink is required to devote his productive time
and best efforts to the business of the Company, as reasonable directed by
the Board of Directors. If Mr. Shink is terminated by the Company under
certain circumstances, he will entitle to severance pay under the
employment agreement of up to one half of his annual base salary.

(5) Pursuant to a five year employment agreement, which expires on June 1,
2001, between the Company and J. Michael Sellards, Mr. Sellards is entitle
to an annual base salary of $120,000. The agreement also provides that Mr.
Sellards is entitled to a salary adjustment and eligible for a bonus on a
graduating scale based on the performance of the Company. Such salary
adjustment and bonus eligibility become effective when the Company's net
income exceeds $1,500,000. In addition to salary and bonus, under the terms
of his employment agreement the Company is required to provide Mr. Sellards
with other benefits consistent with those provided to similarly situated
executives of the Company. Pursuant to the employment agreement, Mr.
Sellards is required to devoted his full productive time to the business of
the Company, as directed by the Board of Directors. If Mr. Sellard's
employment is terminated by him or the Company under certain circumstances,
including a change in control of the Company, he will be entitled to
severance pay under the employment agreement of up to one year of his then
current salary and group health insurance coverage; Mr. Sellards will also
be eligible for a payment after two years of at least $250,000 provided he
complies with certain confidentiality and non-competition terms of his
agreement.

(6) Pursuant to a five year agreement, which expires on September 5, 2001,
between the Company and Christopher A. Reid, Mr. Reid is currently entitled
to an annual base salary of $102,000. The agreement also provides that Mr.
Reid is entitled to a salary adjustment and eligible for a bonus on a
graduating scale based on the performance of the Company. Such salary
adjustment and bonus eligibility become effective when the Company's net
income exceeds $1,200,000. In addition to salary and bonus, under the terms
of his employment agreement, the Company is required to provide Mr. Reid
with other benefits including a leased automobile, a travel and lodging
expense allowance, certain office equipment for a home office, legal
membership fees, and health and dental insurance coverage. Mr. Reid is also
a participant in the Company Executive Stock Option Plan. Pursuant to the
employment agreement, Mr. Reid is required to devote his full productive
time to the business of the Company, as reasonably directed by the Board of
Directors. If Mr. Reid is terminated by the Company under certain
circumstances, including a change in control of the Company he will be
entitled to severance pay under the employment agreement based on length of
employment from a minimum of six months to maximum of one year of his then
current salary plus group health insurance. Mr. Reid is also eligible for a
payment; the lesser of $250,000 or 2% of the average net income amount
before tax for twelve month periods, however, in no event less than
$100,000, provided he complies with certain confidentiality and
non-competition terms of his agreement.

(7) Mr. LaFleur resigned as Chief Executive Officer and Director effective
August 13, 1993. Pursuant to a termination agreement with the Company, Mr.
LaFleur was paid $55,000. Pursuant to the termination agreement, the
Company also canceled outstanding options for the purchase of 1,000,000
shares of common stock and stock appreciation rights with respect to an
additional 1,000,000 shares of common stock.

(8) The Company was a party to an employment agreement with Mr. King providing
for his employment as President of the Company for a period of three years,
or until April 10, 1993. The employment agreement provided for base
salaries of $50,000, $75,000 and $100,000 in each of the three years of Mr.
King's employment, and also provided for the grant of options for the
purchase of 500,000 shares of common stock of the Company. Mr. King was
terminated as President in January, 1994. As a result of his termination
all outstanding stock options were also terminated. As of June 30, 1995,
Mr. King claimed he was owed unspecified amounts in compensation, attorney
fees and damages pursuant to the employment agreement for the years ended
June 30, 1993 and 1992. A lawsuit was filed in District Court, County of
Douglas, State of Colorado on March 25, 1994 and was settled by an
arbitration

16
<PAGE> 17

agreement dated May 22, 1996 in favor of Mr. King. As a result, the Company
has expended an amount in fiscal 1996 of $103,882 as final settlement.

(9) On October 23, 1995 250,000 shares of common stock were awarded to Mr.
Fitch, and such shares are subject to repurchase pursuant to the terms of
his employment agreement. No other restricted stock awards of the Company
are outstanding. Such restricted stock will be treated the same as all
other common stock for the purpose of the payment of dividends, although no
such dividends are expected to be paid.

(10) On October 23, 1995, 200,000 shares of common stock were awarded to Mr.
Sellards.

(11) Norman Shink's other Compensation includes $16,000 income related to a
grant of options to purchase common stock below fair market value at the
grant date.

Options Granted in Current Year. All stock options were canceled in
January 1994 and none were granted or exercised during the years ended June 30,
1996 and June 30, 1995.

Employment Agreements. At June 30, 1996 the Company has employment
agreements with several key executives as discussed in Item 11, Executive
Compensation. As of June 30, 1995, the Company had an outstanding employment
agreement with the President of its subsidiary, GlobalTelCom. The agreement was
terminated on November 30, 1995.

Directors Compensation. The Company discontinued awarding directors fees
during fiscal 1995. Directors fees of $10,000, each, were awarded to directors
Robert E. Sterling, James F. O'Connell and Richard J. Davis for the year ended
June 30, 1994.

Description of Incentive Stock Option and Employee Stock Ownership
Plan. The Company maintained an incentive stock option plan, the 1987 Incentive
Stock Option Plan for Employees (the "1987 Plan"), through June 30, 1994. The
plan has since been terminated. Under the terms of Mr. Gilbert's employment
contract, no options were earned or granted for the year ending June 30, 1996.

Chief Executive Officer's Compensation. The Board of Directors initiated
an employment agreement with Greg Gilbert, Chairman and CEO of StarTronix
International Inc. for a base salary of $120,000 per year for five years
beginning July 1995 (see Item 11, Executive Compensation for details of
employment agreement). Salary and bonuses under this agreement are subject to
increases based on a formula using pre-tax income targets. Mr. Gilbert's salary
was accrued but not paid for fiscal 1996. No employment agreement existed in
previous years and Gilbert declined to take a salary for those periods.

The day-to-day business and affairs of the Company were managed by Robert
E. Sterling, the former President and Director of the Company, until Mr. Gilbert
took over during fiscal 1994.

17
<PAGE> 18

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)(b) The following table sets forth as of September 30, 1996, the
outstanding common stock of the Company owned beneficially by each person who
owned more than 5 percent of the Company's common stock, and the name and share
holdings of each officer and Director and of all officers and Directors as a
group:

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND BENEFICIAL PERCENTAGE
ADDRESS OF OWNER OWNERSHIP OF CLASS
------------------------------------------------ ---------- ----------
<S> <C> <C>
Greg Gilbert.................................... 2,800,000(2) 14.69%
2402 Michelson Drive,
Suite 160
Irvine, Ca. 92715
Amwest Environmental Group Inc.................. 1,500,000 7.87%
10701 Los Alamitos Blvd.,
3rd Floor
Los Alamitos, CA 90720
Richard A. Scruggs.............................. 852,650 4.47%
c/o Phoenix Environmental Services, Inc.
4158 US Highway 78
Lilburn, GA 30244
J. Michael Sellards............................. 200,000 1.05%
2402 Michelson #160
Irvine, CA 92612-1314
Gerald Fitch.................................... 250,000 1.31%
2402 Michelson #160
Irvine, CA 92612-1314
Norman Shink.................................... 250,000(3) 1.31%
2402 Michelson #160
Irvine, CA 92612-1314
James Valle..................................... 100,000(3) .52%
2402 Michelson #160
Irvine, CA 92612-1314
--------- -----
TOTAL................................. 5,952,650(1) 31.22%
All officers and directors as a group
(5 individuals)............................... 3,600,000 18.88%
========= =====
</TABLE>

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

(1) Does not include shares held in the names of CEDE & Co., KRAY & Co., and
other brokerage clearinghouses.

(2) Mr. Greg Gilbert held options from four stockholders of StarTronix
International which granted him the right to purchase up to 931,742 shares
of StarTronix International common stock currently held by these
stockholders, at $3.38 per share. These option agreements were not exercised
and expired in April 1996.

(3) Includes 100,000 shares of common stock options awarded by the Company and
unexercised by both Mr. Shink and Mr. Valle.

PART IV

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On June 28, 1996, the Company reached a Settlement Agreement with Alta Gold
Company whereby the companies agreed to the following: StarTronix surrendered to
Alta Gold the 1996 and 1998 Debentures with a value of $3,000,000 in return for
400,000 shares of Alta Gold common stock and warrants to purchase up to 400,000
shares of Alta Gold common stock. The original Zero Coupon Debenture and
Provisional Copper

18
<PAGE> 19

Production Royalty Agreement dated June 14, 1994 between Alta Gold and
StarTronix shall remain in full effect. StarTronix assigned its rights to the
stock and warrants of Alta Gold to N.A. Degerstrom in exchange for the release
of secured and unsecured debt of $2,782,265. The Company incurred a loss of
$234,065 in the liquidation of the Degerstrom debt. As of June 30, 1995, the
Company had two notes payable of $2,782,265 due to N. A. Degerstrom, Inc., a
principal shareholder of the Company. (See also notes 7 and 8 to the
Consolidated Financial Statements filed as part of this report.)

On May 9, 1995, Phoenix Environmental Services Inc., agreed to loan the
Company $400,000 in the form of two promissory notes to secure the Company's
obligation to pay the notes, Greg Gilbert has pledged or caused to be pledged
1,000,000 shares of common stock of the Company. In connection with this
transaction, the Company issued to Mr. Gilbert options to purchase 1,000,000
shares of Common Stock at a price of $0.50 per share which become exercisable
upon the payment of or default under the notes. Mr. Richard A. Scruggs is the
President of Phoenix Environmental Services Inc.

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8K AND
FORM S-8

(a) Documents Filed as a Part of this Report

(i) Financial Statements. Reference is made to Item 8 under Part II
of this Report.

(ii) Financial Statement Schedules. Reference is made to Item 8 under
Part II of the Report.

(iii) Exhibits:

<TABLE>
<S> <C>
3.1* Articles of Incorporation and Articles as amended
3.2 By-laws as amended and restated
4.1 Stock Options -- Norman Shink
4.2 Warrants to D.J. Limited
4.3 Warrants to Stock Works USA, Inc.
4.4 Certificate of Determination for Series "B" Preferred Stock
4.5 Certificate of Determination for Series "C" Preferred Stock
10.1* Employment Agreement of John King dated April 23, 1990
10.1(a) Employment Agreement of Greg Gilbert dated July 1, 1995
10.1(b) Employment Agreement of Gerald Fitch dated October 1, 1995
10.1(c) Employment Agreement of Norman Shink dated March 1, 1996
10.1(d) Employment Agreement of J. Michael Sellards dated June 1, 1996
10.1(e) Employment Agreement of James Valle dated August 15, 1996
10.1(f) Employment Agreement of Christopher Reid dated September 5, 1996
10.2* 1987 Incentive Stock Option Plan
10.3* Royalty Agreement
10.4* Copper Flat Sales Agreement
10.5 Golden Source Electronics Ltd.
10.6 Settlement agreement and Release John R. King
10.7 Alta Gold Co. Settlement Agreement
11 Statement re-computation of per share earnings
18* Letter Regarding Change in Accounting Principles
21 Subsidiaries of the Registrant
27 Financial Data Schedule
</TABLE>

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

* Incorporated by reference from EXHIBIT of the same number to the Registrant's
Annual Report on Form 10-K for the period ended June 30, 1993

19
<PAGE> 20

(b) Reports on Form 8-K and Form S-8.

Form 8-K, dated September 19, 1995 and filed with the Commission on
September 26, 1995 reporting on termination of the proposed plan of merger with
Phoenix Environmental Services Inc. and item 1, change of State of
incorporation. The report included material utilized in connection with the
shareholders meeting to be held on September 30, 1995.

Form S-8, dated December 6, 1995 and filed with the Commission on December
14, 1995 pertaining to a Share Agreement between US Corporate Development Group,
Inc. and StarTronix International Inc. pursuant to which the Company will issue
500,000 shares of the Company's common stock in consideration of certain
consulting services rendered and to be rendered by USCDG to the Company.

Form 8-K, dated September 20,1996 and filed with the Commission on
September 27, 1996 reporting on the resignation of BDO Seidman LLP as the
Company's independent auditors.

Form 8-K/A, dated September 20, 1996 and filed with the Commission on
October 4, 1996 reporting on BDO Seidman's agreement on content of the Company's
Form 8-K dated September 20, 1996.

Form 8-K, dated October 24, 1996 and filed with the Commission on October
29, 1996 reporting on the appointment of Strabala Ramirez & Associates as the
Company's independent auditors.

Form 8-K, dated October 25, 1996 and filed with the Commission on November
7, 1996 reporting on the suspension of the conversion of the Company's Series
"C" Convertible Preferred Stock.

20
<PAGE> 21

PART V

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

STARTRONIX INTERNATIONAL INC.
(Registrant)

By: /s/ GREG GILBERT
--------------------------------------
Greg Gilbert, Chairman & CEO

Date: 12/11/96

By: /s/ JAMES VALLE
--------------------------------------
James Valle, Chief Financial Officer

Date: 12/11/96

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

By: /s/ GREG GILBERT
--------------------------------------
Greg Gilbert, Chairman & CEO

Date: 12/11/96

By: /s/ J. MICHAEL SELLARDS
--------------------------------------
J. Michael Sellards, Director

Date: 12/11/96

By: /s/ GERALD FITCH
--------------------------------------
Gerald Fitch, Director

Date: 12/11/96

21
<PAGE> 22

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS AS OF
JUNE 30, 1996 AND 1995 AND THE
PERIOD FROM INCEPTION
(SEPTEMBER 16, 1983) THROUGH JUNE 30, 1996
<PAGE> 23

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
Reports of Independent Certified Public Accountants............................. F-1 - F-2
Consolidated Balance Sheets..................................................... F-4 - F-5
Consolidated Statements of Loss................................................. F-6
Consolidated Statements of Changes in Stockholders' Equity (Deficit)............ F-7 - F-11
Consolidated Statements of Cash Flows........................................... F-12 - F-13
Notes to Consolidated Financial Statements...................................... F-14 - F-32
Reports of Independent Certified Public Accountants on Financial Statement
Schedule...................................................................... F-33 - F-34
Schedule II -- Valuation and Qualifying Accounts and Reserves for the Years
Ended June 30, 1996, 1995, and 1994........................................... F-35
</TABLE>
<PAGE> 24

INDEPENDENT ACCOUNTANTS' REPORT

The Board of Directors
StarTronix International Inc.
Irvine, California

We have audited the accompanying consolidated balance sheets of StarTronix
International Inc. (formerly known as Gold Express Communications, Inc. and Gold
Express Corporation) and Subsidiaries, (a development stage company) as of June
30, 1996, and the related consolidated statements of loss, changes in
stockholders' equity (deficit) and cash flows for the year then ended, and the
period from the date of inception (September 16, 1983) through June 30, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit. We did not audit the consolidated financial statements of
StarTronix International Inc. and Subsidiaries for each of the six years in the
period ended June 30, 1995 and the period from inception (September 16, 1983) to
June 30, 1995. Those statements were audited by other auditors whose reports
have been furnished to us, and our opinion, insofar as it relates to the amounts
for those periods included in the statements of loss, changes in stockholders'
equity (deficit) and cash flows for the period from date of inception (September
16, 1983) to June 30, 1995, is based solely on the report of the other auditors.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of StarTronix
International Inc. and Subsidiaries as of June 30, 1996, and the results of
their operations and their cash flows for (1), the year then ended, and (2),
based on our audit and the report of the other auditors, the period from the
date of inception (September 16, 1983) through June 30, 1996 in conformity with
generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has been in the development stage
since its inception, has generated limited operating revenues to date, and has
incurred losses since inception. These conditions raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

STRABALA RAMIREZ & ASSOCIATES

December 6, 1996, except for Note 2 and the
third paragraph of Note 18 which are
as of December 11 and 12, 1996, respectively
Irvine, California

F-1
<PAGE> 25

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
StarTronix International Inc.
Irvine, California

We have audited the accompanying consolidated balance sheet of StarTronix
International Inc. (formerly known as Gold Express Communications, Inc. and Gold
Express Corporation) (a development stage company) and subsidiaries as of June
30, 1995, and the related consolidated statements of loss, stockholders' equity
(deficit) and cash flows for each of the two years in the period ended June 30,
1995, and for the period from the date of inception (September 16, 1983) through
June 30, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the consolidated
financial statements of StarTronix International Inc. for each of the six years
in the period ended June 30, 1989 and the period from inception (September 16,
1983) to June 30, 1989. Those statements were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the
amounts for those periods included in the consolidated balance sheet and related
statements of loss, changes in stockholders' equity (deficit) and cash flows for
the period from date of inception (September 16, 1983) to June 30, 1989, is
based solely on the report of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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.

As discussed in Note 5 to the consolidated financial statements, the
Company has received a demand letter from the purchaser of a gold mine property
sold during the year ended June 30, 1994. The purchaser alleges the Company
breached certain aspects of the sales contract and is seeking to reduce the
sales price and the corresponding amount due to the Company in the form of
subordinated debentures.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of StarTronix
International Inc. and subsidiaries at June 30, 1995, and the consolidated
results of their operations and their cash flows for (1) each of the two years
in the period ended June 30, 1995, and (2) based on our audits and the report of
the other auditors, the period from the date of inception (September 16, 1983)
through June 30, 1995, in conformity with generally accepted accounting
principles.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
2 to the consolidated financial statements, the Company is in the development
stage and has generated limited operating revenues to date and has incurred
losses since inception. These conditions raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

As discussed in Note 9 to the financial statements, effective July 1, 1993,
the Company changed its method of accounting for income taxes.

BDO Seidman, LLP

Costa Mesa, California
August 17, 1995

F-2
<PAGE> 26

(This page intentionally left blank)

F-3
<PAGE> 27

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND 1995

ASSETS

<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Current Assets:
Cash................................................................ $ 2,355 $ 6,150
Accounts receivable, net of allowance for doubtful accounts of
$337,493 (Note 19)............................................... 1,628 15,187
Inventory........................................................... 84,533 --
Subordinated debenture receivable (Note 5).......................... -- 1,500,000
Interest receivable................................................. -- 45,000
Prepaid expenses and other.......................................... 490,214 5,786
---------- ----------
Total current assets............................................. 578,730 1,572,123
---------- ----------
Property and Equipment, less accumulated depreciation (Note 4)........ 376,052 63,071
---------- ----------
Other Assets:
Prepaid production costs (Note 1)................................... 300,000 300,000
Goodwill, net of accumulated amortization (Note 3).................. -- 475,911
Investments (Note 6)................................................ 900,000 150,000
Other............................................................... 12,855 5,986
Subordinated debentures receivable (Note 5)......................... 1,427,750 2,809,862
---------- ----------
Total other assets............................................... 2,640,605 3,741,759
---------- ----------
$3,595,387 $5,376,953
========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements

F-4
<PAGE> 28

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND 1995

LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
1996 1995
------------ ----------
<S> <C> <C>
Current Liabilities:
Accounts payable -- trade....................................... $ 443,292 $ 202,022
Due to related parties (Note 7)................................. -- 20,995
Accrued professional fees....................................... 265,900 220,000
Accrued expenses................................................ 735,607 343,502
Accrued interest................................................ 27,500 42,655
Notes payable (Note 8).......................................... 400,000 400,000
Current maturities of notes payable to related parties.......... -- 4,006
Deferred revenue................................................ -- 31,500
------------ ----------
Total current liabilities............................... 1,872,299 1,264,680
Notes payable to related parties, less current maturities (Note
8).............................................................. -- 2,782,265
------------ ----------
Total liabilities....................................... 1,872,299 4,046,945
------------ ----------
Commitments and Contingencies (Note 17)........................... -- --
Stockholders' Equity
Preferred Stock, $.01 par value, 10,000,000 authorized (Note
10):
Series "B" Convertible Preferred Stock, $.01 par value,
90,000 shares issued and outstanding....................... 900 --
Series "C" Convertible Preferred Stock, $.01 par value,
15,000 shares issued and outstanding....................... 150 --
Common stock, $.001 par value, of authorized: 50,000,000;
outstanding: 15,475,277 and 8,864,282........................ 15,475 8,864
Additional paid-in capital...................................... 15,553,068 7,979,501
Unrealized holding gains (losses), net (Note 6)................. (1,166,250) --
Deficit accumulated during the development stage................ (12,680,255) (6,658,357)
------------ ----------
Total stockholders' equity.............................. 1,723,088 1,330,008
------------ ----------
$ 3,595,387 $5,376,953
============ ==========
</TABLE>

The accompanying notes are an integral part of these
consolidated financial statements

F-5
<PAGE> 29

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF LOSS

<TABLE>
<CAPTION>
CUMULATIVE
AMOUNTS FROM YEAR ENDED JUNE 30,
DATE OF INCEPTION ------------------------------------------
TO JUNE 30, 1996 1996 1995 1994
----------------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Sales.............................. $ 916,276 $ 97,654 $ 818,622 $ --
------------ ----------- ----------- ----------
Operating Expenses:
Cost of sales.................... 801,996 95,417 706,579 --
Exploration expense.............. 894,627 -- -- --
Royalty expense.................. 593,193 -- -- --
Write down of abandoned
properties.................... 543,479 -- -- --
Equipment rental and costs....... 172,805 -- -- --
Depreciation and amortization.... 151,599 27,321 28,129 1,200
Write down of impaired asset
(Note 5 & 6).................. 1,803,961 655,911 350,000 35,213
Selling, general and
administrative................ 8,272,663 5,105,925 1,463,035 391,356
------------ ----------- ----------- ----------
Total operating
expenses............... 13,234,323 5,884,574 2,547,743 427,769
------------ ----------- ----------- ----------
Other (Income) Expense:
Interest income.................. (914,042) (297,887) (301,137) --
Interest expense................. 702,424 194,918 174,592 233,900
Litigation settlement............ 203,882 103,882 -- --
Loss on liquidation of debt
(Note 5)...................... 234,065 234,065 -- --
Equity in net loss of investee... 53,307 -- -- --
Realized loss from short-term
investments................... 28,492 -- -- --
Net loss on dispositions of
property and equipment........ 14,376 -- -- --
Gain on sale of property (Note
5)............................ (182,739) -- -- (182,739)
Loss on disposal of investment in
affiliate..................... 403,693 -- -- --
------------ ----------- ----------- ----------
Total other (income)
expense................ 543,458 234,978 (126,545) 51,161
------------ ----------- ----------- ----------
Loss Before Cumulative Effect of
Change in Accounting Principle... (12,861,505) (6,021,898) (1,602,576) (478,930)
Cumulative Effect of Change in
Accounting Principle (Note 15)... 181,250 -- -- --
------------ ----------- ----------- ----------
Net Loss........................... $(12,680,255) $(6,021,898) $(1,602,576) $ (478,930)
============ =========== =========== ==========
Net Loss Per Share............... $ (0.48) $ (0.22) $ (0.12)
=========== =========== ==========
Weighted Average Shares
Outstanding................... 12,629,279 7,451,016 4,140,876
=========== =========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements

F-6
<PAGE> 30

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM THE DATE OF INCEPTION
(SEPTEMBER 16, 1983) TO JUNE 30, 1996

<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
-------------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
---------- ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Eagle Claw Mining Company, Inc.
activity:
Issuance of common stock for:
Cash ($.80 per share)..... 625 $ 1 $ 499 $ -- $ 500
Satisfaction of
stockholder advances
($.80 per share)........ 127,830 128 102,762 -- 102,890
Acquisition of mining
leases from an officer
and director ($.80 per
share).................. 55,921 56 44,954 -- 45,010
Net loss for the period from
the date of inception
(September 16, 1983) to
June 30, 1984............. -- -- -- (96,957) (96,957)
--------- ------ ---------- ----------- -----------
Balance at June 30, 1984....... 184,376 185 148,215 (96,957) 51,443
Gold Express Corporation
activity:
Issuance of common stock
for cash ($.59 per
share).................. 303,346 303 177,198 -- 177,501
Net loss for the year........ -- -- -- (254,468) (254,468)
--------- ------ ---------- ----------- -----------
Balance at June 30, 1985....... 487,722 488 325,413 (351,425) (25,524)
Issuance of common stock for
cash, net of issuance
costs ($4.18 per share)... 511,634 512 2,137,946 -- 2,138,458
Net loss for the year........ -- -- -- (189,591) (189,591)
--------- ------ ---------- ----------- -----------
Balance at June 30, 1986....... 999,356 1,000 2,463,359 (541,016) 1,923,343
Issuance costs relating to
common stock offering..... -- -- (12,068) -- (12,068)
Issuance of common stocks
for:
Acquisition of investment
($3.00 per share)....... 110,000 110 329,890 -- 330,000
Compensation to certain
stockholders ($3.50 per
share)(Note 7).......... 33,000 33 115,467 -- 115,500
Acquisition of mining lease
($3.50 per share)......... 20,000 20 69,980 -- 70,000
Net loss for the year.......... -- -- -- (517,233) (517,233)
--------- ------ ---------- ----------- -----------
Balance at June 30, 1987....... 1,162,356 $1,163 $2,966,628 $(1,058,249) $ 1,909,542
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements

F-7
<PAGE> 31

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT) -- (CONTINUED)
FOR THE PERIOD FROM THE DATE OF INCEPTION
(SEPTEMBER 16, 1983) TO JUNE 30, 1996

<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
--------- ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Issuance of common stock for:
Satisfaction of long-term
debt ($1.90 per share).. 20,000 $ 20 $ 38,192 $ -- $ 38,212
Acquisition of investment
($1.78 per share)
(Note 6)................ 73,412 73 130,927 -- 131,000
Net loss for the year........ -- -- -- (268,480) (268,480)
--------- ------ ---------- ----------- -----------
Balance at June 30, 1988....... 1,255,768 1,256 3,135,747 (1,326,729) 1,810,274
Issuance of common stock for:
Acquisition of interest in
joint venture ($3.00 per
share)(Note 5).......... 20,834 21 62,479 -- 62,500
Compensation to directors
(45,000 shares at $2.40 and
15,000 shares at $1.60)
(Note 7)..................... 60,000 60 131,190 -- 131,250
Net loss for the year.......... -- -- -- (616,976) (616,976)
--------- ------ ---------- ----------- -----------
Balance at June 30, 1989....... 1,336,602 1,337 3,329,416 (1,943,705) 1,387,048
Issuance of common stock for:
Purchase of Manhattan
($1.20 per share)....... 10,000 10 11,990 -- 12,000
Purchase of Copper Flat
($1.55 per share)
(Note 5)................ 240,000 240 394,560 -- 394,800
Prepaid financing costs
and issue discount on
notes payable to related
parties ($1.65 per share) 157,500 157 260,731 -- 260,888
Net loss for the year.......... -- -- -- (345,383) (345,383)
--------- ------ ---------- ----------- -----------
Balance at June 30, 1990....... 1,744,102 $1,744 $3,996,697 $(2,289,088) $ 1,709,353
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements

F-8
<PAGE> 32

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT) -- (CONTINUED)
FOR THE PERIOD FROM THE DATE OF INCEPTION
(SEPTEMBER 16, 1983) TO JUNE 30, 1996

<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
--------- ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Issuance of common stock for:
Development of Copper Flat
($2.31 per share)
(Note 5)................ 183,862 $ 184 $ 424,668 $ -- $ 424,852
Cash ($2.00 per share).... 500,000 500 999,500 -- 1,000,000
Purchase of Rimini ($1.82
per share).............. 106,746 107 193,885 -- 193,992
Promotion ($1.66 per
share).................. 16,000 16 26,534 -- 26,550
Directors fees ($2.03 per
share)(Note 7).......... 47,500 47 96,437 -- 96,484
Net loss for the year........ -- -- -- (1,414,085) (1,414,085)
--------- ------ ---------- ----------- -----------
Balance at June 30, 1991....... 2,598,210 2,598 5,737,721 (3,703,173) 2,037,146
Issuance of common stock for:
Directors' fees ($1.56 per
share).................. 25,000 25 39,037 -- 39,062
Note extension ($1.88 per
share).................. 50,000 50 93,700 -- 93,750
Net loss for the year........ -- -- -- (18,153) (18,153)
--------- ------ ---------- ----------- -----------
Balance at June 30, 1992....... 2,673,210 2,673 5,870,458 (3,721,326) 2,151,805
Issuance of common stock for:
Director's fees ($1.24 per
share).................. 25,000 25 31,225 -- 31,250
Copper Flat project fees
($1.24 per share)....... 11,000 11 13,739 -- 13,750
Satisfaction of amounts
due to related parties
($.70 per share)........ 975,000 975 681,525 -- 682,500
Retirement of common stock... (10,000) (10) 10 -- --
Net loss for the year.......... -- -- -- (855,525) (855,525)
--------- ------ ---------- ----------- -----------
Balance at June 30, 1993....... 3,674,210 3,674 6,596,957 (4,576,851) 2,023,780
Issuance of common stock for
business combination
($.005 per share)
(Note 3).................. 2,800,000 2,800 12,200 -- 15,000
Net loss for the year........ -- -- -- (478,930) (478,930)
--------- ------ ---------- ----------- -----------
Balance at June 30, 1994....... 6,474,210 $6,474 $6,609,157 $(5,055,781) $ 1,559,850
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements

F-9
<PAGE> 33

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT) -- (CONTINUED)
FOR THE PERIOD FROM THE DATE OF INCEPTION
(SEPTEMBER 16, 1983) TO JUNE 30, 1996

<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
--------- ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
StarTronix International Inc.
activity:
Issuance of common stock for:
Infomercial Production
($.60 per share)
(Note 1)................ 500,000 $ 500 $ 299,500 $ -- $ 300,000
Financial marketing
services ($.50 per
share)(Note 7).......... 500,000 500 249,500 -- 250,000
Acquisition of Global
TelCom ($.49 per share)
(Note 3)................ 500,000 500 243,250 -- 243,750
Issue stock to Global
TelCom note holders
($1.00 per share)....... 102,650 103 102,547 -- 102,650
Directors fees, advances
and other ($.87 per
share).................. 87,422 87 76,247 -- 76,334
Investment in unrelated
party ($.75 per share)
(Note 6)................ 200,000 200 149,800 -- 150,000
Stock for working capital
($.50 per share)........ 500,000 500 249,500 -- 250,000
Net loss for the year........ -- -- -- (1,602,576) (1,602,576)
--------- ------ ---------- ----------- -----------
Balance at June 30, 1995....... 8,864,282 $8,864 $7,979,501 $(6,658,357) $ 1,330,008
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements

F-10
<PAGE> 34

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT) -- (CONTINUED)
FOR THE PERIOD FROM THE DATE OF INCEPTION
(SEPTEMBER 16, 1983) TO JUNE 30, 1996
<TABLE>
<CAPTION>
CLASS "B" CLASS "C"
COMMON STOCK PREFERRED PREFERRED ADDITIONAL UNREALIZED
--------------------- STOCK STOCK PAID-IN HOLDING
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL GAINS(LOSSES)
---------- ------- ---------- ------ ---------- ------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1995....... 8,864,282 $ 8,864 -- $ -- -- $ -- $ 7,979,501 $ --
Issuance of common stock for:
Payment of services
($1.25 per share)(Note
7)......................... 1,100,000 1,100 -- -- -- -- 1,373,900
Payment of services
($.50 per share)(Note 7)... 790,000 790 -- -- -- -- 399,210
Payment of services
($1.00 per share)(Note
7)......................... 600,000 600 -- -- -- -- 599,400
Payment of services
($1.50 per share)(Note
7)......................... 500,000 500 -- -- -- -- 749,500
Conversion of stock warrants
($1.00 per share)(Note
7)......................... 500,000 500 -- -- -- -- 499,500
Conversion of stock warrants
($1.50 per share)(Note
7)......................... 1,000,000 1,000 -- -- -- -- 499,000
Conversion of stock warrants
($.80 per share)(Note 7)... 500,000 500 -- -- -- -- 399,500
Acquisition of 1,500,000
shares of AmWest
Environmental Group (Note
6)......................... 1,500,000 1,500 -- -- -- -- 2,064,750
Repayment of debt ($.33 per
share)(Note 7)............. 100,000 100 -- -- -- -- 32,900
Repayment of debt ($1.00 per
share)(Note 7)............. 20,995 21 -- -- -- -- 20,974
Convertible preferred stock
for working capital ($10.00
per share, net of issue
costs) (Note 10)........... -- -- 90,000 900 15,000 150 934,933
Net loss....................... -- -- -- -- -- -- --
Unrealized holding loss (SFAS
115) on 1,500,000 shares of
AmWest Environmental Group
(Note 6)..................... -- -- -- -- -- -- -- (1,166,250)
---------- ------- -------- ----- -------- ----- ----------- -----------
Balance at June 30, 1996....... 15,475,277 $15,475 90,000 $900 15,000 $150 $15,553,068 $(1,166,250)
========== ======= ======== ===== ======== ===== =========== ===========

<CAPTION>
DEFICIT
ACCUMULATED
DURING THE
DEVELOPMENT
STAGE TOTAL
------------ -----------
<S> <<C> <C>
Balance at June 30, 1995....... $ (6,658,357) $ 1,330,008
Issuance of common stock for:
Payment of services
($1.25 per share)(Note
7)......................... -- 1,375,000
Payment of services
($.50 per share)(Note 7)... -- 400,000
Payment of services
($1.00 per share)(Note
7)......................... -- 600,000
Payment of services
($1.50 per share)(Note
7)......................... -- 750,000
Conversion of stock warrants
($1.00 per share)(Note
7)......................... -- 500,000
Conversion of stock warrants
($1.50 per share)(Note
7)......................... -- 500,000
Conversion of stock warrants
($.80 per share)(Note 7)... -- 400,000
Acquisition of 1,500,000
shares of AmWest
Environmental Group (Note
6)......................... -- 2,066,250
Repayment of debt ($.33 per
share)(Note 7)............. -- 33,000
Repayment of debt ($1.00 per
share)(Note 7)............. -- 20,995
Convertible preferred stock
for working capital ($10.00
per share, net of issue
costs) (Note 10)........... -- 935,983
Net loss....................... (6,021,898) (6,021,898)
Unrealized holding loss (SFAS
115) on 1,500,000 shares of
AmWest Environmental Group
(Note 6)..................... (1,166,250)
------------ -----------
Balance at June 30, 1996....... $(12,680,255) $ 1,723,088
============ ===========
</TABLE>

The accompanying notes are an integral part of these
consolidated financial statements

F-11
<PAGE> 35

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
CUMULATIVE
AMOUNTS FROM
DATE OF
INCEPTION TO YEAR ENDED JUNE 30,
JUNE 30, -------------------------------------
1996 1996 1995 1994
------------ ----------- ----------- ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................. $(12,680,255) $(6,021,898) $(1,602,576) $(478,930)
Adjustments to reconcile net loss to net
cash used in operating activities:
Loss on liquidation of debt............... 234,066 234,066 -- --
Write off of goodwill..................... 475,911 475,911 -- --
Write off of abandoned properties......... 513,459 -- -- --
Write down of impaired asset.............. 1,328,050 180,000 350,000 35,213
Loss on forgiveness of note receivable.... 30,360 -- -- --
Purchase of inventory..................... (84,533) (84,533) -- --
Issuance of common stock for compensation
to directors........................... 489,880 -- 76,334 --
Issuance of common stock for payment of
debt................................... 53,995 53,995 -- --
Issuance of common stock for fees and
services............................... 3,376,875 3,125,000 250,000 --
Issuance of common stock for stock
issuance costs......................... (12,068) -- -- --
Amortization of prepaid mining leases..... 138,310 -- -- --
Depreciation and amortization............. 151,599 27,321 28,129 1,200
Realized loss from short-term
investments............................ 28,492 -- -- --
Net (gain) loss on disposal of equipment,
mining lease and investment in
affiliate.............................. 235,330 -- -- (182,739)
Equity in net loss of investee............ 53,307 -- -- --
Write-off of deferred stock offering
costs.................................. 60,873 -- -- --
Accretion of zero coupon bond discount.... (230,764) (117,888) (112,876) --
Interest receivable, debenture bonds...... (45,000) -- (45,000) --
Change in accounts receivable and
prepaids............................... (390,565) (470,869) (20,973) --
Change in accounts payable and due to
related parties........................ 804,876 220,275 22,287 157,569
Change in deferred revenue................ -- (31,500) 31,500 --
Change in accrued expenses and other
liabilities............................ 1,066,260 447,514 419,117 (31,147)
------------ ----------- ----------- ---------
Net cash used in operating
activities........................... (4,401,542) (1,962,606) (604,058) (498,834)
------------ ----------- ----------- ---------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements

F-12
<PAGE> 36

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
CUMULATIVE
AMOUNTS FROM
DATE OF YEAR ENDED JUNE 30,
INCEPTION TO ----------------------------------
JUNE 30, 1996 1996 1995 1994
------------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Cash flows from investing activities:
Proceeds from disposal of equipment and mining
leases..................................... 1,453,811 -- -- 1,401,000
Funds advanced under notes receivable......... (939,000) -- -- --
Payment received on notes receivable.......... 917,278 -- -- --
Issuance of common stock to effect business
combination................................ 15,000 -- -- 15,000
Purchase of equipment......................... (468,703) (340,302) (65,552) --
Proceeds from sale of short term investment... 9,008 -- -- --
Purchase of short-term investment............. (37,500) -- -- --
Investments in mineral properties and
development................................ (4,513,763) -- -- (320,759)
Investment in Joint Venture................... (30,000) (30,000) -- --
Payment for deposits to vendors............... (12,855) (6,869) (5,986) --
Organization costs............................ (7,241) -- -- --
------------- ---------- -------- ----------
Net cash provided by (used in) investing
activities............................... (3,613,965) (377,171) (71,538) 1,095,241
------------- ---------- -------- ----------
Cash flows from financing activities:
Principal payments on capital leases.......... (125,020) -- --
Payments of borrowing......................... (1,655,887) -- (583,787)
Proceeds from borrowing....................... 3,854,201 400,000 19,000
Proceeds from issuance of stock, net of
offering cost.............................. 5,944,568 2,335,982 250,000 --
------------- ---------- -------- ----------
Net cash provided by (used in) financing
activities............................... 8,017,862 2,335,982 650,000 (564,787)
------------- ---------- -------- ----------
Net increase (decrease) in cash................. 2,355 (3,795) (25,596) 31,620
Cash, beginning of period....................... -- 6,150 31,746 126
------------ ---------- -------- ----------
Cash, end of period............................. $ 2,355 $ 2,355 $ 6,150 $ 31,746
============ ========== ======== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements

F-13
<PAGE> 37

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. COMPANY HISTORY AND SUMMARY OF ACCOUNTING POLICIES

StarTronix International Inc. (StarTronix or the Company), formerly Gold
Express Corporation and Gold Express Communications, Inc., was originally
incorporated in the State of Washington on June 26, 1984 for the purposes of
exploring and developing mineral properties. The Company's predecessor was Eagle
Claw Mining Company, Inc. (Eagle Claw), which was incorporated on September 16,
1983 (date of inception). Historically, the Company engaged in the joint venture
and acquisition of various mining properties. However, in 1993, the Company
chose to begin liquidation and divestiture of the majority of its mining assets.

As more fully described in Note 3, in April 1994 the Company issued
2,800,000 shares of its common stock, a controlling interest of 43.25%, to a new
investor in exchange for 100% of the common stock of SmartCom International,
Inc., a corporation wholly owned by the investor. Subsequent to the change in
ownership, certain directors of the Company continued in their capacity as
directors and held security interests in the stock issued to the investor to
assure performance under the plan of reorganization. The Company continued to
hold rights to certain mineral properties (Note 5). In May 1995, the Company,
then Gold Express Corporation, changed its name to Gold Express Communications
and began to pursue marketing of telecommunication products and services.

In August 1995, Gold Express Communications established a wholly owned
subsidiary, StarTronix International Inc, a Delaware corporation, with
authorized capital of 50,000,000 shares of common stock and 10,000,000 shares of
preferred stock. On September 30, 1995, Gold Express Communications and
StarTronix International Inc. merged, and StarTronix International Inc. became
the surviving corporation.

In July 1995, SmartCom International, Inc. changed its name to StarTronix
USA, Inc. In May 1996 StarTronix USA, Inc. changed its name to StarTronix Inc.
StarTronix Inc. is currently the main operating entity of the Company.
StarTronix Inc. is primarily engaged in direct marketing and sales of exclusive
products and services for which StarTronix Inc. or the Company contracts for
production and distribution. StarTronix Inc.'s major products include: the
StarScreen telephone, the StarVoice telephone, and the StarVoice/Data Bank.
Through a network of independent distributors, StarTronix Inc. also sells
proprietary health aids, nutritional supplements, and beauty products. The
StarScreen telephone is a "plug and play" Internet screen phone and is currently
the Company's major source of projected revenues. The StarScreen is currently in
the process of being approved for use by the Federal Communications Commission
("FCC").

In December 1994, the Company acquired Global TelCom, Inc. (Global TelCom),
a provider of products and services relating to long distance telephone and
debit card services in exchange for 500,000 shares of the Company's common stock
and assumption of debt. This transaction has been accounted for under the
purchase method of accounting. Subsequent to this acquisition, Global TelCom has
generated limited operating revenues and sustained consistent operating losses.
Global TelCom ceased operations as of December 31, 1995, due to the loss of a
major customer (Note 19). In the current year Global TelCom had limited activity
and reported a net loss. As further discussed in Note 3, the Company continues
to maintain reserves for currently unasserted claims related to the shut down of
the operations in Global TelCom.

In August 1995, the Company established a new wholly-owned subsidiary,
GoldTone Communications, Inc., a Delaware corporation, to provide specialized
long distance telephone and debit card services. In November 1995, GoldTone
Communications, Inc. changed its name to StarTronix TelCom Inc. For its first
year ended June 30, 1996, StarTronix TelCom Inc., had limited operations and no
material amounts of income or loss.

In June 1996, the Company established a new wholly-owned subsidiary,
StarTronix Marketing N.A. Inc., a Canadian corporation, to provide access to
Canadian markets for the Company's telecommunications products and services. As
of and through June 30, 1996, StarTronix Marketing N.A. Inc. had no operations
nor discernible activity.

F-14
<PAGE> 38

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. COMPANY HISTORY AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

In August 1996, the Company established a new wholly-owned subsidiary,
StarTronix On-Line Inc. a Delaware corporation, to provide access to the
Internet for users of the Company's telecommunications products and services.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries: Eagle Claw Mining Company Inc., StarTronix
Inc. (formerly StarTronix USA), Global TelCom Inc., StarTronix TelCom Inc.
(formerly GoldTone Communications, Inc.) and StarTronix Marketing N.A. Inc. All
significant intercompany accounts and transactions have been eliminated. The
Company also consolidates its proportional share of the account of its only
joint interest in mineral properties, which was written off as of June 30, 1995
(see Note 5).

Property and Equipment

Equipment is stated at cost. Depreciation is provided over the estimate
useful lives of the respective assets, using the straight-line method.

Historically, the Company capitalized development costs relating to mineral
properties until such time as the mineral properties were brought into
production. Interest cost was capitalized to the basis of mineral properties
during the periods in which activities to ready the properties for commercial
production occurred. The amount capitalized was based on the portion of the
Company's interest cost incurred which could have been avoided if expenditures
related to the mineral property had not been made. If the property was sold or
abandoned, those costs were written off to current period expense. The carrying
values of mineral properties and related deferred expenditures were reviewed on
a regular basis and, where necessary, were written down to the estimated
recoverable amount. As of June 30, 1995, the Company's mineral properties were
written-off entirely. During fiscal 1996, the Company disposed of its residual
interest in its two remaining mineral properties. (Note 5)

Cash Equivalents

For the purpose of the consolidated balance sheets and statements of cash
flows, the Company considers a cash equivalent to be any highly liquid debt
instrument purchased with an original maturity of three months or less.

Inventory

As of June 30, 1996, the Company carried in inventory certain marketing
materials, referred to as "Starter Kits", and related items held for sale in the
normal course of business. These items are stated at the lower of cost,
determined under the first-in, first-out (FIFO) method, or market.

During fiscal 1996, the Company began contracting for production and
fulfillment on its principal products: the StarScreen telephone, StarVoice
telephone, StarVoice/Data Bank, and proprietary health, nutritional products,
and beauty aids. As of June 30, 1996, no amounts of these principal products
were held in inventory.

F-15
<PAGE> 39

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. COMPANY HISTORY AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

Prepaid Production Costs (Infomercial)

In October 1994, the Company contracted with U.S. Corporate Development
Group Inc.(USCDG) to produce one half-hour infomercial related to its StarScreen
and direct sales marketing plan, issuing 500,000 shares of the Company's common
stock in satisfaction of the $300,000 contract price.

As of June 30, 1996, production on the infomercial had been delayed as no
product was available and the Company's direct sales marketing was just
beginning. In September 1996, USCDG contracted with Harmony Media
Communications, Inc. to produce the infomercial. Film footage of sponsored
events has begun, and the infomercial is scheduled to air in January 1997. Under
SOP 93-7, the costs of the infomercial will be expensed when the infomercial
airs for the first time. The Company has determined that realizability of the
benefit of the prepaid cost can be reasonably assured.

Goodwill

Goodwill has been recognized as a result of the cost in excess of the
assets acquired in the acquisition of Global TelCom in December 1994. Goodwill
is being amortized over a 10 year period. During fiscal 1996, the Company wrote
off the carrying value of goodwill due to the loss of its major customer during
fiscal 1995 (see Note 19) and inability of Global TelCom, Inc. to recover and
remain viable.

Investment

During fiscal 1995, the Company made an investment in common and preferred
stock in an unrelated company, OTC Emerging Growth Fund (OTC), that disseminates
information, services and products relating to newly emerging public companies.
The investment is carried at cost having no readily determinable market value
(Note 6).

During fiscal 1996, the Company made an investment in AmWest Environmental
Group, Inc. (a Nevada corporation). The value of this investment is determined
under the rules set forth in Statement of Financial Accounting Standards (FAS)
No. 115 for securities "available-for-sale" (Note 6).

Revenue Recognition/Deferred Revenue

The Company's policy for telephone debit cards and long distance service is
to recognize the revenue for the design and printing of the card at the time of
sale to the customer. Initial activation of the debit card for the customer
creates an accounts receivable and offsetting deferred revenue. As the debit
card is actually used by the customer, the deferred revenue account is relieved
and revenue for the usage is recorded. As of June 30, 1996, the Company had
discontinued its debit card and long distance service.

Net Loss per Share

Net loss per share amounts are based on the weighted average number of
shares of common stock and common stock equivalents outstanding during each
period. Common stock equivalents, which include or included warrants,
convertible preferred stock, stock options and stock appreciation rights, have
been excluded from net loss per share calculations for all periods presented
because under Accounting Practice Bulletin (APB) No. 15 they would be
anti-dilutive.

Income Taxes

Income taxes are provided based on the liability method of accounting
pursuant to Statement of Financial Accounting Standards (SFAS) No. 109.
Accounting for Income Taxes. Under this approach, deferred income taxes are
recorded to reflect the tax consequences on future years of differences between
the tax basis of assets and liabilities and their financial reporting amounts at
each year end.

F-16
<PAGE> 40

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. COMPANY HISTORY AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.

Reclassification

Certain amounts for 1995 and prior have been reclassified to conform with
the 1996 presentation.

2. DEVELOPMENT STAGE OPERATIONS AND MANAGEMENT'S PLANS

The Company has been in the development stage since its inception. Through
April 1994, the Company was attempting to establish itself as a mining and
natural resource company. Subsequent to April 1994, the Company's focus was
changed to developing telecommunications products and services, as more fully
discussed in Note 1.

The accompanying consolidated financial statements have been prepared on a
going concern basis which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has
suffered recurring losses from operations since its inception; has recorded
limited revenues to date as a result of its acquisition of GlobalTelCom, Inc. in
December 1994 (see Note 3); has recorded significant realized and unrealized
losses on investment write downs; and continues to rely on its capital raising
efforts to fund continuing operations. These conditions raise substantial doubt
as to the Companies ability to continue as a going concern. The accompanying
consolidated financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amount of
liabilities that might be necessary if the Company is unable to continue as a
going concern.

Continuation of the Company is contingent upon the Company establishing
markets for its products and services and achieving profitable operations. Such
operations will also require management to secure additional financing for the
Company in the form of debt or equity, which management plans to partially
satisfy through the issuance of shares of its capital stock. Management's plans
with regard to these matters are as follows:

- The Company is presently negotiating a stock subscription agreement with
a third party investor to raise a total of $2,500,000, less associated
issuance costs. Additionally, the Company has engaged an investment
advisory group to arrange for additional future offerings of the
Company's stock. The total of these future offerings is anticipated to
be a maximum of $15 million. As to both of these actions, no definitive
agreements or offerings exist as of the date of the report and no
assurance is given that the Company will ultimately be successful in
securing this additional financing.

- The Company has vendor finance programs in place to support sales of the
StarScreen. The Company expects approval by the FCC of the major
components of the StarScreen in December 1996, which have passed testing
at independent laboratories. The Company currently has in excess of
5,000 distributors who have applied to purchase the StarScreen. As
discussed in Note 20, the Company has prepaid approximately $1.6 million
toward its manufacturing commitment with Golden Source Electronics, Ltd.

- The Company has approximately 18,000 distributors of its products
disbursed throughout the United States and Canada and has commenced
shipment of products to these distributors.

F-17
<PAGE> 41

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. BUSINESS COMBINATIONS

Acquisition of StarTronix Inc. (Formerly SmartCom International, Inc.)

In April 1994, pursuant to a Plan and Agreement of Reorganization ("the
Plan"), the Company issued 2,800,000 shares of its common stock to an investor
(the Investor), the sole shareholder of SmartCom, in exchange for all of the
outstanding shares of common stock of SmartCom International Inc. (SmartCom),
making the investor a 43.25% shareholder. SmartCom was incorporated in January
1994 under the laws of the State of Delaware. At the date of acquisition,
SmartCom had no assets and no operations.

In an agreement separate from the Plan, certain of the shareholders of the
Company transferred 1,168,180 shares, or approximately 18% ownership, to certain
corporations unrelated to the Investor. In addition, these same shareholders
took a security interest in 1,863,484 shares of the 2,800,000 shares issued to
the Investor in order to assure the Investor's performance under certain stock
purchase options related to the Plan. The combined effect of this series of
transactions shifted the control of the Company to the Investor.

Due to the common control of SmartCom and the Company, the assets and
liabilities of SmartCom were consolidated at their historical book values as of
the date of the exchange.

In July 1995, SmartCom changed its name to StarTronix USA Inc., and
subsequently in May 1996 to StarTronix Inc.

Acquisition of Global TelCom Inc. (Formerly Global Long Distance Company,
Inc.)

In December 1994, the Company issued 500,000 shares of its common stock in
exchange for all the outstanding shares of common stock of Global TelCom, Inc.
(formerly Global Long Distance Company, Inc.) The cost in excess of the net
assets acquired of $500,959 has been recorded as goodwill under the purchase
method of accounting.

Amortization expense in 1995 was $25,048. During 1996, the Company
determined that the goodwill would not provide any future benefit and wrote off
the balance taking a charge to income of $475,911. As further discussed in Note
1 and Note 19, during fiscal 1996, Global TelCom had limited activity, and by
the third quarter of fiscal 1996, all activity had ceased. Management intends to
shut down Global TelCom in fiscal 1997 and has established, as of June 30, 1996,
a reserve for contingent liabilities related to the shut down of $424,581.

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
JUNE 30,
--------------------
1996 1995
-------- -------
<S> <C> <C>
Computer equipment and peripherals........... $241,524 $ --
Office furniture and equipment............... 118,521 71,552
Leasehold improvements....................... 51,809 --
-------- -------
411,854 71,552
Less accumulated depreciation................ 35,802 8,481
-------- -------
Net property and equipment................... $376,052 $63,071
======== =======
</TABLE>

Total depreciation expense for the years ended June 30, 1996 and 1995 was
$27,321 and $3,081 respectively. Additionally, as of June 30, 1996, $79,355 of
the computer equipment and peripherals were idle or nonproductive pending
returns under product warranties.

F-18
<PAGE> 42

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. MINERAL PROPERTIES AND RELATED CAPITALIZED DEVELOPMENT COSTS

Copper Flat

In April 1990, the Company purchased the Copper flat property from an
unrelated party for $1,299,925. In connection with the acquisition, the Company
borrowed funds from several individuals which were partially satisfied with the
issuance of 240,000 shares of the Company's common stock. Through fiscal 1994,
the Company incurred an additional $4,035,488 in purchase and development costs
which were capitalized to the property.

During fiscal 1994, the Company sold its interest in the Copper Flat
property to Alta Gold Co. (Alta), an unrelated party. Consideration received by
the Company consisted of $601,000 in option payments, $800,000 cash at closing,
two 6% convertible subordinated debentures, each having a principal balance of
$1,500,000, and a subordinated zero coupon debenture with a $4,000,000
redemption price. The Company recognized a gain of $182,739 from the sale.

In June 1995 the Company received notification that it was not in
compliance with certain terms of the sale of the Copper Flat property. During
June 1996 the Company entered into an agreement with Alta, and concurrently with
N.A. Degerstrom, Inc. (Degerstrom) to cancel the two convertible debentures, in
exchange for cancellation of the notes and other debts payable to Degerstrom
(Note 8) and relinquishment of certain claimed rights to certain properties
related to the original sale of the Copper Flat property. As a result of this
transaction, the Company recognized a loss of $234,065 in fiscal 1996.

The convertible debentures required quarterly interest payments at a rate
of 7.75% and are presented in the consolidated financial statements at face
value. The subordinated zero coupon debenture matures in June 2008 and is
presented in the consolidated balance sheet net of an unamortized discount based
on an imputed interest rate of 8.75%. Each of the convertible debentures
originally secured the notes payable to Degerstrom. The Company was also granted
and still retains a provisional copper production royalty which provides for
royalty payments based on a predetermined formula related to the quantity of
copper produced and the average spot price of copper. Payments under the royalty
agreement would constitute dollar-for-dollar credits against the subordinated
zero coupon debenture. No amounts for royalties have been received by the
Company.

Vulcan/Gold Dike

In March 1989, the Company and N.A. Degerstrom, Inc. (Degerstrom), in a
50/50 joint interest, entered into an agreement for the purchase of assets and
claims from Vulcan Mtn., Inc. Pursuant to this agreement, the Company and
Degerstrom purchased certain real property, personal property and mining claims
located in Ferry County, Washington for an aggregate purchase price of
$1,100,000. For its 50-percent interest, the Company contributed the following:

<TABLE>
<S> <C>
Cash.............................................................. $387,500
Issuance of 20,834 shares of restricted common stock of the
Company valued at $3.00 per share............................... 62,500
Assumption of an obligation of Vulcan Mtn., Inc. with respect to a
lawsuit (see below)............................................. 100,000
--------
$550,000
========
</TABLE>

Deferred mine development costs, which were either paid or accrued to the
Company's joint venture partner, of $0, $35,213 and $39,027 were capitalized in
fiscal 1995, 1994 and 1993.

F-19
<PAGE> 43

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. MINERAL PROPERTIES AND RELATED CAPITALIZED DEVELOPMENT COSTS (CONTINUED)

During fiscal 1993, the Company wrote down its investment in the joint
venture to $350,000. This $762,837 write down was based on metallurgical studies
performed on the property which indicated lower recoverability rates than those
previously estimated. All development costs incurred in fiscal 1994 were charged
as expenses of the period. During fiscal 1995, the Company wrote off the balance
of its investment and entered into an agreement to sell its interest to an
unrelated party for $1 and indemnification from any potential environmental
liability. In January 1996, the Company completed the transfer of title and was
released of future liability for environmental clean up.

6. INVESTMENTS

Investment in Affiliate

In April 1987, the Company exchanged 110,000 shares of its common stock for
702,127 common shares of Gold Coin with an estimated value of $330,000. In June
1988, the Company exchanged an additional 73,412 shares of its common stock for
480,000 shares of Gold Coin with an estimated value of $131,000. These newly
issued shares of both companies were not registered pursuant to the Securities
Exchange Act of 1933 and were valued at a discount of approximately 30% from
market value. Due to then common management of the Company and Gold Coin, and
the presence of common stockholders, the Company accounted for its investment in
Gold Coin using the equity method of accounting. The Company wrote off its
investment in Gold Coin during 1991 resulting in a charge to other expense of
$373,193.

Other Investments

During June 1995, the Company entered into an agreement to purchase 30,000
shares of common stock and 30,000 shares of preferred stock of OTC Emerging
Growth Fund (OTC) in exchange for 200,000 shares of the restricted Rule 144
common stock of the Company for a total investment of $150,000. As of June 30,
1996, the Company wrote-off this investment following notification by OTC that
it would not continue as a going concern. The total charge to income for fiscal
1996 was $150,000.

During fiscal 1996, the Company advanced $30,000 to IPO Network, an
unrelated company, pursuant to a proposed asset purchase agreement. The asset
purchase was abandoned by the Company following disagreements with the
management of IPO Network. Therefore, the Company wrote-off this investment as
of June 30, 1996, taking a charge to income of $30,000.

During fiscal 1996, the Company exchanged 1,500,000 shares of its
restricted Rule 144 common stock for 1,500,000 shares of the restricted Rule 144
stock of AmWest Environmental Group, Inc (AmWest). The Company made the
investment as a vehicle to facilitate entry into foreign markets, particularly
Hong Kong. The market value of the AmWest common stock at the date of the
transaction was $1.45 per share. The Company recorded the investment at
$2,066,250, after discounting for restriction. Under Statement of Financial
Accounting Standards (FAS) 115 for securities "available for sale" , the
investment is carried at fair value and net unrealized holding gains or losses
are excluded from earnings and reported separately in shareholders' equity. At
June 30, 1996, the Company valued this investment at $900,000, based on a $0.75
per share quoted market price at June 28, 1996 and 20% discount for the
restriction. The net unrealized holding loss carried in shareholders' equity is
$1,166,250. The restriction on the AmWest common stock lapsed in September 1996.

F-20
<PAGE> 44

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. RELATED PARTY TRANSACTIONS

During the period from inception to June 30, 1996, the Company had the
following transactions with related parties:

During fiscal 1996 the Company paid compensation to its officers and key
personnel, as follows:

<TABLE>
<CAPTION>
CASH OTHER
NAME/TITLE COMPENSATION STOCK COMPENSATION COMPENSATION
- ---------- ------------ ------------------ ------------
<S> <C> <C> <C>
Greg Gilbert, CEO............................... $ -- $ -- $ 12,500
Gerry Fitch, COO................................ $115,000 125,000 --
(250,000 shares
common stock)
Norman M. Shink, President...................... $ 47,031 -- 16,000
J. Michael Sellards, CEO of StarTronix Inc...... $104,500 100,000 --
(200,000 shares
common stock)
Robert E. Patton, CFO of StarTronix Inc......... $ 74,296 40,000 --
(80,000 shares
common stock)
Richard Henander, CFO (retired)................. $ 45,650 100,000 --
(200,000 shares
common stock)
</TABLE>

The value of stock issued to each employee as compensation was determined
at fair market value at the date of grant, after discounting for any
restrictions.

During fiscal 1996, the Company issued 1,600,000 shares of its common stock
to T. Davis Capital for stock promotion services, taking a total charge to
income of $2,103,750 and carrying a prepaid of $21,250 in the consolidated
financial statements. Of the 1,600,000 shares issued, 1,100,000 and 500,000 were
issued at $1.25 and $1.50, respectively under sum certain agreements.

During fiscal 1996, Mr. Kurtis Jones, a consultant to the Company,
exercised 2,000,000 warrants for $1,400,000 to purchase 2,000,000 shares of the
Company's common stock. During fiscal 1995, the Company granted Mr. Jones
warrants to purchase 1,000,000 shares of common stock at a maximum of $1.00 per
share and 1,000,000 shares of common stock at a maximum of $1.50 per share, as
an incentive to secure and provide funding for the Company. Such warrants were
registered on a Form S-8 filed with the Securities and Exchange Commission in
June 1995.

In September 1995, the Company issued 1,500,000 shares of its common stock
to AmWest Environmental Group, receiving in return 1,500,000 shares of the
restricted Rule 144 common stock of AmWest. This investments is being carried at
$900,000, net of a $1,166,250 unrealized holding loss, on the consolidated
financial statements. (Note 6).

During 1996, the Company accrued $27,500 in interest expense on two notes
payable to Phoenix Environmental Services, Inc. ("Phoenix") (Note 8) of which
none was paid. In addition, the Company issued 100,000 shares of its restricted
common stock in satisfaction of $33,000 loaned to the Company by Phoenix. The
Company has accrued $29,000 to Phoenix for certain services in relation to
Global TelCom, Inc.

Pursuant to a Form S-8 filed December 14, 1995, the Company issued 500,000
shares of its common stock to U.S. Corporate Development Group, Inc. ("USCDG")
for management consulting and marketing services. The total charge to income in
1996 was $500,000.

F-21
<PAGE> 45

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. RELATED PARTY TRANSACTIONS (CONTINUED)

USCDG is a shareholder in the Company which provides services to the
Company under a 2 year consulting agreement which commenced in July 1994, (Note
17). USCDG is responsible for producing an infomercial to be used in the product
launch of StarTronix Inc. Additionally, the Company issued 500,000 shares of
common stock at $.60 per share to be used to complete the infomercial. The
agreement calls for the Company to pay the amount of the deficiency, if any, in
the event USCDG is unable to net $250,000 from the sale of the stock. Prepaid
production costs of $300,000 have been capitalized as other assets. Refer to
Note 17 for other amounts paid to USCDG.

Pacific Horizons, Inc., a company owned by a personal friend of the
President and CEO, and for which he formerly was a V.P. and director, has
provided working capital to the Company through the purchase of 350,000 shares
of common stock for $175,000. During fiscal 1995, the Company accrued $55,000 in
consulting fees to Pacific Horizons Inc.

Robert Sterling Enterprises, a company belonging to Robert Sterling, a
former officer and director, and a shareholder of the Company, maintains the
bank account through which the interest on the subordinated debentures is
received (see Note 5) and the interest on the Degerstrom notes (see Note 8) is
paid. Administrative expenses of $6,000 and $2,500 were charged during fiscal
1996 and 1995, respectively.

During fiscal 1994, 1993, 1992, 1991, 1990, 1989, 1988 and 1987, the
Company paid or accrued $82,900, $52,500, $52,659, $30,000, $36,400, $24,727,
$12,600 and $19,668 to Robert Sterling Enterprises for overhead expenses and
cash advances made to the Company.

At June 30, 1995 and 1994, the Company owed $10,995 and $45,622 to an
officer of the Company who resigned in October 1994 for net advances by the
officer and $10,000 and $30,000 for Directors fees. During fiscal 1996 and 1995,
directors fees and advances in the amount of $20,995 and $75,622 were satisfied
with 20,995 and 75,622 shares of common stock of the Company. Directors fees
were discontinued in fiscal 1995.

During fiscal 1993, 1992, 1991 and 1989, the Company issued 25,000, 25,000,
47,500 and 60,000 shares of its unregistered common stock to the directors of
the Company as compensation for services as directors, aggregating $31,250,
$39,062, $96,484 and $131,250. Fiscal 1994 directors fees, which totaled $30,000
were accrued at June 30, 1994.

During fiscal 1993, the Company issued 800,000 shares of its unregistered
common stock to Degerstrom and 175,000 shares to an officer of the Company as
partial satisfaction of amounts owed to these parties.

During 1990, the Company sold equipment to a company controlled by a
stockholder, at a gain of $6,801. The Company received a 10% note receivable in
the amount of $36,283, which was collected during the year ended June 30, 1991.

During 1987, the Company sold equipment to Gold Coin (see Note 7) at a gain
of $30,360. The Company received a note receivable of $37,500 from Gold Coin as
a result of this purchase. In April 1988, this note was canceled and the
equipment was returned to the Company. This equipment was recorded at its net
book value at original sale date.

During fiscal 1990 and 1989, the Company advanced Gold Coin $34,000 and
$37,500 for operating capital.

In April 1990, Gold Coin sold its Rimini property to the Company. On July
24, 1990, Gold Coin entered into an agreement with an officer of the Company who
was also an officer of Gold Coin. This officer assumed substantially all of the
liabilities of Gold Coin in exchange for cash, a note payable and Gold Coin's
assets except for any remaining cash and plant, property and equipment
(primarily its interest in the Gold Coin Mine).

F-22
<PAGE> 46

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. RELATED PARTY TRANSACTIONS (CONTINUED)

During 1987, the Company paid, in the form of 33,000 shares of the
Company's unregistered common stock, $115,500 to certain stockholders as
compensation for their personal guarantees on bank loans. The stock was valued
at market price on the date of the issuance.

8. NOTES PAYABLE

Related Parties

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Notes payable to related parties consist of: 6% Note
payable to Degerstrom, interest and principal due July
15, 1998, collateralized by debentures receivable
(See Note 5)............................................ $ -- $ 2,500,000
6% Note payable to Degerstrom, interest and principal due
July 30, 1998, unsecured (See Note 5)................... -- 282,265
12% Note due an officer, payable on demand, unsecured...... -- 4,006
----------- -----------
-- 2,786,271
Less current maturities.................................... -- 4,006
----------- -----------
Long-term notes payable to related parties................. $ -- $ 2,782,265
=========== ===========
</TABLE>

Historically, the Company entered into financing, stock and stock option
agreements with N.A. Degerstrom, a shareholder, to borrow money to finance the
Company's operations. During fiscal 1994, all amounts owing to Degerstrom,
including accrued interest and short term advances, were consolidated into two
new notes payable in the respective amounts of $2,500,000 and $282,265.
Additionally, all stock options previously granted to Degerstrom for note
amendments and extensions were canceled.

The Degerstrom notes were satisfied during fiscal 1996 in conjunction with
an agreement involving Alta Gold Inc. (Note 5)

During fiscal 1992, a $500,000 note due a shareholder was amended and the
maturity date extended to April 24, 1994. As consideration for extending the
maturity date the Company granted the shareholder an option to purchase 100,000
shares of the Company's unregistered common stock at $.20 per share. The option
expired and the note was repaid during the fiscal 1994.

Others

During the year ended June 30, 1995, the Company borrowed, in the form of
two notes, $400,000 for working capital from an unrelated party which is secured
by stock in StarTronix International Inc., owned by Pacific Horizons and the
Company's Chief Executive Officer. The notes were originally due July 1995.
Subsequently, the parties have agreed to extend the notes to December 15, 1996
at a rate of 7.5%. Total accrued interest expense recorded in 1996 is $27,500 of
which none has been paid.

9. INCOME TAXES

The Company adopted Statement of Financial Accounting Standards (SFAS) No.
109, Accounting for Income Taxes, effective July 1, 1993. SFAS No. 109 requires
the use of an asset and liability approach for financial accounting and
reporting for income taxes. Financial statements for prior years have not been
restated and there was no cumulative effect of adopting this accounting change.

F-23
<PAGE> 47

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. INCOME TAXES (CONTINUED)

Deferred income tax assets were comprised of the following:

<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1996 1995
------------ ------------
<S> <C> <C>
Deferred income tax assets:
Net operating loss carryforwards........................ $ 3,871,000 $ 1,541,500
Mineral properties...................................... -- 197,000
------------ ------------
3,871,000 1,738,500
Valuation allowance....................................... (3,871,000) (1,738,500)
------------ ------------
Net deferred income tax assets............................ $ -- $ --
============ ============
</TABLE>

Since inception the Company has reported losses for income tax and
financial reporting purposes. Accordingly, no provisions for Federal or State
income taxes were provided. A 100% valuation allowance was provided at June 30,
1996, 1995 and 1994 since management could not determine that it was more likely
than not that the net deferred tax asset would be realized.

At June 30, 1996, the Company has available net operating loss (NOL)
carryforwards of approximately $10,627,600 for income tax purposes, which expire
in varying amounts through 2011. Of this amount, utilization of approximately
$3,800,000 of such NOL has been limited to approximately $149,000 per year over
the statutory period as a result of ownership changes from the issuance of
common stock. If additional ownership changes were to occur, the utilization of
the NOL could be further limited and thereby reduce the amount of these benefits
that would be available to offset future taxable income each year, starting with
the year of ownership change. The NOL carryforwards expire as follows:

<TABLE>
<CAPTION>
YEAR ENDING JUNE 30, AMOUNT
-------------------------------------------------- ------------
<S> <C>
2006.............................................. $ 1,560,000
2007.............................................. 1,208,000
2008.............................................. 1,010,000
2009.............................................. --
2010.............................................. 756,400
2011.............................................. 6,093,200
------------
$ 10,627,600
============
</TABLE>

10. PREFERRED STOCK

General

The Company has authorized 10,000,000 shares of $0.01 par value preferred
stock. As of June 30, 1995, the Company had not issued any classes of preferred
stock.

Series "B" Convertible Preferred Stock

During fiscal 1996, the Company made a private placement offering of
200,000 shares of its Series "B" $0.01 par value convertible preferred stock. As
of June 30, 1996, 90,000 shares had been issued for $900,000, less $90,000 in
issue costs. The Series "B" preferred stock is convertible into common stock at
any time 45 days after the issuance date. The conversion rate is $10.00 divided
by the Conversion Price, which is based on a predetermined formula. Refer to
Note 20 for discussion of subsequent conversions.

F-24
<PAGE> 48

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. PREFERRED STOCK (CONTINUED)

Series "C" Convertible Preferred Stock

During fiscal 1996, the Company made a private placement offering of
650,000 shares of its Series "C" $0.01 par value convertible preferred stock. As
of June 30, 1996 the Company had issued 15,000 shares for $150,000, less $24,017
in issue costs. The Series "C" preferred stock is convertible into common stock
at any time 41 days after the issuance date. The conversion rate is $10.00
divided by the Conversion Price, which is based on a predetermined formula.
Refer to Note 20 for discussion of subsequent conversions. See also Note 18 on
suspension of the conversion feature.

Dividends on Preferred Stock

Both series of preferred stock pay dividends at a rate of $0.60 per share
per year. These dividends are cumulative and shall accrue day by day whether or
not declared All dividends are payable in common stock of the Company and paid
only upon conversion. Cash dividends may be paid at the discretion of the
Company's Board of Directors, however no common stock dividends may be declared
or paid to the common stock holders until the preferred stock holders have been
paid their dividends in full. As of June 30, 1996, accrued dividends on
preferred stock were not material.

11. WARRANTS

The Company issued warrants to the following companies:

<TABLE>
<CAPTION>
EXPIRATION
COMPANY WARRANTS EXERCISE PRICE ISSUE DATE DATE
- --------------------------------------- -------- ---------------- ------------- -------------
<S> <C> <C> <C> <C>
D.J. Ltd............................... 67,500 $1.00 per share May 29, 1996 May 29, 1998
Stockworks USA, Inc.................... 22,500 $1.00 per share May 29, 1996 May 29, 1998
</TABLE>

These warrants may be exercised at anytime during the Warrant Exercise
Period. Under the warrant agreement, no fractional shares may be issued and full
shares will only be issued if fully paid and free of any liens or encumbrances.
The warrants are transferable and have no voting rights.

12. STOCK APPRECIATION RIGHTS PLAN AND EMPLOYEE STOCK OPTIONS

In December 1990, the Company adopted a Stock Appreciation Rights Plan (the
Plan) for its chief executive officer. During fiscal 1994, the Company's chief
executive officer resigned and all rights under the Plan were terminated.

As of June 30, 1996, the Company did not have an employee-based stock
option plan (Note 13). However, during fiscal 1996, the Company did grant the
following stock option to an employee based on his specific performance:

<TABLE>
<CAPTION>
OPTION EXERCISE MARKET
NUMBER EXPIRATION PRICE PER PRICE AT
EMPLOYEE OF SHARES DATE SHARE GRANT DATE
------------------------------------------- --------- --------------- --------- ----------
<S> <C> <C> <C> <C>
Norman Shink............................... 100,000 May 28, 1997 $1.50 $1.66
</TABLE>

Although the Company is not required to adopt the provisions of Statement
of Financial Accounting Standards (FAS) 123 in the current year, the effects of
adoption of FAS 123 would not have had a material effect on the consolidated
financial statements as of June 30, 1996 as it relates to the above employee
stock option and warrants issued to non-employees (Note 11).

F-25
<PAGE> 49

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. INCENTIVE STOCK OPTION PLAN

In November 1987, the Company adopted an Incentive Stock Option Plan (the
Plan) for key employees, officers and directors. The plan provided for options
to purchase a maximum of 4,000,000 common shares to be granted at an exercise
price that at least equals the fair market value of the Company's common stock
on the date of grant. The plan was terminated during fiscal 1994. Activity
concerning options granted during the six years ended June 30, 1994, which were
immediately vested and exercisable, is as follows:

<TABLE>
<CAPTION>
EXERCISE EXERCISE
SHARES PRICE PERIOD
---------- ---------- -----------
<S> <C> <C> <C>
Granted***.............................................. 200,000 $0.29 5 years
Granted***.............................................. 200,000 0.26 10 years
Granted*................................................ 200,000 0.26 10 years
Granted**............................................... 50,000 0.26 10 years
---------- ---------- -----------
Outstanding, June 30, 1988.............................. 650,000 0.26-0.29 5-10 years
Granted***.............................................. 300,000 0.29 5 years
Granted*................................................ 300,000 0.26 10 years
Granted***.............................................. 300,000 0.26 10 years
**Canceled due to termination as director or employee... (50,000) 0.26 10 years
---------- ---------- -----------
Outstanding June 30, 1989............................... 1,500,000 0.26-0.29 5-10 years
Granted****............................................. 500,000 0.22 5 years
*Canceled due to termination as director or employee.... (500,000) 0.26 10 years
---------- ---------- -----------
Outstanding, June 30, 1990.............................. 1,500,000 0.22-0.29 5-10 years
Granted****............................................. 1,600,000 0.19 5-10 years
---------- ---------- -----------
Outstanding, June 30, 1991.............................. 3,100,000 0.19-0.29 5-10 years
Granted................................................. -- -- --
---------- ---------- -----------
Outstanding, June 30, 1992.............................. 3,100,000 0.19-0.29 5-10 years
Granted................................................. -- -- --
---------- ---------- -----------
Outstanding, June 30, 1993.............................. 3,100,000 0.19-0.29 5-10 years
***Canceled due to termination as director or
employees............................................. (1,000,000) 0.29-0.29 5-10 years
****Canceled due to termination of Plan................. (2,100,000) 0.19-0.22 5-10 years
---------- ---------- -----------
Outstanding, June 30, 1994.............................. -- $ -- --
========== ========== ===========
</TABLE>

F-26
<PAGE> 50

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
CUMULATIVE
AMOUNTS FROM
DATE OF YEAR ENDED JUNE 30,
INCEPTION TO --------------------------------------
JUNE 30, 1996 1996 1995 1994
------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash paid for interest........................ $ 631,518 $ 117,888 $ 132,417 $ 49,903
=========== ========== ========== ==========
Interest capitalized in development costs..... $ 561,105 $ -- $ -- $ --
=========== ========== ========== ==========
Non-cash investing and financing activities
consist of:
Mining lease or mineral property purchased
for:
Notes payable............................ $ 854,320 $ -- $ -- $ --
Debt forgiveness......................... 98,370 -- -- --
Assumption of indebtedness............... 200,050 -- -- --
---------- ---------- ---------- ----------
$1,152,740 $ -- $ -- $ --
========== ========== ========== ==========
Equipment sold in exchange for note
receivable.................................. $ 73,783 $ -- $ -- $ --
Less reversal of sale and note................ (37,500) -- -- --
---------- ---------- ---------- ----------
$ 36,283 $ -- $ -- $ --
========== ========== ========== ==========
Equipment exchanged for mining leases......... $ 27,000 $ -- $ -- $ --
========== ========== ========== ==========
Equipment received as satisfaction of note
receivable.................................. $ 7,140 $ -- $ -- $ --
========== ========== ========== ==========
Equipment acquired under capital leases....... $ 125,000 $ -- $ -- $ --
========== ========== ========== ==========
Common stock issued for:
Development of properties................... $ 438,602 $ -- $ -- $ --
Investment infomercial...................... 300,000 -- 300,000 --
Investment in common stock of affiliated
company.................................. 704,750 -- 243,750 --
Investment in common stock of non-affiliated
company.................................. 2,216,250 2,066,250 150,000 --
Purchase of mining leases................... 703,802 -- -- --
Satisfaction of long-term debt.............. 164,842 -- -- --
Satisfaction of other debt.................. 232,979 53,995 178,984 --
Interest in joint venture................... 74,500 -- -- --
Prepaid financing costs and original issue
discount on notes payable to related
parties.................................. 260,888 -- -- --
Promotional fees and financial marketing
services................................. 3,401,550 3,125,000 250,000 --
Satisfaction of amounts due to related
parties.................................. 682,500 -- -- --
---------- ---------- ---------- ----------
$9,180,663 $5,245,245 $1,122,734 $ --
========== ========== ========== ==========
</TABLE>

F-27
<PAGE> 51

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
CUMULATIVE
AMOUNTS FROM
DATE OF YEAR ENDED JUNE 30,
INCEPTION TO --------------------------------------
JUNE 30, 1996 1996 1995 1994
------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Stock payable exchanged for:
Development of properties................... $ 93,750 $ -- $ -- $ --
Investment in joint venture................. 12,000 -- -- --
Prepaid financing costs..................... 12,058 -- -- --
Purchase of mineral property or mining
lease.................................... 80,500 -- -- --
Consulting fees............................. 24,675 -- -- --
Less prior year's stock payable issued in
current year............................. (222,983) -- -- --
----------- ---------- ---------- ----------
$ -- $ -- $ -- $ --
=========== ========== ========== ==========
Partial exchange of investment in affiliate
for prepaid financing costs................. $ 4,000 $ -- $ -- $ --
=========== ========== ========== ==========
Mining property sold in exchange for
subordinated debentures receivable.......... $ 4,196,986 $ -- $ -- $4,196,986
=========== ========== ========== ==========
Accrued interest and amounts due to related
parties converted to long-term debt......... $ 740,940 $ 27,500 $ -- $ 671,265
=========== ========== ========== ==========
</TABLE>

15. CHANGE IN ACCOUNTING PRINCIPLE

Effective July 1, 1991, the Company changed its method of accounting for
minimum advance royalty payments made pursuant to the purchase agreement for the
Copper Flat property. Under the new method, such royalty payments were
capitalized to the basis of the project. Prior to this change in accounting,
royalty payments were charged against income when incurred. The Company believed
that the new method of accounting was preferable in that it provided for a
better matching of royalty payments with future revenues from mining operations.
The minimum advance royalty payments are viewed as a cost of mining operations.

By deferring these costs until such time that commercial production
commences at Copper Flat, the Company believed that a more accurate cost of
production could be achieved. The cumulative effect of their accounting change
for years prior to 1992 resulted in a benefit of $181,250, or $.07 per share of
common stock.

16. REVERSE STOCK SPLIT

On February 15, 1994, the Company completed a one-for-ten reverse stock
split thereby decreasing the number of then issued and outstanding common stock
to 3,674,210 and increasing the par value of each share to $0.01. All references
in the accompanying consolidated financial statements to the number of common
shares and per-share amounts have been restated to reflect the reverse stock
split.

17. COMMITMENTS AND CONTINGENCIES

The Company leases office space in Irvine, California at the rate of
$14,600 per month under a lease agreement which expires in April 1999 and office
space in Atlanta, Georgia at the rate of $3,450 per month under a lease
agreement which expires in November 1996. Deposits under the Irvine lease
agreement total

F-28
<PAGE> 52

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

17. COMMITMENTS AND CONTINGENCIES (CONTINUED)

$10,675 and are included in other assets in the consolidated balance sheet.
Additionally, the Company leases other office equipment under operating leases
which expire at various future dates through November 2001. Future minimum lease
payments under the leases as of June 30, 1996 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING JUNE 30, AMOUNT
------------------------------------------- ---------
<S> <C>
1997....................................... $232,749
1998....................................... 262,065
1999....................................... 212,571
2000....................................... 49,911
2001....................................... 19,328
--------
Total minimum lease payments...................... $776,624
========
</TABLE>

Total rent expense for the years ended June 30, 1996 and 1995 was $105,909
and $42,892, respectively.

The Company has the following employment agreements with its officers and
key personnel:

<TABLE>
<CAPTION>
TERM OF
NAME/TITLE AGREEMENT BEGIN DATE BASE SALARY
---------------------------------------------------------- --------------- -----------
<S> <C> <C> <C>
Greg Gilbert, CEO............................... 5 years July 1995 $ 120,000
Gerry Fitch, COO................................ 5 years October 1995 $ 120,000
Norman M. Shink................................. 5 years March 1996 $ 144,000
President of StarTronix Inc.
J. Michael Sellards............................. 5 years June 1996 $ 120,000
CEO of StarTronix Inc.
Daniel C. Mahoney............................... 5 years June 1996 $ 60,000
V.P. Mgmt Info Services of StarTronix Inc.
Shane Gilbert................................... 5 years June 1996 $ 36,000
VP On-Line Services of StarTronix Inc.
Robert E. Patton................................ 5 years June 1996 $ 90,000
CFO of StarTronix Inc.
James Valle, CFO................................ 5 years August 1996 $ 120,000
Christopher Reid................................ 5 years September 1996 $ 102,000
VP and Corporate Counsel for StarTronix Inc.
</TABLE>

Each separate employment agreement provides for cash bonuses and stock
based incentives based on predetermined formulas related to the future
profitability of the Company. In addition, Mr. Gilbert's agreement provides
allowances for business expenses and clothing. Both Mr. Valle's and Mr. Reid's
agreements provide for certain business expenses and an allowance for
unallocable business expenses.

The Company also has certain contracted production commitments to Golden
Source Electronics Ltd, as discussed in Note 20.

The Company has a consulting agreement with U.S. Corporate Development
Group, Inc. (USCDG) to (1) assist in the development of a long range business
strategy, (2) identify and negotiate with potential merger/acquisition
candidates, (3) assist in the identification and hiring of key personnel, and
(4) assume other activities as mutually agreed upon. USCDG will receive
compensation as follows:

1. $10,000 monthly retainer and reimbursement of direct expenses,
and;

2. $0.005 per minute of long distance usage related to Golden TelCom,
Inc., and;

F-29
<PAGE> 53

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

17. COMMITMENTS AND CONTINGENCIES (CONTINUED)

3. A minimum of 5% of the acquisition value for assisted
merger/acquisition transactions, and;

4. 5% finder's fee on funds received for securing additional capital
financing, and;

5. 1% of gross sales, regardless of source, after USCDG has secured
$4,000,000 in additional capital financing.

The original agreement continues on a month to month basis until either
party terminates the agreement. The Company's Board of Directors is currently
negotiating and approving an amended agreement which is substantially the same
as the existing agreement. For the year ended June 30, 1996, the Company paid
USCDG, in a combination of cash and common stock, $327,500. As of June 30, 1996,
USCDG has assisted in securing $1,050,000 in additional capital financing, and
is responsible for securing an additional $2.5 million financing agreement to be
completed in December 1996 (Note 20).

The Company has an agreement with Affinity Membership, Inc., dated April
1996, which provides discount travel and other incentives to a limited number of
purchasers of the StarScreen. The Company has paid as of June 30, 1996, $70,000
under this agreement, which is being carried in prepaid expense in the
consolidated balance sheet.

The Company has a contract dated June 1996 with Baytree Associates, Inc.
pursuant to the Company's Series "C" Convertible Preferred Stock (Regulation S)
offering, Baytree Associates, Inc. will sell up to 400,000 shares of the Series
"C" preferred stock at a cost of 16% of the gross proceeds. In addition, USCDG
receives 5% as a finders fee under separate agreement. See also Note 18.

On April 22, 1996, the Company entered into an agreement with Bridgewater
Capital Corporation (Bridgewater) to provide the company with consulting
services as finder in connection with contemplated future financial
transactions. The agreement states that Bridgewater will receive 10% of the
amount of the transaction at the time of closing. In addition, for every $1
million, or pro rata portion thereof, raised by Bridgewater, Bridgewater will
receive 100,000 warrants to purchase StarTronix common stock at $1.00 per share.
As of the date of the audit report, no warrants have been exercised. As of the
date of the audit report, Bridgewater has received 90,000 warrants which were
assigned to various entities (Note 11). No warrants have been exercised. In
addition, Bridgewater has received $90,000 in finder's fees.

The Company has an agreement dated May 1996 with MCS International Inc. to
provide a "migration path" to add features to existing operating software. The
base cost of the agreement is $32,370, not including consulting and support fees
at various hourly rates, which the Company estimates to be approximately
$250,000.

18. LITIGATION

In November 1996, the Company suspended the conversion of its Series "C"
Convertible Preferred Stock as a result of the concerted market irregularities
in the trading of the Company's common stock, which management believes is
related to the conversion terms contained in the private placement offering of
the Series "C" Preferred Stock. The suspension of the conversion provisions of
the private placement offering is more fully described in the Company's 8-K
filed with the SEC on October 25, 1996.

Subsequent to the Company suspending the conversion of the Series "C"
Preferred Stock, a shareholder group filed an action against the Company in the
United States District Court in New York. The action seeks to compel the Company
to resume conversion of the Class "C" Preferred Stock or, in the alternative, to
rescind the subscription agreement and recover the shareholders' original
investment in the amount of $1,337,500. Discovery has not started as of the date
of the audit report. Management intends to vigorously defend its position,
however the ultimate outcome of any litigation on this matter cannot be
determined at this time.

F-30
<PAGE> 54

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

18. LITIGATION (CONTINUED)

19. MAJOR CUSTOMER

During fiscal 1995, the Company lost its major customer, Megatrend
Telecommunications, in a dispute over services provided and the companies have
agreed to arbitration. Greater than 90% of the revenues generated by Global
TelCom Inc. and the Company in fiscal 1995 were to this single customer. The
Company has provided an allowance for doubtful accounts of $337,493 to cover
amounts due from this customer.

Subsequent to the loss of this major customer, Global TelCom Inc. has not
been able to continue as a going concern. All assets recorded relative to the
new acquisition of Global TelCom Inc. have been written-off as a result (See
"Goodwill" under Note 1).

20. SUBSEQUENT EVENTS

In August 1996, the Company finalized a contract with Golden Source
Electronics Ltd (Golden Source), a Hong Kong corporation, to manufacture the
Company's StarScreen Telephone, an Internet screen-phone. The agreement
contracts for production of 12,000 units at a per unit cost of $955, totaling
$11,460,000. The Company had deposited $195,000 with Golden Source during April
1996 in anticipation of the agreement, which is being carried as a prepaid in
the consolidated financial statements. As of December 6, 1996, a total of
$1,620,000 has been paid to Golden Source.

Subsequent to June 30, 1996, all of the Series "B" Convertible preferred
stockholders exercised their conversion rights, exchanging all 90,000 shares of
Series "B" Convertible preferred stock for 952,847 shares of common stock,
including accrued common stock dividends due. Additionally, holders of 254,000
shares of Series "C" convertible preferred stock exercised their conversion
rights, receiving 6,121,766 shares of common stock, including accrued common
stock dividends due (See Notes 10 and 18).

21. MATERIAL FOURTH QUARTER ADJUSTMENTS AND QUARTERLY FINANCIAL DATA

During the fourth quarter of fiscal 1996, the Company recorded the
following adjustments which, if reported correctly in the quarters to which they
relate, would have had material effect on the balance sheet and results of
operations:

1. The Company wrote-off the balance of goodwill related to the
acquisition of Global TelCom (Notes 1, 3, and 19). Management has agreed
that proper evaluation of this asset in the first quarter of fiscal 1996
would have resulted an additional $463,386 charge to income in that quarter
and correspondingly reduced total assets by the same amount. Also, in the
second and third quarters, amortization of $12,525 per quarter would not
have been taken.

2. During the second quarter of fiscal 1996, the Company did not
properly record the value of stock issued to a promoter for services
related to its consulting agreement. Proper recording of this stock
issuance would have resulted in an additional charge to income in that
quarter of $250,000.

F-31
<PAGE> 55

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

21. MATERIAL FOURTH QUARTER ADJUSTMENTS AND
QUARTERLY FINANCIAL DATA (CONTINUED)
3. In the first quarter of fiscal 1996, the Company recorded an
investment in AmWest Environmental Group, Inc. (Notes 1, 6, and 7). This
asset was carried at $2,066,250 at each of the first three quarters. Proper
valuation of this asset under SFAS 115 would have resulted in a carrying
value of $1,350,000 at the end of each of those quarters. There would have
been no effect on the statements of loss for those quarters.

If these adjustments had been recorded properly during the quarters in
which they relate, the Company would have reported the following:

<TABLE>
<CAPTION>
QUARTER
-----------------------------------------------------
FIRST SECOND THIRD FOURTH
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales........................... $ 47,687 $ 20,718 $ -- $ 29,249
Gross profit........................ (6,737) 1,896 -- 7,078
Operating loss...................... (1,195,679) (1,680,184) (1,211,963) (1,934,072)
Net loss per share.................. (0.13) (0.16) (0.11) (0.15)
Net loss............................ (1,195,679) (1,680,184) (1,211,963) (1,934,072)
</TABLE>

22. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

Cash and short-term investments

The carrying amount approximates fair value because of the short maturity
of those instruments.

Equity investments (AmWest)

The carrying amount, under FAS 115, is the quoted market value. (Note 6)

Subordinated debenture receivable

The Company's subordinated debenture receivable has no quoted market price
and a reasonable estimate of fair value could not be made without incurring
excessive costs. Additional information pertinent to the valuation is provided
below.

<TABLE>
<CAPTION>
JUNE 30, 1996 JUNE 30, 1995
---------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- -------- ---------- -------
<S> <C> <C> <C> <C>
Cash..................................... $ 2,355 $ 2,355 $ 6,150 $ 6,150
Equity investments....................... $ 900,000 $900,000 $ -- $ --
Subordinated debenture receivable........ $1,427,750 $ -- $1,309,862 $ --
</TABLE>

It is not practicable to estimate the value of the subordinated debenture
receivable due to (1) subordination to senior debt, (2) restrictions on ability
to assign or transfer, (3) limited market, and (4) effect of the related
provisional copper royalty agreement. Refer to Note 5 for further disclosure.

Valuation of the long term related party debt existing at June 30, 1995 is
not required under FAS 107.

F-32
<PAGE> 56

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE

The Board of Directors
StarTronix International Inc.
Irvine, California

The audits referred to in our report dated December 6, 1996, except for Note 2
and the third paragraph of Note 18 which are as of December 11 and 12, 1996,
respectively, relating to the consolidated financial statements of StarTronix
International Inc. (formerly known as Gold Express Communication, Inc. and Gold
Express Corporation) and Subsidiaries (a development stage company), which is
contained in Item 8 of this Form 10-K, included the audit of the consolidated
financial statement schedule listed in the accompanying index. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based upon our audit.

In our opinion, such consolidated financial statement schedule presents fairly,
in all material respects, the information set forth therein.

STRABALA RAMIREZ & ASSOCIATES

December 6, 1996
Irvine, California

F-33
<PAGE> 57

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE

The Board of Directors
StarTronix International Inc.
Irvine, California

The audits referred to in our report dated August 17, 1995 relating to the
consolidated financial statements of StarTronix International Inc. (formerly
known as Gold Express Communications, Inc. and Gold Express Corporation) and
subsidiaries (a development stage company), which is contained in Item 8 of this
Form 10-K, included the audit of the consolidated financial statement schedule
for the years ended June 30, 1995 and 1994 listed in the accompanying index.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based upon our audits.

In our opinion, such consolidated financial statement schedule presents
fairly, in all material respects, the information set forth therein.

The accompanying consolidated financial statement schedule has been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 2 to the consolidated financial statements, the Company is in
the development stage and has generated limited operating revenues to date and
has incurred losses since inception. These conditions raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 2. The consolidated financial
statement schedule does not include any adjustments that might result from the
outcome of this uncertainty.

/s/ BDO SEIDMAN, LLP
--------------------------------------
BDO Seidman, LLP

Costa Mesa, California
August 17, 1995

F-34
<PAGE> 58

STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
COLUMN C COLUMN D
COLUMN B ---------- ---------- COLUMN F
---------- ADDITIONS ADDITIONS ---------
BALANCE AT CHARGED TO CHARGED TO COLUMN E BALANCE
BEGINNING COSTS AND OTHER ---------- AT END OF
COLUMN A OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended June 30, 1996.............. $337,493 -- -- -- $337,493
-------- -------- -------- -------- --------
Year ended June 30, 1995.............. $ -- $337,493 -- -- $337,493
-------- -------- -------- -------- --------
Year ended June 30, 1994.............. $ -- -- -- -- --
-------- -------- -------- -------- --------
</TABLE>

F-35
<PAGE> 59

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ---------------------------------------------------------------------- ------------
<C> <S> <C>
3.1* Articles of Incorporation and Articles as amended.....................
3.2 By-laws as amended and restated.......................................
4.1 Stock Options -- Norman Shink.........................................
4.2 Warrants to D.J. Limited..............................................
4.3 Warrants to Stock Works USA, Inc. ....................................
4.4 Certificate of Determination for Series "B" Preferred Stock...........
4.5 Certificate of Determination for Series "C" Preferred Stock...........
10.1* Employment Agreement of John King dated April 23, 1990................
10.1(a) Employment Agreement of Greg Gilbert dated July 1, 1995...............
10.1(b) Employment Agreement of Gerald Fitch dated October 1, 1995............
10.1(c) Employment Agreement of Norman Shink dated March 1, 1996..............
10.1(d) Employment Agreement of J. Michael Sellards dated June 1, 1996........
10.1(e) Employment Agreement of James Valle dated August 15, 1996.............
10.1(f) Employment Agreement of Christopher Reid dated September 5, 1996......
10.2* 1987 Incentive Stock Option Plan......................................
10.3* Royalty Agreement.....................................................
10.4* Copper Flat Sales Agreement...........................................
10.5 Golden Source Electronics Ltd. .......................................
10.6 Settlement agreement and Release John R. King.........................
10.7 Alta Gold Co. Settlement Agreement....................................
11 Statement re-computation of per share earnings........................
18* Letter Regarding Change in Accounting Principles......................
21 Subsidiaries of the Registrant........................................
27 Financial Data Schedule...............................................
</TABLE>

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

* Incorporated by reference from EXHIBIT of the same number to the Registrant's
Annual Report on Form 10-K for the period ended June 30, 1993

<PAGE> 1
Exhibit 3.2

BY-LAWS
OF
STARTRONIX INTERNATIONAL INC.

ARTICLE I
OFFICES

Section 1. PRINCIPAL OFFICE. The principal office for the transaction of
business of the corporation shall be fixed or may be changed by approval of a
majority of the authorized Directors, and additional offices may be established
and maintained at such other place or places as the Board of Directors may from
time to time designate.

Section 2. OTHER OFFICES. Branch or subordinate offices may at any time
be established by the Board of Directors at any place or places where the
corporation is qualified to do business.

ARTICLE II

DIRECTORS - MANAGEMENT

Section 1. RESPONSIBILITY OF BOARD OF DIRECTORS. Subject to the
provisions of applicable law and to any 1imitations in the Articles of
Incorporation of the corporation relating to action required to be approved by
the Shareholders, or by the outstanding shares, the business and affairs of the
corporation shall be managed and all corporate powers shall be exercised by or
under the direction of the Board of Directors. The Board may delegate the
management of the day-to-day operation of the business of the corporation to a
management company or other person, provided that the business and affairs of
the corporation shall be managed and all corporate powers shall be exercised
under the ultimate direction of the Board.

Section 2. STANDARD OF CARE. Each Director shall perform the duties of a
Director, including the duties as a member of any committee of the Board upon
which the Director may serve, in good faith, in a manner such Director believes
to be in the best interests of the corporation, and with such care, including
reasonable inquiry, as an ordinary prudent person in a like position would use
under similar circumstances.

1.
<PAGE> 2

Section 3. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized
number of Directors shall be three (3) until changed by a duly adopted
amendment to the Articles of Incorporation or by an amendment to this by-law
adopted by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote.

Section 4. ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors shall be
elected at each annual meeting of the Shareholders to hold office until the next
annual meeting. Each Director, including a Director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.

Section 5. VACANCIES. Vacancies in the Board of Directors may be filled
by a majority of the remaining Directors, though less than a quorum, or by a
sole remaining Director, except that a vacancy created by the removal of a
Director by the vote or written consent of the Shareholders or by court order
may be filled only by the vote of a majority of the shares entitled to vote
represented at a duly held meeting at which a quorum is present, or by the
written consent of holders of a majority of the outstanding shares entitled to
vote. Each Director so elected shall hold office until the next annual meeting
of the Shareholders and until a successor has been elected and qualified.

A vacancy or vacancies in the Board of Directors shall be deemed to
exist in the event of the death, resignation, or removal of any Director, or if
the Board of Directors by resolution declares vacant the office of a Director
who has been declared of unsound mind by an order of court or convicted of a
felony, or if the authorized number of Directors is increased, or if the
Shareholders fail, at any meeting of Shareholders at which any Director or
Directors are elected, to elect the number of Directors to be voted for at that
meeting.

The Shareholders may elect a Director or Directors at any time to fill
any vacancy or vacancies not filled by the Directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.

Any Director may resign effective on giving written notice to the
Chairman of the Board, the President, the Secretary, or the Board of Directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a Director is effective at a future time, the
Board of Directors may elect a successor to take office when the resignation
becomes effective.

No reduction of the authorized number of Directors shall have the effect
of removing any Director before that Directors' term of office expires.

2.
<PAGE> 3

Section 6. REMOVAL OF DIRECTORS. Subject to applicable law, the entire
Board of Directors or any individual Director may be removed from office. In
such case, the remaining Board members may elect a successor Director to fill
such vacancy for the remaining unexpired term of the Director so removed.

Section 7. NOTICE, PLACE AND MANNER OF MEETINGS. Meetings of the Board
of Directors may be called by the Chairman of the Board, or the President, or
any Vice President, or the Secretary, or any two (2) Directors and shall be held
at the principal executive office of the corporation, unless some other place is
designated in the notice of the meeting. Members of the Board may participate in
a meeting through use of a conference telephone or similar communications
equipment so long as all members participating in such a meeting can hear one
another. Accurate minutes of any meeting of the Board or any committee thereof,
shall be maintained by the Secretary or other officer designated for that
purpose.

Section 8. ORGANIZATIONAL MEETINGS. The organizational meetings of the
Board of Directors shall be held immediately following the adjournment of the
Annual Meetings of the Shareholders.

Section 9. OTHER REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at the corporate offices, or such other place as may be
designated by the Board of Directors, as follows:

Time of Regular Meeting: 10:00 A.M.
Date of Regular Meeting: Third day of every fourth month.

If said day shall fall upon a holiday, such meetings shall be held on
the next succeeding business day thereafter. No notice need be given of such
regular meetings.

Section 10. SPECIAL MEETINGS - NOTICES - WAIVERS. Special meetings of
the Board may be called at any time by the President or, if he or she is absent
or unable or refuses to act, by any Vice President or the Secretary or by any
two (2) Directors, or by one (1) Director if only one is provided.

At least forty-eight (48) hours notice of the time and place of special
meetings shall be delivered personally to the Directors or personally
communicated to them by a corporate Officer by telephone or telegraph. If the
notice is sent to a Director by letter, it shall be addressed to him or her at
his or her address as it is shown upon the records of the corporation, or if it
is not so shown on such records or if not readily ascertainable, at the place in
which the meetings of the Directors are regularly held. In case such notice is
mailed, it shall be deposited in the United States mail, postage prepaid, in the
place in which the principal executive officer of the corporation is located at

3.
<PAGE> 4

least four (4) days prior to the time of the holding of the meeting. Such
mailing, telegraphing, telephoning or delivery as above provided shall be due,
legal and personal notice to such Director.

When all of the Directors are present at any Directors' meeting,
however, called or noticed, and either (i) sign a written consent thereto on the
records of such meeting, or, (ii) if a majority of the Directors is present and
if those not present sign a waiver of notice of such meeting or a consent to
holding the meeting or an approval of the minute thereof, whether prior to or
after the holding of such meeting, which said waiver, consent or approval shall
be filed with the Secretary of the corporation, or, (iii) if a Director attends
a meeting without notice but without protesting, prior thereto or at its
commencement, the lack of notice, then the transactions thereof are as valid as
if had at a meeting regularly called and noticed.

Section 11. DIRECTORS' ACTION BY UNANIMOUS WRITTEN CONSENT. Any action
required or permitted to be taken by the Board of Directors may be taken without
a meeting and with the same force and effect as if taken by a unanimous vote of
Directors, if authorized by a writing signed individually or collectively by all
members of the Board. Such consent shall be filed with the regular minutes of
the Board.

Section 12. QUORUM. A majority of the number of Directors as fixed by
the Articles of Incorporation or By-Laws shall be necessary to constitute a
quorum for the transaction of business, and the action of a majority of the
Directors present at any meeting at which there is a quorum, when duly
assembled, is valid as a corporate act; provided that a minority of the
Directors, in the absence of a quorum, may adjourn from time to time, but may
not transact any business. A meeting at which a quorum is initially present may
continue to transact business, notwithstanding the withdrawal of Directors, if
any action taken is approved by a majority of the required quorum for such
meeting.

Section 13. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given to absent Directors if the time
and place be fixed at the meeting adjourned and held within twenty-four (24)
hours, but if adjourned more than twenty-four (24) hours, notice shall be given
to all Directors not present at the time of the adjournment.

Section 14. COMPENSATION OF DIRECTORS. Directors, as such, shall not
receive any stated salary for their services, but by resolution of the Board a
fixed sum and expense of attendance, if any, may be allowed for attendance at
each regular and special meeting of the Board; provided that nothing herein
contained shall be construed to preclude any Director from serving the
corporation in any other capacity and receiving compensation therefor.

4.
<PAGE> 5

Section 15. COMMITTEES. Committees of the Board may be appointed by
resolution passed by a majority of the whole Board. Committees shall be composed
of two (2) or more members of the Board and shall have such powers of the Board
as may be expressly delegated to it by resolution of the Board of Directors,
except those powers expressly made non-delegable by applicable law.

Section 16. ADVISORY DIRECTORS. The Board of Directors from time to time
may elect one or more persons to be Advisory Directors who shall not by such
appointment be members of the Board of Directors. Advisory Directors shall be
available from time to time to perform special assignments specified by the
President, to attend meetings of the Board of Directors upon invitation and to
furnish consultation to the Board. The period during which the title shall be
held may be prescribed by the Board of Directors. If no period is prescribed,
the title shall be held at the pleasure of the Board.

Section 17. RESIGNATIONS. Any Director may resign effective upon giving
written notice to the Chairman of the Board, the President, the Secretary or the
Board of Directors of the Corporation, unless the notice specifies a later time
for the effectiveness of such resignation. If the resignation is effective at a
future time, a successor may be elected to take office when the resignation
becomes effective.

ARTICLE III

OFFICERS

Section 1. OFFICERS. The Officers of the corporation shall be a
President, a Secretary, and a Chief Financial Officer. The corporation may also
have, at the discretion of the Board of Directors, a Chairman of the Board, one
or more Vice Presidents, one or more Assistant Secretaries, or one or more
Assistant Treasurers, and such other Officers as may be appointed in accordance
with the provisions of Section 3 of this Article. Any number of offices may be
held by the same person.

Section 2. ELECTION. The Officers of the corporation, except such
Officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article, shall be chosen annually by the Board of Directors,
and each shall hold office until he or she shall resign or shall be removed or
otherwise disqualified to serve or a successor shall be elected and qualified.

Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may appoint
such other officers as the business of the corporation may require, each of whom
shall hold office for such period, have such authority and perform such duties
as are provided by the By-Laws or as the Board of Directors may from

5.
<PAGE> 6

time to time determine.

Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights,
if any, of any Officer under any contract of employment, any Officer may be
removed, either with or without cause, by the Board of Directors, at any regular
or special meeting of the Board, or except in case of an Officer chosen by the
Board of Directors by any Officer upon whom such power of removal may be
conferred by the Board of Directors.

Any Officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Officer is a
party.

Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filed in the
manner prescribed in the By-Laws for regular appointment to that office.

Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an
officer be elected, shall, if present, preside at meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from
time to time assigned by the Board of Directors or prescribed by the By-Laws. If
there is no President, the Chairman of the Board shall in addition be the Chief
Executive Officer of the corporation and shall have the powers and duties
prescribed in Section 7 of this Article.

Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may
be given by the Board of Directors to the Chairman of the Board, if there be
such an Officer, the President shall be the Chief Executive Officer of the
corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and Officers of the
corporation. He or she shall preside at all meetings of the Shareholders and in
the absence of the Chairman of the Board, or if there be none, at all meetings
of the Board of Directors. The President shall be ex officio a member of all the
standing committees, including the Executive Committee, if any, and shall have
the general powers and duties of management usually vested in the office of
President of a corporation, and shall have such other powers and duties as may
be prescribed by the Board of Directors or the By-Laws.

Section 8. VICE PRESIDENT. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as fixed by the
Board of Directors, or if not ranked, the Vice President designated by the Board
of Directors, shall perform all the duties of the President, and when so acting
shall

6.
<PAGE> 7

have all the powers of, and be subject to, all the restrictions upon, the
President. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors or the By-Laws.

Section 9. SECRETARY. The Secretary shall keep, or cause to be kept, a
book of minutes at the principal office, or such other place as the Board of
Directors may order, of all meetings of Directors and Shareholders, with the
time and place of holding, whether regular or special, and if special, how
authorized, the notice thereof given, the names of those present at Directors'
meetings, the number of shares present or represented at Shareholders' meetings
and the proceedings thereof.

The Secretary shall keep, or cause to be kept, at the principal office
or at the office of the corporation's transfer agent, a share register, or
duplicate share register showing the names of the Shareholders and their
addresses, the number and classes of shares held by each, the number and date of
certificates issued for the same, and the number and date of cancellation of
every certificate surrendered for cancellation.

The Secretary shall give, or cause to be given, notice of all the
meetings of the Shareholders and of the Board of Directors required by the
By-Laws or by law to be given. He or she shall keep the seal of the corporation
in safe custody, and shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors or by the By-Laws.

Section 10. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
keep and maintain, or cause to be kept and maintained in accordance with
generally accepted accounting principles, adequate and correct accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
earnings (or surplus) and shares. The books of accounts shall at all reasonable
times be open to inspection by any Director.

This Officer shall deposit all moneys and other valuables in the name
and to the credit of the corporation with such depositories as may be designated
by the Board of Directors. He or she shall disburse the funds of the corporation
as may be ordered by the Board of Directors, shall render to the President and
Directors, whenever they request it, an account of all of his or her
transactions and of the financial condition of the corporation, and shall have
such other powers and perform such other duties as may be prescribed by the
Board of Directors or the By-Laws.

7.
<PAGE> 8

ARTICLE IV

SHAREHOLDERS' MEETINGS

Section 1. PLACE OF MEETINGS. All meetings of the Shareholders shall be
held at the principal executive office of the corporation unless some other
appropriate and convenient location be designated for that purpose from time to
time by the Board of Directors.

Section 2. ANNUAL MEETINGS. The annual meetings of the Shareholders
shall be held, each year, at the time and on the day following:

Time of Meeting: 10:00 A.M.
Date of Meeting: October 15

If this day shall be a legal holiday, then the meeting shall be held on
the next succeeding business day, at the same hour. At the annual meeting, the
Shareholders shall elect a Board of Directors, consider reports of the affairs
of the corporation and transact such other business as may be properly brought
before the meeting.

Section 3. SPECIAL MEETINGS. Special meetings of the Shareholders may be
called at any time by the Board of Directors, the Chairman of the Board, the
President, a Vice President, the Secretary, or by one or more Shareholders
holding not less than one-tenth (1/10) of the voting power of the corporation.
Except as next provided, notice shall be given as for the annual meeting.

Upon receipt of a written request addressed to the Chairman, President,
Vice President, or Secretary, mailed or delivered personally to such Officer by
any person (other than the Board) entitled to call a special meeting of
Shareholders, such Officer shall cause notice to be given, to the Shareholders
entitled to vote, that a meeting will be held at a time requested by the person
or persons calling the meeting, not less than thirty-five (35) nor more than
sixty (60) days after the receipt of such request. If such notice is not given
within twenty (20) days after receipt of such request, the persons calling the
meeting may give notice thereof in the same manner provided by these By-Laws.

Section 4. NOTICE OF MEETINGS - REPORTS. Notice of meetings, annual or
special, shall be given in writing not less than ten (10) nor more than sixty
(60) days before the date of the meeting to Shareholders entitled to vote
thereat. Such notice shall be given by the Secretary or the Assistant Secretary,
or if there be no such officer, or in the case of his or her neglect or refusal,
by any Director or Shareholder.

8.
<PAGE> 9

Such notices or any reports shall be given personally or by mail and
shall be sent to the Shareholder's address appearing on the books of the
corporation, or supplied by him or her to the corporation for the purpose of the
notice.

Notice of any meeting of Shareholders shall specify the place, the day
and the hour of meeting, and (1) in case of a special meeting, the general
nature of the business to be transacted and no other business may be transacted,
or (2) in the case of an annual meeting, those matters which Board at date of
mailing, intends to present for action by the Shareholders. At any meetings
where Directors are to be elected notice shall include the names of the
nominees, if any, intended at date of notice to be presented by management for
election.

If a Shareholder supplies no address, notice shall be deemed to have
been given if mailed to the place where the principal executive office of the
corporation is situated, or published at least once in some newspaper of general
circulation in the County of said principal office.

Notice shall be deemed given at the time it is delivered personally or
deposited in the mail or sent by other means of written communication. The
officer giving such notice or report shall prepare and file an affidavit or
declaration thereof.

When a meeting is adjourned for forty-five (45) days or more, notice of
the adjourned meeting shall be given as in case of an original meeting. Save, as
aforesaid, it shall not be necessary to give any notice of adjournment or of the
business to be transacted at an adjourned meeting other than by announcement at
the meeting at which said adjournment is taken.

Section 5. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The
transactions of any meeting of Shareholders, however called and notice, shall be
valid as through had at a meeting duly held after regular call and notice, if a
quorum be present either in person or by proxy, and if, either before or after
the meeting, each of the Shareholders entitled to vote, not present in person or
by proxy, sign a written waiver of notice, or a consent to the holding of such
meeting or an approval shall be filed with the corporate records or made a part
of the minutes of the meeting. Attendance shall constitute a waiver of notice,
unless objection shall be made as provided in applicable law.

Section 6. SHAREHOLDERS ACTING WITHOUT A MEETING - DIRECTORS. Any
action which may be taken at a meeting of the Shareholders, may be taken without
a meeting or notice of meeting if authorized by a writing signed by all of the
Shareholders entitled to vote at a meeting for such purpose, and filed with the
Secretary of the corporation, provided, further, that while ordinarily Directors
can be elected by unanimous written consent, if the Directors fail to fill a
vacancy, then a Director to fill that vacancy may be elected by the written
consent of persons

9.
<PAGE> 10

holding a majority of shares entitled to vote for the election of Directors.

Section 7. OTHER ACTIONS WITHOUT A MEETING. Unless otherwise provided
for under applicable law or the Articles of Incorporation, any action which may
be taken at any annual or special meeting of Shareholders may be taken without a
meeting and without prior notice, if a consent in writing, setting forth the
action so taken, signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize to take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.

Unless the consents of all Shareholders entitled to vote have been
solicited in writing,

(1) Notice of any Shareholder approval without a
meeting by less than unanimous written consent shall be given
at least ten (10) days before the consummation of the action
authorized by such approval, and

(2) Prompt notice shall be given of the taking of any
other corporate action approved by Shareholders without a
meeting be less than unanimous written consent, to each of
those Shareholders entitled to vote who have not consented in
writing.

Any Shareholder giving a written consent, or the Shareholder's
proxyholders, or a transferee of the shares of a personal representative of the
Shareholder or their respective proxyholders, may revoke the consent by a
writing received by the corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the corporation, but may not do so thereafter. Such
revocation is effective upon its receipt by the Secretary of the corporation.

Section 8. QUORUM. The holder of a majority of the shares entitled to
vote thereat, present in person, or represented by proxy, shall constitute a
quorum at all meetings of the Shareholders for the transaction of business
except as otherwise provided by law, by the Articles of Incorporation, or by
these By-Laws. If, however, such majority shall not be present or represented at
any meeting of the Shareholders, the shareholders entitled to vote thereat,
present in person, or by proxy, shall have the power to adjourn the meeting from
time to time, until the requisite amount of voting shares shall be present. At
such adjourned meeting at which the requisite amount of voting shares shall be
represented, any business may be transacted which might have been transacted at
a meeting as originally notified.

10.
<PAGE> 11

If a quorum be initially present, the Shareholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, if any action taken is approved by a
majority of the Shareholders required to initially constitute a quorum.

Section 9. VOTING AND RECORD DATE. The shareholders entitled to notice
of any meeting or to vote at any such meeting shall be only persons in whose
name shares stand on the stock records of the Corporation on the record date
determined in accordance with this Section 9. Unless otherwise provided by law,
the Certificate of Incorporation or these Bylaws, each outstanding share of
common stock standing in the stockholder's name on the stock transfer books
shall be entitled to one (1) vote on each matter submitted to a vote at such
meeting. The Corporation's outstanding preferred shares shall have such voting
rights as are set forth in the Corporation's Certificate of Incorporation and
any applicable Certificate of Determination of Preferences.

The Board of Directors may fix a record date for the determination of
the stockholders entitled to notice of, or to vote at any meeting of the
stockholders or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights with respect to any change, conversion or exchange of stock
or for the purpose of any other lawful action. The record date so fixed shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors and:

(1)in the case of determining stockholders entitled to vote
at any meeting of the stockholders, shall not be more than sixty
(60) nor less than ten (10) days before the date of such meeting,
unless otherwise provided by law;

(2) in the case of determining stockholders entitled to
consent to corporate action in writing without a meeting, shall not
be more than ten (10) days from the date upon which the resolution
fixing the date is adopted by the Board of Directors; and

(3) in the case of any other action, shall not be more than
sixty (60) days prior to any other action.

11.
<PAGE> 12

The determination of stockholders of record entitled to notice of or to
vote at a meeting of the stockholders shall apply to any adjournment of the
meeting; provided however, that the Board of Directors may fix a new record date
for the adjourned meeting.

If no record date is fixed by the Board of
Directors:

(1)the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at
the close of business on the business day next preceding the day
on which the notice is given or, if notice is waived, at the
close of business on the business day next preceding the day on
which the meeting is held;

(2)the record date for determining stockholders entitled
to express consent to corporate action in writing, when no prior
action of the Board of Directors is required by law, shall be the
first day on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the
Corporation in accordance with applicable law, or, if prior
action by the Board is required by law, shall be at the close of
business on the day on which the Board adopts the resolution
taking such prior action; and

(3)the record date for determining stockholders for any
other purpose shall be at the close of business on the day on
which the Board adopts the resolution relating thereto.

Section 10. PROXIES. Every Shareholder entitled to vote, or to execute
consents, may do so, either in person or by written proxy, executed in
accordance with the provisions of applicable law filed with the Secretary of the
corporation.

Section 11. ORGANIZATION. The President, or in the absence of the
President, any Vice President, shall call the meeting of the Shareholders to
order, and shall act as Chairman of the meeting. In the absence of the President
and all of the Vice Presidents, Shareholders shall appoint a Chairman for such
meeting. The Secretary of the corporation shall act as Secretary of all meetings
of the Shareholders, but in the absence of the Secretary at any meeting of the
Shareholders, the presiding Officer may appoint any person to act as Secretary
of the meeting.

12.
<PAGE> 13

Section 12. INSPECTORS OF ELECTION. In advance of any meeting of
Shareholders, the Board of Directors may, if they so elect, appoint inspectors
of election to act at such meeting or any adjournment thereof. If inspectors of
election be not so appointed, or if any persons so appointed fail to appear or
refuse to act, the chairman of any such meeting may, and on the request of any
Shareholder or his or her proxy shall, make such appointment at the meeting in
which case the number of inspectors shall be either one (1) or three (3) as
determined by a majority of the Shareholders represented at the meeting.

ARTICLE V

CERTIFICATES AND TRANSFER OF SHARES

Section 1. CERTIFICATES FOR SHARES. Certificates for shares shall be of
such form and device as the Board of Directors may designate and shall state the
name of the record holder of the shares represented thereby; its number; date of
issuance; the number of shares for which it is issued; a statement of the
rights, privileges preferences and restriction, if any; a statement as to the
redemption or conversion, if any; a statement of liens or restrictions upon
transfer or voting, if any; if the shares be assessable or, if assessments are
collectible by personal action, a plain statement of such facts.

All certificates shall be signed in the name of the corporation by the
Chairman of the Board or Vice Chairman of the Board or the President or Vice
President and by the Chief Financial Officer or an Assistant Treasurer or the
Secretary or any Assistant Secretary, certifying the number of shares and the
class or series of shares owned by the Shareholder.

Any or all of the signatures on the certificate may be facsimile. In
case any Officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed on a certificate shall have ceased to be that Officer,
transfer agent, or registrar before that certificate is issued, it may be issued
by the corporation with the same effect as if that person were an Officer,
transfer agent, or registrar at the date of issuance.

Section 2. TRANSFER ON THE BOOKS. Upon surrender to the Secretary or
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the

13.
<PAGE> 14

duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.

Section 3. LOST OR DESTROYED CERTIFICATES. Any person claiming a
certificate of stock to be lost or destroyed shall make an affidavit or
affirmation of that fact and shall, if the Directors so require, give the
corporation a bond of indemnity, inform and with one or more sureties
satisfactory to the Board, in at least double the value of the stock represented
by said certificate, whereupon a new certificate may be issued in the same
tender and for the same number of shares as the one alleged to be lost or
destroyed.

Section 4. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may
appoint one or more transfer agents or transfer clerks, and one or more
registrars which shall be an incorporated bank or trust company, either domestic
or foreign, who shall be appointed at such times and places as the requirements
of the corporation may necessitate and the Board of Directors may designate.

Section 5. CLOSING STOCK TRANSFER BOOKS - RECORD DATE. In order that the
corporation may determine the Shareholders entitled to notice of any meeting or
to vote or entitled to receive payment of any dividend or other distribution or
allotment of any rights or entitled to exercise any rights in respect to any
other lawful action the Board may fix, in advance, a record date, which shall
not be more than sixty (60) days nor less than ten (10) days prior to the date
of such meeting nor more than sixty (60) days prior to any other action.

If no record date is fixed; the record date for determining Shareholders
entitled to notice of or to vote at a meeting of Shareholders shall be at the
close of business on the business day next preceding the day on which notice is
given or if notice is waived, at the close of business on the business day next
preceding the day on which the meeting is held. The record date for determining
Shareholders entitled to give consent to corporate action in writing without a
meeting, when no prior action by the Board is necessary, shall be the day on
which the first written consent is given.

The record date for determining Shareholders for any other purpose shall
be at the close of business on the day on which the Board adopts the resolution
relating thereto, or the sixtieth

14.
<PAGE> 15

(60th) day prior to the date of such other action, whichever is later.

ARTICLE VI

RECORDS - REPORTS - INSPECTION

Section 1. RECORDS. The corporation shall maintain, in accordance with
generally accepted accounting principles, adequate and correct accounts, books
and records of its business and properties. All of such books, records and
accounts shall be kept at its principal executive office as fixed by the Board
of Directors from time to time.

Section 2. INSPECTION OF BOOKS AND RECORDS. All books and records shall
be open to inspection of the Directors and Shareholders from time to time and in
the manner provided under applicable law.

Section 3. CERTIFICATION AND INSPECTION OF BY-LAWS. The original or a
copy of these By-Laws, as amended or otherwise altered to date, certified by the
Secretary, shall be kept at the corporation's principal executive office and
shall be open to inspection by the Shareholders at all reasonable times during
office hours.

Section 4. CHECK, DRAFTS, ETC. All checks, drafts, or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as shall be determined from time to time by the Board
of Directors.

Section 5. CONTRACT, ETC. - HOW EXECUTED. The Board of Directors, except
as in the By-Laws otherwise provided, may authorize any Officer or Officers,
agent or agents, to enter into any contract or execute any instrument in the
name of and on behalf of the corporation. Such authority may be general or
confined to specific instances. Unless so authorized by the board of Directors,
no Officer, agent or employee shall have any power or authority to bind the
corporation by any contract or agreement, or to pledge its credit, or to render
it liable for any purpose or to any amount except as may be provided under
applicable law.

15.
<PAGE> 16

ARTICLE VII

ANNUAL REPORTS

Section 1. REPORT TO SHAREHOLDERS, DUE DATE. The Board of Directors
shall cause an annual report to be sent to the Shareholders not later than one
hundred twenty (120) days after the close of the fiscal or calendar year adopted
by the corporation. This report shall be sent at least fifteen (15) days before
the annual meeting of Shareholders to be held during the next fiscal year and in
the manner specified in Section 4 of the Article IV of these By-Laws for giving
notice to Shareholders of the corporation. The annual report shall contain a
balance sheet as of the end of the fiscal year and an income statement and
statement of changes in financial position for the fiscal year, accompanied by
any report of independent accountants or, if there is no such report, the
certificate of an authorized officer of the corporation that the statements were
prepared without audit from the books and records of the corporation.

ARTICLE VIII

AMENDMENTS TO BY-LAWS

Section 1. AMENDMENT BY SHAREHOLDERS. New By-Laws may be adopted or
these By-Laws may be amended or repealed by the vote or written consent of
holders of a majority of the outstanding shares entitled to vote; provided,
however, that if the Articles of Incorporation of the corporation set forth the
number of authorized Directors of the corporation, the authorized number of
Directors may be changed only by an amendment of the Article of Incorporation.

Section 2. POWERS OF DIRECTORS. Subject to the right of the Shareholders
to adopt, amend or repeal By-Laws, as provided in Section 1 of this Article
VIII, and the limitations, if any, under law, the Board of Directors may adopt,
amend or repeal any of these By-Laws other than a By-Law or amendment thereof
changing the authorized number of Directors.

Section 3. RECORD OF AMENDMENTS. Whenever an amendment or new By-Law is
adopted, it shall be copied in the book of By-Laws with the original By-Laws, in
the appropriate place. If any By-Law is repealed, the fact of repeal with the
date of the meeting at which the repeal with the date of the meeting at which

16.
<PAGE> 17

the repeal was enacted or written assent was filed shall be stated in said
book.

ARTICLE IX

CORPORATE SEAL

Section 1. Seal. The corporate seal shall be circular in form, and shall
have inscribed thereon the name of the corporation, the date and State of
incorporation.

ARTICLE X

MISCELLANEOUS

Section 1. REPRESENTATION OF SHARES IN OTHER CORPORATIONS. Shares of
other corporations standing in the name of this corporation may be voted or
represented and all incidents thereto may be exercised on behalf of the
corporation by the Chairman of the Board, the President or any Vice President
and the Secretary or an Assistant Secretary.

Section 2. SUBSIDIARY CORPORATIONS. Shares of this corporation owned by
a subsidiary shall not be entitled to vote on any matter. A subsidiary for these
purposed is defined as a corporation, the shares of which possessing more than
25% of the total combined voting power of all classes of shares entitled to
vote, are owned directly or indirectly through one (1) or more subsidiaries.

Section 3. INDEMNITY. Subject to applicable law, the corporation may
indemnify any Director, Officer, agent or employee as to those liabilities and
on those terms and conditions as appropriate. In any event, the corporation
shall have the right to purchase and maintain insurance on behalf of any such
persons whether or not the corporation would have the power to indemnify such
person against the liability insured against.

Section 4. ACCOUNTING YEAR. The accounting year of the corporation shall
be fixed by resolution of the Board of Directors.

17.

<PAGE> 1
Exhibit 4.1

STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
this 28th day of May, 1996 by and between NORMAN SHINK ("Optionee") and
STARTRONIX INTERNATIONAL INC., a Delaware corporation (the "Company")

R E C I T A L S

A. The Company has determined that it is in the best interest of the
Company to grant the option described in this Agreement to Optionee as an
inducement to remain in the service of the Company and as an incentive for
increasing efforts during such service.

B. Optionee has been advised to consult with an attorney and a tax
advisor before making any decision concerning this Agreement or an exercise of
any option granted hereby. THE UNTIMELY EXERCISE OF THE OPTION GRANTED HEREBY
AND THE SALE OF STOCK ACQUIRED AS A RESULT OF SUCH EXERCISE MAY CAUSE OPTIONEE
TO INCUR LIABILITIES UNDER THE TAXATION AND SECURITIES LAWS OF WHICH OPTIONEE
MAY BE OTHERWISE UNAWARE WITHOUT SEEKING THE ADVICE OF ADVISORS.

AGREEMENT

NOW, THEREFORE, the parties agree as follows:

1. Grant to Optionee.

The Company hereby grants to Optionee, subject to the terms and
conditions set forth herein, an option (the "Option") to purchase from the
Company all or any part of an aggregate of One Hundred Thousand (100,000) shares
(the "Shares") of the Company's common stock, subject to adjustment as provided
herein.

2. Exercise Price.

The price to be paid for common stock upon exercise of the option or any
part thereof shall be $1.50 per share (the "Exercise Price"), subject to
adjustment as provided herein.

3. Exercise.

(a) Optionee may exercise this Option in whole at any time or in part
from time to time, on any business day, prior to the time this Option terminates
as provided in Section 7 below, by delivery at the principal office of the
Company, of:
<PAGE> 2

(i) THIS OPTION,

(ii) the Exercise Notice in the form set forth on Exhibit A or Exhibit B
hereto (as applicable), duly executed and specifying the number of shares of
common stock to be purchased hereunder, and

(iii) payment of the sum (the "Purchase Price") obtained by multiplying
(x) the number of shares of common stock to be purchased by (y) the Exercise
Price. Optionee may elect, to the extent permitted by applicable statutes and
regulations, to make payment of the Purchase Price under one of the following
alternatives:

(A) in cash or by certified or official bank check
payable to the order of the Company, or

(B) Provided that at the time of exercise the Company's
common stock is publicly traded and quoted regularly in the
Wall Street Journal or by a quotation service acceptable to
the Board of Directors, payment by delivery of already-owned
shares of common stock, held for the period required to avoid
a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security
interests, which common stock shall be valued at its Fair
Market Value (as defined below); or

(C) Provided that at the time of exercise the
Company's common stock is publicly traded and quoted regularly
in the Wall Street Journal or by a quotation service
acceptable to the Board of Directors, and provided further,
that the exercise hereof pursuant to this paragraph (C) (a
"Net Exercise") will not result in a charge to the Company's
earnings, payment by delivery and surrender of this Option
with a Net Exercise Notice (in the form attached hereto as
Exhibit B) . In the event of a Net Exercise, Optionee shall
receive that number of shares of common stock in exchange for
the Option (or portion thereof) equal to (x) that number of
shares of common stock issuable upon exercise of that portion
of the Option being exchanged multiplied by (y) a fraction,
the numerator of which shall be the difference between the
Fair Market Value per share of the common stock and the
exercise price per share of the Option, the denominator of
which shall be the Fair Market Value per share of the common
stock; or

(D) To the extent permitted by applicable law, payment by
a combination of the methods of payment permitted by
paragraphs (A), (B) and (C) above.

Upon receipt thereof, the Company shall, as promptly as practicable, and
in any event within thirty (30) days thereafter,

-2-
<PAGE> 3

cause to be executed and delivered to Optionee a certificate or certificates for
the aggregate number of the Shares issuable upon such exercise. If this Option
shall have been exercised only in part, the Company shall, at the time of
delivery of such certificate or certificates, deliver to Optionee a new Option
evidencing the rights of Optionee to purchase the remaining shares of common
stock called for by this Option, pursuant to the same terms and conditions and
with the same restrictions specified herein, and which new Option shall be of
like tenor to this Option. All shares of common stock issuable upon the exercise
of this Option will be validly issued, fully paid and nonassessable.

(b) "Fair Market Value" means the value of the common stock of the
Company determined as follows:

(i) If the common stock is listed on any established stock
exchange or a national market system, including without limitation the
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a share
of common stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such system or
exchange on the last market trading day prior to the date of exercise
of the Option, as reported in the Wall Street Journal or such other
source as the Board deems reliable;

(ii) If the common stock is quoted on the NASDAQ System (but not
on the National Market thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market
Value of a share of common stock shall be the mean between the bid and
asked prices for the common stock on the last market trading day prior
to the date of exercise of the Option, as reported in the Wall Street
Journal or such other source as the Board deems reliable;

4. Fractional Shares.

No fractional shares shall be purchased upon the exercise of the Option.
The number of Shares to be purchased shall be rounded to the nearest whole
share.

5. Securities Law Requirements.

No part of the Option shall be exercised if counsel to the Company
determines that any applicable registration requirement under the Securities Act
of 1933 or any other applicable requirement of federal or state law has not been
met. The Option is granted to Optionee on the condition that all purchases of
common stock will be for investment purposes, and not with a view to resale or
distribution. Any Shares issued under this Option shall be specifically subject
to such restrictive provisions as the Board may from time to time deem necessary
in order to fully comply

-3-
<PAGE> 4

with all applicable securities laws. Optionee understands that the Company is
not presently taking actions to register the shares to be obtained upon the
exercise of the Option, is under no obligation to do so, and has no present
intention to do so.

Stock certificates evidencing Shares acquired under the Option pursuant
to an unregistered transaction shall bear the following restrictive legend and
such other restrictive legends as are required or deemed advisable under the
provisions of any applicable law:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF
1933 AND THE RULES AND REGULATIONS THEREUNDER.

6. Adjustments.

(a) Stock Splits and Combinations. If the Company at any time or from
time to time after the Effective Date effects a subdivision of the outstanding
common stock pursuant to a stock split or similar event, the Exercise Price of
the Option shall be proportionately decreased, and conversely, if the Company at
any time or from time to time after the Effective Date combines the outstanding
shares of common stock into a smaller number of shares in a reverse stock split
or similar event, the Exercise Price of the Option shall be proportionately
increased. Upon the adjustment of the Exercise Price pursuant to the foregoing
provisions, the number of shares of common stock subject to the exercise of the
Option shall be adjusted to the nearest full share by multiplying the Shares
subject to the Option by a fraction, the numerator of which is the Exercise
Price immediately prior to such adjustment and the denominator of which is the
Exercise Price immediately after such adjustment. Any adjustment under this
subsection (a) shall be effective at the close of business on the date the
subdivision or combination becomes effective.

(b) Certain Dividends and Distributions. If the Company at any time or
from time to time after the Effective Date makes, or fixes a record date for the
determination of holders of common stock entitled to receive a dividend or other
distribution payable in additional shares of common stock, then and in each such
event the number of shares of common stock subject to the Option shall be
increased and the Exercise Price then in effect shall be decreased as of the
date of such issuance or, in the event such record date is fixed, as of the
close of business on such record date, by:

(i) multiplying the Exercise Price then in effect by a
fraction (1) the numerator of which is the total number of shares of
common stock issued and outstanding immediately

-4-
<PAGE> 5

prior to the time of such issuance or the close of business on such
record date, and (2) the denominator of which shall be the total
number of shares of common stock issued and outstanding immediately
prior to the time of such issuance or the close of business on such
record date plus the number of shares of common stock issuable in
payment of such dividend or distribution; and

(ii) multiplying the number of shares of common stock subject to
the Option by a fraction (1) the numerator of which is the total number
of shares of common stock issued and outstanding immediately prior to
the time of such issuance or the close of business on such record date
plus the number of shares of common stock issuable in payment of such
dividend or distribution, and (2) the denominator of which shall be the
total number of shares of common stock issued and outstanding
immediately prior to the time of such issuance or the close of business
on such record date.

If, however, such record date is fixed and such dividend is not fully
paid or if such distribution is not fully made on the date fixed therefor, the
number of shares of common stock subject to the Option and the Exercise Price
thereof shall be recomputed accordingly as of the close of business on such
record date and thereafter shall be adjusted pursuant to this subsection (b) as
of the time of actual payment of such dividends or distributions.

(i) makes a dividend or other distribution payable in
securities of the Company other than shares of common stock, or

(ii) changes any common stock into the same or a different
number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets provided for
elsewhere in this Section 6), or

(iii) effects a capital reorganization of the common stock
(other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this
Section 6) or merger or consolidation of the Company with or into
another corporation, or the sale of all or substantially all of the
Company's properties and assets to any other person,

then, in each such event, any and all new, substituted or additional securities
to which Optionee is entitled by reason of his ownership of the Shares shall be
immediately subject to the Option and be included in the word "Shares" for all
purposes hereunder with the same force and effect as the Shares from time to

- 5 -
<PAGE> 6

time subject hereto. After each such event, the Exercise Price per share shall
be proportionately adjusted so that the aggregate Exercise Price upon exercise
of the Option shall remain the same as before such event.

7. Expiration Date.

The Option shall terminate in any event on the earliest of (a) the 28th
day of May, 1997 at 5:00 p.m. California time, (b) the expiration of the period
described in Section 8 below, or (c) the expiration of the period described in
Section 9 below. The Option shall also terminate as provided elsewhere in this
Agreement.

8. Exercise Following Cessation of Employment.

If Optionee's employment with the Company ceases for any reason or no
reason, whether voluntarily or involuntarily, with or without cause, other than
death or Disability, the Option (to the extent it has not previously been
exercised and is exercisable at the time of cessation) may be exercised within
ninety (90) consecutive days after the date of such cessation. The foregoing
sentence to the contrary notwithstanding in the event Optionee's employment with
the Company is terminated by reason of misconduct, the Option (to the extent it
has not previously been exercised and is exercisable at the time of cessation)
may only be exercised within thirty (30) consecutive days after the date of such
cessation. For the purposes of this Option, Optionee's employment shall be
considered to have terminated for "misconduct" if he or she resigns, or is
terminated for (i) fraud, misappropriation, embezzlement or intentional and
material damage to property or business opportunities of the Company, or (ii)
material breach by Optionee of any express provision of the Employment Agreement
and failure to cure such breach within thirty (30) days after receipt of written
notice thereof.

9. Exercise Following Death or Disability.

If Optionee's employment with the Company ceases by reason of Optionee's
death or Disability, or if Optionee dies after cessation as an employee but
while the Option would have been exercisable hereunder, the Option (to the
extent it has not previously been exercised and is exercisable at the time of
cessation) may be exercised within twelve (12) months after the date of
Optionee's death or cessation by reason of Disability. In the case of death, the
exercise may be made by Optionee's representative or by the person entitled
thereto under Optionee's will or the laws of descent and distribution; provided
that such representative or such person consents in writing to abide by and be
subject to the terms of this Option and such writing is delivered to the
President or Chairman of the Company.

-6-
<PAGE> 7

For purposes hereof, the term "Disability" shall mean a medically
determinable physical or mental impairment which has made an individual
incapable of engaging in any substantial gainful activity. A condition shall be
considered a Disability only if (i) it can be expected to result in death or has
lasted or it can be expected to last for a continuous period of not less than
twelve (12) months, and (ii) the Board (with Optionee abstaining from the
decision, if Optionee is on the Board), based upon medical evidence, has
expressly determined that Disability exists.

10. Nontransferable.

This Option shall be exercisable during Optionee's lifetime only by
Optionee or Optionee's guardian or legal representative and shall be
nontransferable, except that Optionee may transfer all or any part of the Option
by will or by the laws of descent and distribution.

11. No Right to Continued Employment.

This Option is not an employment contract and nothing in this Option
shall create any obligation on Optionee's part to continue in the employ of the
Company, or of the Company to continue Optionee's employment with the Company.

12. No Rights as Stockholder.

The holder of this Option shall not have any of the rights of a
stockholder with respect to the shares subject to the Option until such holder
shall have exercised the Option and paid the exercise price.

13. Investment Representation.

Optionee hereby represents to the Company that Optionee is acquiring the
Option and any underlying shares for Optionee's own account for investment
purposes only and not for the purpose of resale or distribution. Optionee has no
contract, undertaking, agreement or arrangement with any person to sell,
transfer or pledge to such person, or anyone else, all or any part of the Option
or the underlying shares, and Optionee has no present plan to enter into any
such contact, undertaking, agreement or arrangement. Optionee further agrees to
execute and deliver any further investment certificates as counsel to the
Company deems necessary or advisable to comply with state or federal securities
laws.

-7-
<PAGE> 8

14. Notices.

Any notice or other communication required or permitted to be given to
the parties hereto shall be in writing and hand delivered or sent by certified
or registered mail, return receipt requested, first class postage prepaid, to
the respective addresses of the parties set forth below:

If to Optionee: Norman Shink
__________________________________
__________________________________

If to Company: StarTronix International Inc.
2402 Michelson, Suite 160
Irvine, California 92715
Attention: Corporate Secretary

or to such other address as a party hereto may from time to time designate in
writing to the other. Any notice delivered by hand is deemed to have been given
upon delivery. Any notice mailed as provided above is deemed to have been given
five (5) days after the date of mailing.

15. Choice of Law.

This Agreement shall be governed by and construed in accordance with the
laws of the State of California.

IN WITNESS WHEREOF, the parties have caused this Stock Option Agreement
to be executed as of the date first set forth above.

"Company": STARTRONIX INTERNATIONAL INC.,
a Delaware corporation

By: /s/ Greg Gilbert
------------------------------------
Greg Gilbert President

"Optionee": /s/ Norman Shink
---------------------------------------
NORMAN SHINK

-8-
<PAGE> 9

EXHIBIT A

EXERCISE NOTICE

(To be signed only upon exercise of Option)

StarTronix International Inc.
2402 Michelson, Suite 160
Irvine, California 92715
Attention: Corporate Secretary

Re: Exercise of Stock Option

Ladies and Gentlemen:

Pursuant to Section 3 of that certain Stock Option Agreement (the
"Agreement") between the undersigned and StarTronix International Inc., a
Delaware corporation (the "Company"), the undersigned hereby elects to exercise
the option granted thereby to purchase _______* shares of common stock of the
Company (subject to adjustment as provided in such Stock Option Agreement) and
herewith makes payment of $_______ therefor, and requests that the certificates
for such shares be issued in the name of, and be delivered to__________________
at the following address:_____________________________________________________.

The undersigned hereby represents and warrants that the undersigned is
acquiring such shares of common stock for the undersigned's own account, for
investment and not with a view to or for resale in connection with the
distribution thereof.

Dated:_____________

______________________________________
(Signature must conform in all respects
to name of Optionee as specified in the
Stock Option Agreement)

* Insert here all or such portion of the number of shares specified at the
beginning of the attached Option with respect to which Optionee desires
to exercise Optionee's purchase right, without adjustment for any other
or additional stock or other securities, property or cash that may be
delivered on such exercise.

-9 -
<PAGE> 10

EXHIBIT B

NET EXERCISE NOTICE

(To be signed only upon net exercise of Option)

StarTronix International Inc.
2402 Michelson, Suite 160
Irvine, California 92715
Attention: Corporate Secretary

Re: Net Exercise of Stock Option

Ladies and Gentlemen:

Pursuant to Section 3(a)(iii)(C) of that certain Stock Option Agreement
(the "Agreement") between the undersigned and StarTronix International Inc., a
Delaware corporation (the "Company"), the undersigned hereby elects to exchange
the option granted thereby for _______* shares of common stock of the Company
(subject to adjustment as provided in such Stock Option Agreement), as
permitted by the terms of the Stock Option Agreement.

If the number of shares referenced in this Net Exercise Notice shall not
be all of the shares exchangeable or purchasable under the Option, a new option
shall be issued in the name of the undersigned for the balance remaining of the
shares purchasable thereunder rounded to the nearest whole number of shares.

The undersigned hereby represents and warrants that the undersigned is
acquiring such shares of common stock for the account of the undersigned, for
investment and not with a view to or for resale in connection with the
distribution thereof.

Dated:_______________

______________________________________
(Signature must conform in all respects
to name of Optionee as specified in the
Stock Option Agreement)

* Insert all or such portion of the number of shares specified at the
beginning of the attached Option with respect to which Optionee desires
to exercise Optionee's purchase right, without adjustment for any other
or additional stock or other securities, property or cash that may be
delivered on such exercise.

-10-

<PAGE> 1
EXHIBIT 4.2

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR OTHER APPLICABLE SECURITIES LAWS OF ANY JURISDICTION, AND THIS WARRANT CANNOT
BE EXERCISED, SOLD OR TRANSFERRED, AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT CANNOT BE SOLD OR TRANSFERRED, UNLESS AND UNTIL THEY
ARE SO REGISTERED OR UNLESS AN EXEMPTION IS THEN AVAILABLE.

STARTRONIX INTERNATIONAL INC.
2402 MICHELSON DRIVE
SUITE 160
IRVINE, CALIFORNIA 92715

WARRANT

Date of Issuance:
May 29, 1996
Expiration Date:
May 29, 1998

THIS CERTIFIES THAT, for value received, D.J. LTD., or any registered
assigns thereof (the "Registered Holder"), is entitled to subscribe for and
purchase from STARTRONIX INTERNATIONAL INC. (the "Company"), a Delaware
corporation, 67,500 shares (the "Shares") of Common Stock, par value $.001 of
the Company (the "Common Stock"), at a price of $1.00 per Share, at any time and
from time to time after the date hereof and through the second anniversary of
the date hereof (the "Warrant Exercise Period").

This Warrant is subject to the following provisions, terms and
conditions:

1. EXERCISE; ISSUANCE OF CERTIFICATES, ETC.

(a) The rights represented by this Warrant may be exercised by
the Registered Holder hereof at any time and from time to time during the
Warrant Exercise Period in whole or in part (but not as to a fractional Share),
by the surrender of this Warrant (properly endorsed if required) accompanied by
a completed and executed copy of the Exercise Agreement in the form of Exhibit I
to this Warrant at the principal office of the Company (or at such other office
or agency of the Company as it may designate in accordance herewith) and upon
payment to it in immediately available funds of an amount equal to $1.00
multiplied by the number of Shares as to which this Warrant is then being
exercised (the "Warrant Exercise Price").

1
<PAGE> 2
(b) The Company agrees that the Shares purchased upon exercise of this
Warrant shall be, and are deemed to be, issued to the holder hereof as the
record owner of such Shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment of the Warrant Exercise
Price shall have been made for Shares as provided herein. Certificates for the
Shares purchased upon exercise of this Warrant shall be delivered to the holder
hereof within a reasonable time, not to exceed ten (10) days, after this Warrant
shall have been so exercised.

(c) The rights represented by this Warrant shall terminate upon the
earlier to occur of exercise of this Warrant in whole or the expiration of the
Warrant Exercise Period.

2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES

(a) The Company covenants and agrees that all Shares that may be issued
upon the exercise of this Warrant will, upon issuance, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof.

(b) The Company further covenants and agrees that during the Warrant
Exercise Period, the Company will at all times have authorized and reserved for
issuance pursuant to the exercise of this Warrant, a sufficient number of Shares
to provide for the exercise of this Warrant.

3. NO FRACTIONAL SHARES

The Company will not be obligated to issue any fractional Share or
Shares upon exercise of this Warrant. To the extent the holder of this Warrant
may be entitled to purchase a fractional Share, the Company shall make a cash
payment in respect of such fraction in an amount equal to the same fraction of
the per-Share Warrant Exercise Price as of the Warrant Exercise Date.

4. REORGANIZATIONS, RECLASSIFICATIONS, CONSOLIDATIONS, MERGERS
OR SALES

(a) In the event of any capital reorganization or reclassification of
the capital stock of the Company, or any consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of the
Company's assets to another corporation, which results in the holders of any
shares of Common Stock becoming entitled to receive stock, securities or assets
with respect to or in exchange for such shares, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provisions (in form reasonably satisfactory to the holder of the
Warrant) shall be made such that immediately following consummation of such
transaction, the holder of this Warrant shall have the right to purchase and
receive upon the basis and terms and conditions specified in this Warrant, and
in lieu of the Shares immediately theretofore purchasable and receivable upon
the exercise of this Warrant, such shares of stock, securities or assets as may

2
<PAGE> 3
be issued or payable with respect to, or in exchange for, the number of Shares
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby had such reorganization, reclassification,
consolidation, merger or sale not taken place.

(b) If a purchase, tender or exchange offer is made to and accepted by
the holders of a majority of the outstanding shares of the Company's Common
Stock, the Company shall not effect any consolidation, merger or sale with the
individual or entity having made such offer or with any Affiliate of such
individual or entity, unless, prior to the consummation of such consolidation,
merger or sale, the holder of this Warrant shall have been given a reasonable
opportunity to elect to receive upon the exercise of this Warrant either the
Shares then issuable with respect to the Shares of Common Stock or the stock,
securities or assets issuable to a holder of the number of Shares for which this
Warrant may then be exercised in accordance with such offer.

5. NOTICE OF CERTAIN EVENTS

If at any time during the Warrant Exercise Period:

(a) the Company shall declare any cash dividend upon Shares of Common
Stock;

(b) the Company shall declare any dividend upon any Shares of Common
Stock payable in any class or category of securities or make any special
dividend or other distribution (other than regular cash dividends) to the
holders of any Shares of Common Stock;

(c) the Company shall offer for subscription to the holders of any
Shares of Common Stock any additional securities of any class or category or
other rights to acquire any such securities;

(d) there shall be any capital reorganization, or reclassification of
the capital stock of the Company, or any consolidation or merger of the Company
with, exchange of any of the securities of the Company for those of, or sale of
all or any substantial part of the assets of the Company to, another individual
or entity; or

(e) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;

then, in any one or more of said cases, the Company shall give, in accordance
with SECTION 11(c) hereof, (i) at least twenty (20) days' prior written notice
of the date on which the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up (which
notice shall also specify the date on which the holders of Shares shall be
entitled to such dividend, distribution or subscription rights), and (ii) in the
case of any such reorganization,

<PAGE> 4
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, at least twenty (20) days prior written notice of the date when the
same shall take place and the date on which the holders of Shares shall be
entitled to exchange their Shares for (or to receive in respect of their Shares)
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.

6. Closing of Books

The Company shall at no time close its transfer books against the
transfer of this Warrant or of any Shares issued or issuable upon the exercise
of this Warrant in any manner which interferes with the timely exercise of this
Warrant.

7. No Voting Rights

This Warrant will not entitle the holder hereof to any voting
rights or other rights as an equity holder of the Company.

8. Transferability

This Warrant and all rights hereunder are transferable, in whole
or in part, without charge to the Registered Holder, upon surrender of this
Warrant with a properly executed Assignment (in the form of Exhibit II hereto)
at the principal office of the Company, or at such other location as the Company
shall designate in accordance with SECTION 11(c) hereof. This Warrant and the
Shares issued upon exercise hereof may not be offered, sold, or transferred
except in compliance with the Act, and any applicable state securities laws, and
then only after receipt of an agreement of the offeree to whom such offer or
sale is made to comply with the provisions of this SECTION 8 with respect to any
resale or other disposition of such securities; provided that no such agreement
shall be required from any purchaser of this Warrant or any underlying security
pursuant to a registration statement effective under the Act. The Registered
Holder of this Warrant agrees that, prior to the disposition of any security
purchased on the exercise hereof under circumstances that might require
registration of such security under the Act, or any similar statute then in
effect, the Registered Holder shall give written notice to the Company,
expressing the Registered Holder's intention as to such disposition. Promptly
upon receiving such notice, the Company shall present a copy thereof to its
securities counsel. If, in the opinion of such counsel (or of other securities
counsel reasonably acceptable to the Company), the proposed disposition does not
require registration of such security under the Act, or any similar statute then
in effect, the Company shall, as promptly as practicable, notify the Registered
Holder of such opinion, whereupon the Registered Holder shall be entitled to
dispose of such security in accordance with the terms of the notice delivered by
the Registered Holder to the Company.

4
<PAGE> 5
9. Exchangeable for Different Denominations

This Warrant is exchangeable, upon the surrender hereof by the
Registered Holder at the principal office of the Company, or at such other
location as the Company shall designate in accordance with SECTION 11(c) hereof,
for new Warrants of like tenor representing in the aggregate the purchase rights
hereunder, and each of such new Warrants, as set forth on the front page hereof,
will represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. The date the Company initially issued this
Warrant, which is set forth on the front page hereof, will be deemed to be the
"Date of Issuance" of this Warrant and any purchase warrant exchanged or
substituted herefor, regardless of the number of times (and dates on which) new
certificates representing the unexpired and unexercised rights formerly
represented by this Warrant are issued.

10. Replacement Warrant

Upon receipt by the Company from any holder of this Warrant of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this instrument and an indemnity reasonably
satisfactory to it and, in case of mutilation, upon surrender and cancellation
hereof, the Company will execute and deliver in lieu hereof a new Warrant of
like tenor to such holder; provided that, in the case of mutilation, no
indemnity shall be required if this Warrant in identifiable form is surrendered
to the Company for cancellation.

11. General Provisions

(a) DESCRIPTIVE HEADINGS. The descriptive headings of the
several sections of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.

(b) GOVERNING LAW. This Warrant shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of California, without giving effect to principles concerning conflicts
of law.

(c) NOTICES. (i) All notices or other communications required or
permitted to be given or made by the terms of this Warrant shall be in writing
and delivered personally or sent by pre-paid, first class, certified or
registered air mail (or the functional equivalent in any foreign country),
return receipt requested, or by facsimile transmission to the intended recipient
thereof at its address or facsimile number set out below. Any such notice or
communication shall be deemed to have been duly given immediately (if given or
made by facsimile confirmed by mailing a copy thereof to the recipient in
accordance with this SECTION 11(c) on the date of such facsimile), or three days
after mailing (if given or made by mail addressed to a location within the
country in which it is posted) or seven days after mailing (if made or given by
mail addressed to a location outside the country in which it is posted), and in
proving the same it shall be sufficient to show that the envelope containing the
notice was duly

5
<PAGE> 6
addressed, stamped and posted, or that receipt of a facsimile was confirmed by
the recipient as provided above. The addresses and facsimile numbers of the
parties for purposes of this Warrant are:

A. If to the Company: StarTronix International Inc.
2402 Michelson Drive
Suite 160
Irvine, California 92715
Attn: Greg Gilbert
Facsimile No.: (714) 474-9200

With a copy (which Kilpatrick & Cody
shall not constitute 1100 Peachtree Street
notice hereunder) to: Suite 2800
Atlanta, Georgia 30309-4530
Attn: Dennis L. Zakas, Esq.
Facsimile No.: (404) 815-6555

B. If to the Registered Holder: D. J. Ltd.
________________________________
________________________________
Attn:___________________________
Facsimile No.:(___) ___-________

C. If to a holder other than the initial Registered Holder, to such
address as such holder shall provide to the Company in writing;
provided that if such holder does not provide the Company with
such holder's address, the Company shall have no obligation to
deliver any notices to such holder required hereunder.

(ii) Any party may change the address to which notices or other
communications to such party shall be delivered or mailed by giving notice
thereof to the other parties hereto in the manner provided herein.

6
<PAGE> 7
IN WITNESS WHEREOF, StarTronix International Inc. has caused this Warrant
to be signed by its duly authorized officers under its corporate seal, and this
Warrant to be dated as of this 29th day of May, 1996.

STARTRONIX INTERNATIONAL INC.

By: /s/ Greg Gilbert
----------------------------------
Greg Gilbert, President

[CORPORATE SEAL]

Attest:

/s/ J. Michael Sellards
- ----------------------------------------
J. Michael Sellards, Assistant Secretary

7
<PAGE> 8
EXHIBIT I

EXERCISE AGREEMENT

To: ________________________ Dated: ___________________________
________________________
________________________

The undersigned Registered Holder, pursuant to the provisions set forth
in the within Warrant, hereby subscribes for and purchases __________ Shares
covered by such Warrant and herewith makes full payment in immediately available
funds of $_________________ for such Shares at the Warrant Exercise Price
provided by such Warrant.

__________________________________
(Signature of Registered Holder)

__________________________________
(Print or type name)

__________________________________
(Address)

__________________________________
__________________________________

NOTICE: The signature on this Exercise Agreement must correspond with
the name of the Registered Holder as written upon the face of the within
Warrant, or upon the Assignment thereof, if applicable, in every particular,
without alteration, enlargement, or any change whatsoever, and must be
guaranteed by a bank, other than a saving bank, having an office or
correspondent in New York, New York, Los Angeles, California, or Atlanta,
Georgia, or by a firm having membership on a registered national securities
exchange and an office in New York, New York, Los Angeles, California, or
Atlanta, Georgia.

SIGNATURE GUARANTEE

Authorized Signature:__________________________________________________________

Name of Bank or Finn:__________________________________________________________

Dated:_________________________________________________________________________

8
<PAGE> 9
EXHIBIT 11

ASSIGNMENT

FOR VALUE RECEIVED, ________________________________________, the
undersigned Registered Holder, hereby sells, assigns, and transfers all of the
rights of the undersigned under the within Warrant with respect to the number of
Shares covered thereby set forth below, unto the Assignee identified below, and
does hereby irrevocably constitute and appoint_________________________ to
effect such transfer of rights on the books of the Company, with full power of
substitution:

Name of Assignee Address of Assignee Portion of Warrant
- ---------------- ------------------ ------------------

Dated:________________ ______________________________________________
(Signature of Registered Holder)

______________________________________________
(Print or type name)

NOTICE: The signature on this Assignment must correspond with the name
of the Registered Holder as written upon the face of the within Warrant, in
every particular, without alteration, enlargement, or any change whatsoever, and
must be guaranteed by a bank, other than a saving bank, having an office or
correspondent in New York, New York, Los Angeles, California, or Atlanta,
Georgia, or by a firm having membership on a registered national securities
exchange and an office in New York, New York, Los Angeles, California, or
Atlanta, Georgia.

SIGNATURE GUARANTEE

Authorized Signature:__________________________________________________________

Name of Bank or Firm:__________________________________________________________

Dated:_________________________________________________________________________

<PAGE> 1
EXHIBIT 4.3

STARTRONIX INTERNATIONAL INC.
2402 MICHELSON DRIVE
SUITE 160
IRVINE, CALIFORNIA 92715

WARRANT

Date of Issuance:
May 29, 1996
Expiration Date:
May 29, 1998

THIS CERTIFIES THAT, for value received, STOCKWORKS USA, INC., or any
registered assigns thereof (the "Registered Holder"), is entitled to subscribe
for and purchase from STARTRONIX INTERNATIONAL INC. (the "Company"), a Delaware
corporation, 22,500 shares (the "Shares") of Common Stock, par value $.001 of
the Company (the "Common Stock"), at a price of $1.00 per Share, at any time and
from time to time after the date hereof and through the second anniversary of
the date hereof (the "Warrant Exercise Period").

This Warrant is subject to the following provisions, terms and
conditions:

1. EXERCISE; ISSUANCE OF CERTIFICATES, ETC.

(a) The rights represented by this Warrant may be exercised by the
Registered Holder hereof at any time and from time to time during the Warrant
Exercise Period in whole or in part (but not as to a fractional Share), by the
surrender of this Warrant (properly endorsed if required) accompanied by a
completed and executed copy of the Exercise Agreement in the form of Exhibit I
to this Warrant at the principal office of the Company (or at such other office
or agency of the Company as it may designate in accordance herewith) and upon
payment to it in immediately available funds of an amount equal to $1.00
multiplied by the number of Shares as to which this Warrant is then being
exercised (the "Warrant Exercise Price").

1
<PAGE> 2

(b) The Company agrees that the Shares purchased upon exercise of this
Warrant shall be, and are deemed to be, issued to the holder hereof as the
record owner of such Shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment of the Warrant Exercise
Price shall have been made for Shares as provided herein. Certificates for the
Shares purchased upon exercise of this Warrant shall be delivered to the holder
hereof within a reasonable time, not to exceed ten (10) days, after this Warrant
shall have been so exercised.

(c) The rights represented by this Warrant shall terminate upon the
earlier to occur of exercise of this Warrant in whole or the expiration of the
Warrant Exercise Period.

2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES

3. NO FRACTIONAL SHARES

4. REORGANIZATIONS, RECLASSIFICATIONS, CONSOLIDATIONS, MERGERS
OR SALES

2
<PAGE> 3

be issued or payable with respect to, or in exchange for, the number of Shares
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby had such reorganization, reclassification,
consolidation, merger or sale not taken place.

5. NOTICE OF CERTAIN EVENTS

If at any time during the Warrant Exercise Period:

(a) the Company shall declare any cash dividend upon Shares of Common
Stock;

(c) the Company shall offer for subscription to the holders of any
Shares of Common Stock any additional securities of any class or category or
other rights to acquire any such securities;

(e) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;

3
<PAGE> 4

reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, at least twenty (20) days prior written notice of the date when the
same shall take place and the date on which the holders of Shares shall be
entitled to exchange their Shares for (or to receive in respect of their Shares)
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.

6. CLOSING OF BOOKS

7. NO VOTING RIGHTS

This Warrant will not entitle the holder hereof to any voting rights or
other rights as an equity holder of the Company.

8. TRANSFERABILITY

This Warrant and all rights hereunder are transferable, in whole or in
part, without charge to the Registered Holder, upon surrender of this Warrant
with a properly executed Assignment (in the form of Exhibit II hereto) at the
principal office of the Company, or at such other location as the Company shall
designate in accordance with SECTION 11(c) hereof. This Warrant and the Shares
issued upon exercise hereof may not be offered, sold, or transferred except in
compliance with the Act, and any applicable state securities laws, and then only
after receipt of an agreement of the offeree to whom such offer or sale is made
to comply with the provisions of this SECTION 8 with respect to any resale or
other disposition of such securities; provided that no such agreement shall be
required from any purchaser of this Warrant or any underlying security pursuant
to a registration statement effective under the Act. The Registered Holder of
this Warrant agrees that, prior to the disposition of any security purchased on
the exercise hereof under circumstances that might require registration of such
security under the Act, or any similar statute then in effect, the Registered
Holder shall give written notice to the Company, expressing the Registered
Holder's intention as to such disposition. Promptly upon receiving such notice,
the Company shall present a copy thereof to its securities counsel. If, in the
opinion of such counsel (or of other securities counsel reasonably acceptable to
the Company), the proposed disposition does not require registration of such
security under the Act, or any similar statute then in effect, the Company
shall, as promptly as practicable, notify the Registered Holder of such opinion,
whereupon the Registered Holder shall be entitled to dispose of such security in
accordance with the terms of the notice delivered by the Registered Holder to
the Company.

4
<PAGE> 5

9. EXCHANGEABLE FOR DIFFERENT DENOMINATIONS

10. REPLACEMENT WARRANT

Upon receipt by the Company from any holder of this Warrant of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this instrument and an indemnity reasonably
satisfactory to it and, in case of mutilation, upon surrender and cancellation
hereof, the Company will execute and deliver in lieu hereof a new Warrant of
like tenor to such holder; provided that, in the case of mutilation, no
indemnity shall be required if this Warrant in identifiable form is surrendered
to the Company for cancellation.

11. GENERAL PROVISIONS

(a) DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections of this Warrant are inserted for convenience only and do not constitute
a part of this Warrant.

(b) GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
California, without giving effect to principles concerning conflicts of law.

5
<PAGE> 6

addressed, stamped and posted, or that receipt of a facsimile was confirmed by
the recipient as provided above. The addresses and facsimile numbers of the
parties for purposes of this Warrant are:

A. If to the Company: StarTronix International Inc.
2402 Michelson Drive
Suite 160
Irvine, California 92715
Attn: Greg Gilbert
Facsimile No.: (714) 474-9200

With a copy (which Kilpatrick & Cody
shall not constitute 1100 Peachtree Street
notice hereunder) to: Suite 2800
Atlanta, Georgia 30309-4530
Attn: Dennis L. Zakas, Esq.
Facsimile No.: (404) 815-6555

B. If to the Registered Holder: Stockworks USA, Inc.

____________________________
____________________________
Attn:_______________________
Facsimile No.:______________

C. If to a holder other than the initial Registered Holder, to
such address as such holder shall provide to the Company in
writing; provided that if such holder does not provide the
Company with such holder's address, the Company shall have no
obligation to deliver any notices to such holder required
hereunder.

(ii) Any party may change the address to which notices or
other communications to such party shall be delivered or mailed by giving notice
thereof to the other parties hereto in the manner provided herein.

6
<PAGE> 7

IN WITNESS WHEREOF, StarTronix International Inc. has caused
this Warrant to be signed by its duly authorized officers under its corporate
seal, and this Warrant to be dated as of this 29th day of May, 1996.

STARTRONIX INTERNATIONAL INC.

By: /s/ Greg Gilbert
------------------------------
Greg Gilbert, President

[CORPORATE SEAL]

Attest:

/s/ J. Michael Sellards
- ----------------------------------------
J. Michael Sellards, Assistant Secretary

7
<PAGE> 8

EXHIBIT I
EXERCISE AGREEMENT
To: ______________________________ Dated:______________
______________________________
______________________________

The undersigned Registered Holder, pursuant to the provisions set forth
in the within Warrant, hereby subscribes for and purchases _____ Shares covered
by such Warrant and herewith makes full payment in immediately available funds
of $__________ for such Shares at the Warrant Exercise Price provided by such
Warrant.

___________________________________
(Signature of Registered Holder)

___________________________________
(Print or type name)

___________________________________
(Address)

___________________________________
___________________________________

SIGNATURE GUARANTEE

Authorized Signature:______________________________________________________

Name of Bank or Firm:______________________________________________________

Dated:_____________________________________________________________________

8
<PAGE> 9

EXHIBIT II

ASSIGNMENT

FOR VALUE RECEIVED, ________________, the undersigned Registered
Holder, hereby sells, assigns, and transfers all of the rights of the
undersigned under the within Warrant with respect to the number of Shares
covered thereby set forth below, unto the Assignee identified below, and does
hereby irrevocably constitute and appoint ________________ to effect such
transfer of rights on the books of the Company, with full power of substitution:

Name of Assignee Address of Assignee Portion of Warrant

Dated:_____________________________ ___________________________________
(Signature of Registered Holder)

____________________________________
(Print or type name)

SIGNATURE GUARANTEE

Authorized Signature:______________________________________________________

Name of Bank or Firm:______________________________________________________

Dated:_____________________________________________________________________

<PAGE> 1
EXHIBIT 4.4

CERTIFICATION OF DETERMINATION
OF
RIGHTS, PREFERENCES, PRIVILEGES, AND RESTRICTIONS
OF
SERIES B PREFERRED STOCK
OF STARTRONIX INTERNATIONAL, INC.
(A DELAWARE CORPORATION)

The undersigned, Greg Gilbert and Gerald Fitch, President and
Secretary, respectively, of Startronix International, Inc., a Delaware
corporation (the "Corporation"), hereby certify in such capacities that:

1. They are the duly elected and acting President and Secretary,
respectively, of the Corporation.

2. Pursuant to authority given by the Corporation's Certificate of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:

WHEREAS, the Certificate of Incorporation of the Corporation
authorized the Corporation to issue up to Fifty Million (50,000,000)
shares of $.001 par value Common Stock (the "Common Stock") issuable
from time to time in one or more series; and

WHEREAS, the Certificate of Incorporation of the Corporation also
authorized the Corporation to issue up to Ten Million (10,000,000)
shares of $.01 par value Preferred Stock (the "Preferred Stock")
issuable from time to time in one or more series; and

WHEREAS, the Board of Directors of the Corporation is authorized to
fix the designations and the powers, privileges and rights, and
qualifications, limitations or restrictions, of Preferred Stock and to
fix the number of shares constituting any series thereof, and

WHEREAS, the Corporation does not currently have any shares of
Preferred Stock issued and outstanding and the Board of Directors of
the Corporation desires, pursuant to its authority, to determine and
fix the designations and the powers, privileges and rights, and the
qualifications, limitations or restrictions, relating to a new series
of Preferred Stock, as follows:

(a) DESIGNATION. The series of Preferred Stock designated hereby is
designated "Series B Preferred Stock".

(b) NUMBER; INITIAL ISSUANCE DATE. The number of shares constituting
the Series B Preferred Stock is Two Hundred Thousand

<PAGE> 2

(200,000) shares. The term "Initial Issuance Date" means the date on
which the initial shares of Series B Preferred Stock are issued.

(c) DIVIDEND RIGHTS. The registered holders of outstanding shares of
Series B Preferred Stock are entitled to receive cumulative dividends
at the annual rate of sixty cents ($0.60) per share. Dividends shall
accrue day by day whether or not declared or then due and payable. Any
such dividend shall be payable only in shares of Common Stock of the
Corporation, only upon the conversion of shares of Series B Preferred
Stock into shares of Common Stock, and only with respect to such shares
of Series B Preferred Stock as are then being converted. The number of
shares of Common Stock to be issued as a dividend will be computed on
the basis of the Conversion Price (as hereinafter defined). Dividends
will be calculated on the basis of a 365-day year and actual days
elapsed from the Initial Issuance Date for so long as shares of Series
B Preferred Stock shall be outstanding. At the discretion of the
Corporation's Board of Directors, cash dividends may be declared and
paid on shares of Series B Preferred Stock. Dividends may not be
declared and paid on Common Stock of the Corporation for any period
during which any shares of Series B Preferred Stock are issued and
outstanding.

(d) CONVERSION RIGHTS; MECHANICS OF CONVERSION. Subject to
subsections (i) and (ii), below, each share of Series B Preferred Stock
is convertible at the option of the registered holder thereof, at the
office of the Corporation or its transfer agent, into such number of
fully paid and non-assessable shares of Common Stock as will be
determined by dividing the amount of $10.00 by the Conversion Price.
The Conversion Price is defined as the lesser of (x) seventy percent
(70%) of the Average Market Price for the five trading days immediately
preceding the Initial Conversion Date (as hereinafter defined) or (y)
the Average Market Price for the five trading days immediately
preceding the Initial Issuance Date. "Average Market Price" means, as
to any five trading day period, the average of the last reported sales
price for the Common Stock of the Corporation on the OTC Bulletin Board
for each trading day during such period, or, if the Common Stock is
listed on an exchange, the average of the last reported sales price for
such days on the principal exchange on which the Common Stock is
listed. In the absence of any such last sales price, the Board of
Directors of the Corporation shall determine the current market value
of the Common Stock on the basis of such prices or quotations as it
deems appropriate. In case of a dispute as to the calculation of the
Conversion Price, the Corporation's calculation will be conclusive,
absent manifest error.

2
<PAGE> 3

(i) None of the Series B Preferred Stock convertible prior to the date
which is forty-five (45) days following the Initial Issuance Date (the
"Initial Conversion Date"). Each record holder may convert up to one
hundred percent (100%) of such holder's Series B Preferred Stock on or
after the Initial Conversion Date.

(ii) Each share of Series B Preferred Stock then outstanding automatically
will be converted into shares of Common Stock of the Corporation
immediately upon the earlier to occur of (a) the one year anniversary
of the Initial Issuance Date of the Series B Preferred Stock or (b) the
closing of the Corporation's sale of its Common Stock in one or more
registered public offerings or private placements, the gross proceeds
of which offerings or placements are not less than $5,000,000 and the
closing date of which offerings and placements is not less than three
(3) months after the Initial Issuance Date of the Series B Preferred
Stock.

No fractional shares of Common Stock will be issued upon the conversion
of any shares of Series B Preferred Stock. In lieu of any fractional share to
which the registered holder would otherwise be entitled upon any conversion, the
Corporation shall pay to such holder in cash an amount equal to such fractional
share multiplied by the Conversion Price.

In order to convert shares of Series B Preferred Stock into full
shares of Common Stock, the holder shall deliver in a single package, by
overnight courier, to the offices of the Corporation (i) written notice of the
election to convert such shares of Series B Preferred Stock and the number of
shares of Series B Preferred Stock to be converted, (ii) the certificate or
certificates for the shares to be converted, or, if such certificate or
certificates has been lost or destroyed, an affidavit or affirmation of that
fact together with a bond of indemnity in favor of the Corporation, in form and
with one or more sureties satisfactory to the Board of Directors, in at least
double the value of the Common Stock into which such shares of Series B
Preferred Stock are to be converted, and (iii) appropriate endorsements and
transfer documents if required by the Corporation. The holder of any shares of
Series B Preferred Stock is responsible for the payment of any transfer or other
similar tax due in connection with any conversion of Series B Preferred Stock.

The registered holder of shares of Series B Preferred Stock may convert
a portion of such shares if the portion is $10.00 or a greater whole multiple in
excess thereof. Upon surrender of share certificates in the event of a partial
conversion, the Corporation shall issue to the registered holder a new share
certificate for the unconverted shares.

3
<PAGE> 4

The Corporation shall use reasonable efforts to issue and deliver to a
registered holder of Series B Preferred Stock who has complied with the notice
and delivery provisions of the preceding paragraphs, to the holder's address as
shown on the stock records of the Corporation, within five (5) business days
after the Corporation's receipt of notice of conversion, a certificate or
certificates for the number of shares of Common Stock of the Corporation to
which the holder is entitled upon conversion as provided herein. The date on
which the notice of conversion is received by the Corporation will be deemed to
be the date of conversion and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion will be treated for all
purposes as the record holder of such shares of Common Stock as of such date.
All notices of conversion are irrevocable.

(e) LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution, or winding up of the Corporation, whether voluntary or involuntary,
occurring prior to the Initial Conversion Date, a holder of Series B Preferred
Stock will be entitled to receive, before any amount is paid to holders of
Common Stock, an amount equal to $10.00 per share, as such amount may be
adjusted for stock splits, combinations, or similar events in order that the
registered holders of shares of Series B Preferred Stock receive the same amount
upon liquidation, dissolution or winding up of the Corporation as if such stock
split, combination or other similar event has not occurred. If, upon the
occurrence of a liquidation, dissolution, or winding up of the Corporation prior
to the Initial Conversion Date, the assets and surplus funds distributed among
the registered holders of Preferred Stock (including without limitation Series B
Preferred Stock) are insufficient to permit the payment to such holders of the
full preferential amount, then the entire assets and surplus funds of the
Corporation legally available for distribution shall be distributed ratably
among the registered holders of Preferred Stock (including without limitation
Series B Preferred Stock) prior to any distribution to the holders of Common
Stock. On and after the Initial Conversion Date, shares of Series B Preferred
Stock shall not be entitled to any liquidation preference and, subject to the
preferential rights of the holders of any other series of Preferred Stock then
outstanding, the holders of Series B Preferred Stock, ratably with the holders
of Common Stock, will be entitled upon the occurrence of the liquidation,
dissolution or winding up of the Corporation on or after the Initial Conversion
Date, to receive all remaining assets and surplus funds of the Corporation as if
all shares of Series B Preferred Stock had been converted into Common Stock.

For purposes of this Section (e), a liquidation, dissolution, or
winding up of the Corporation will be deemed to be occasioned by, and

4
<PAGE> 5

include, (i) the Corporation's sale of all or substantially all of its assets,
(ii) the acquisition of the Corporation by another entity by means of a merger
or consolidation resulting in the exchange of the outstanding shares of the
Corporation for securities or other consideration issued, or caused to be
issued, by the acquiring corporation or any subsidiary thereof, or (iii) a
change in control of the Corporation (after the Initial Issuance Date) in a
single transaction or a series of related transactions such that the
Corporation's shareholders of record as constituted immediately prior to such
transaction or transactions will, immediately after such transaction or
transactions, hold less than 50% of the voting power of the Corporation (or any
successor entity).

(f) REDEMPTION RIGHTS. Shares of Series B Preferred Stock are not
subject to redemption by the Corporation.

(g) PROVISIONS RELATING TO COMMON STOCK. The registered holders of
Common Stock issued and outstanding, except as otherwise provided by law or by
this Certificate of Determination, will have and possess the exclusive right to
notice of shareholders' meetings and the exclusive voting rights and powers, and
registered holders, as such of Series B Preferred Stock will not be entitled to
any notice of shareholders' meetings or to vote upon the election of directors
or upon any other matter, except if the notice or vote is required by law.

(h) REISSUANCE OF SERIES B PREFERRED STOCK. Each share of the Series B
Preferred Stock that has been converted or otherwise reacquired in any manner by
the Corporation after the original issuance thereof may not be reissued as
Series B Preferred Stock, but shall be restored to the status of authorized but
unissued shares of Preferred Stock.

(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at a times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series B Preferred Stock, such number of its shares of Common
Stock as from time to time is sufficient to effect the conversion of all then
outstanding shares of the Series B Preferred Stock; and at any time the number
of authorized but unissued shares of the Common Stock of the Corporation is
insufficient for the conversion of all outstanding shares of Series B Preferred
Stock, the Corporation shall take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares, as is sufficient for such purpose.

(j) PROTECTIVE PROVISION. So long as shares of Series B Preferred Stock
are outstanding, the Corporation shall not without first

5
<PAGE> 6

obtaining the approval (by vote or written consent, as provided by law)
of the holders of at least a majority of then outstanding shares of
Series B Preferred Stock alter or change the rights, preferences, or
privileges of the shares of Series B Preferred Stock so as to affect
adversely the Series B Preferred Stock.

(k) PERSONS DEEMED OWNERS. The registered holder of any Series B
Preferred Stock shall be treated as the owner of such Preferred Stock
for all purposes.

(l) NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Corporation shall not have any liability
for any of the obligations of the Corporation in respect of the Series
B Preferred Stock or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each holder of Series B
Preferred Stock by its acceptance thereof waives and releases all such
liability. The waiver and release are a part of the consideration for
the issuance of the Preferred Stock.

Except as set forth hereinabove, the relative powers, privileges and
rights, and qualifications, limitations or restrictions of the Series B
Preferred Stock and the Common Stock are identical.

RESOLVED FURTHER, that the President and the Secretary of this
Corporation are each authorized to execute, verify, and file a
certificate of determination of preferences in accordance with Delaware
law.

3. The authorized number of shares of Preferred Stock of the
Corporation is Ten Million (10,000,000) and the number of shares constituting
Series B Preferred Stock, none of which is issued and outstanding on the date
hereof, is Two Hundred Thousand (200,000).

6
<PAGE> 7

IN WITNESS WHEREOF, the undersigned have executed this Certificate on
May 10th 1996.

/s/ Greg Gilbert
---------------------------------
Greg Gilbert, President of
Startronix International, Inc.

/s/ Gerald Fitch
---------------------------------
Gerald Fitch, Secretary of
Startronix International, Inc.

7
<PAGE> 8

VERIFICATION

The undersigned, Greg Gilbert and Gerald Fitch, President and
Secretary, respectively, of StarTronix International, Inc., each declares under
penalty of perjury that the matters set out in the foregoing Certificate are
true to the best of his own knowledge.

Executed at Irvine, California, on May 10th 1996.

/s/ Greg Gilbert
---------------------------------
Greg Gilbert President of
StarTronix International, Inc.

/s/ Gerald Fitch
---------------------------------
Gerald Fitch, Secretary of
StarTronix International, Inc.

8
<PAGE> 9

State of Delaware
PAGE 1
Office of the Secretary of State

I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF, "STARTRONIX INTERNATIONAL INC.", FILED IN THIS OFFICE ON THE
TWENTIETH DAY OF JUNE, A.D, 1996 , AT 9 O'CLOCK A.M.

A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.

/s/ Edward J. Freel
--------------------------------------
Edward J. Freel, Secretary of State

AUTHENTICATION:
2534601 8100 7997106
DATE:
960181538 06-21-96

<PAGE> 10

STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/2(/1996
960181539 - 2534601

CERTIFICATE OF DESIGNATION
OF
RIGHTS, PREFERENCES, PRIVILEGES, AND RESTRICTIONS
OF
SERIES B PREFERRED ST0CK
OF STARTRONIX INTERNATIONAL INC.
(a Delaware Corporation)

The undersigned, Greg Gilbert and Gerald Fitch, President and
Secretary, respectively, of Startronix International Inc., a Delaware
Corporation (the "Corporation"), hereby certify in such capacities that:

1 . They are the duly elected and acting President and Secretary,
respectively, of the Corporation.

2. Pursuant to authority given by the Corporation's Certificate of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:

WHEREAS, the Corporation does not currently have any shares of
Preferred Stock issued and outstanding and the Board of Directors of
the Corporation desires, pursuant to its authority, to determine and
fix the designations and the powers, privileges and rights, and the
qualifications, limitations or restrictions relating to a new series of
Preferred Stock, as follows:

(a) DESIGNATION. The series of Preferred Stock designated hereby is
designated "Series B Preferred Stock"

(b) NUMBER, INITIAL ISSUANCE DATE. The number of shares constituting
the Series B Preferred Stock is Two Hundred Thousand

<PAGE> 11

(200,000) shares. The term "Initial Issuance Date" means the date on which the
initial shares of Series B Preferred Stock are issued.

(c) DIVIDEND RIGHTS. The registered holders of outstanding shares of
Series B Preferred Stock are entitled to receive cumulative dividends at the
annual rate of sixty cents ($0.60) per share. Dividends shall accrue day by day
whether or not declared or then due and payable. Any such dividend shall be
payable only in shares of Common Stock of the Corporation, only upon the
conversion of shares of Series B Preferred Stock into shares of Common Stock,
and only with respect to such shares of Series B Preferred Stock as are then
being converted. The number of shares of Common Stock to be issued as a dividend
will be computed on the basis of the Conversion Price (as hereinafter defined).
Dividends will be calculated on the basis of a 365-day year and actual days
elapsed from the Initial Issuance Date for so long as shares of Series B
Preferred Stock shall be outstanding. At the discretion of the Corporation's
Board of Directors, cash dividends may be declared and paid on shares of Series
B Preferred Stock. Dividends may not be declared and paid on Common Stock of the
Corporation for any period during which any shares of Series B Preferred Stock
are issued and outstanding.

(d) CONVERSION RIGHTS; MECHANICS OF CONVERSION. Subject to subsections
(i) and (ii), below, each share of Series B Preferred Stock is convertible at
the option of the registered holder thereof, at the office of the Corporation or
its transfer agent, into such number of fully paid and non-assessable shares of
Common Stock as will be determined by dividing the amount of $10.00 by the
Conversion Price. The Conversion Price is defined as the lesser of (x) seventy
percent (70%) of the Average Market Price for the five trading days immediately
preceding the Initial Conversion Date (as hereinafter defined) or (y) the
Average Market Price for the five trading days immediately preceding the Initial
Issuance Date. "Average Market Price" means, as to any five trading day period,
the average of the last reported sales price for the Common Stock of the
Corporation on the OTC Bulletin Board for each trading day during such period,
or, if the Common Stock is listed on an exchange, the average of the last
reported sales price for such days on the principal exchange on which the Common
Stock is listed. In the absence of any such last sales price, the Board of
Directors of the Corporation shall determine the current market value of the
Common Stock on the basis of such prices or quotations as it deems appropriate.
In case of a dispute as to the calculation of the Conversion Price, the
Corporation's calculation will be conclusive, absent manifest error.

2
<PAGE> 12

(i) None of the Series B Preferred Stock is convertible prior to the date
which is forty-five (45) days following the Initial Issuance Date (the
"Initial Conversion Date"). Each record holder may convert up to one
hundred percent (100%) of such holder's Series B Preferred Stock on or
after the Initial Conversion Date.

(ii) Each share of Series B Preferred Stock then outstanding automatically
will be converted into shares of Common Stock of the Corporation
immediately upon the earlier to occur of (a) the one year anniversary
of the Initial Issuance Date of the Series B Preferred Stock or (b) the
closing of the Corporation's sale of its Common Stock in one or more
registered public offerings or private placements, the gross proceeds
of which offerings or placements am not less than $5,000,000 and the
closing date of which offerings and placements is not less than three
(3) months after the Initial Issuance Date of the Series B Preferred
Stock.

In order to convert shares of Series B Preferred Stock into full shares
of Common Stock, the holder shall deliver in a single package, by overnight
courier, to the offices of the Corporation (i) written notice of the election to
convert such shares of Series B Preferred Stock and the number of shares of
Series B Preferred Stock to be converted, (ii) the certificate or certificates
for the shares to be converted, or, if such certificate or certificates has been
lost or destroyed, an affidavit or affirmation of that fact together with a bond
of indemnity in favor of the Corporation, in form and with one or more sureties
satisfactory to the Board of Directors, in at least double the value of the
Common Stock into which such shares of Series B Preferred Stock are to be
converted, and (iii) appropriate endorsements and transfer documents if required
by the Corporation. The holder of any shares of Series B Preferred Stock is
responsible for the payment of any transfer or other similar tax due in
connection with any conversion of Series B Preferred Stock.

3
<PAGE> 13

The Corporation shall use reasonable efforts to issue and deliver to a
registered holder of Series B Preferred Stork who has complied with the notice
and delivery provisions of the preceding paragraphs, to the holder's address as
shown on the stock records of the Corporation, within five (5) business days
after the Corporation's receipt of notice of conversion, a certificate or
certificates for the number of shares of Common Stock of the Corporation to
which the holder is entitled upon conversion as provided herein. The date on
which the notice of conversion is received by the Corporation will be deemed to
be the date of conversion and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion will be treated for all
purposes as the record holder of such shares of Common Stock as of such date.
All notices of conversion are irrevocable.

For purposes of this Section (e), a liquidation, dissolution, or
winding up of the Corporation will be deemed to be occasioned by, and

4
<PAGE> 14

include, (i) the Corporations sale of all or substantially all of its assets,
(ii) the acquisition of the Corporation by another entity by means of a merger
or consolidation resulting in the exchange of the outstanding shares of the
Corporation for securities or other consideration issued, or caused to be
issued, by the acquiring corporation or any subsidiary thereof, or (iii) a
change in control of the Corporation (after the Initial Issuance Date) in a
single transaction or a series of related transactions such that the
Corporation's shareholders of record as constituted immediately prior to such
transaction or transactions will, immediately after such transaction or
transactions, hold less than 50% of the voting power of the Corporation (or any
successor entity).

(f) REDEMPTION RIGHTS. Shares of Series B Preferred Stock are not
subject to redemption by the Corporation.

(g) PROVISIONS RELATING TO COMMON STOCK. The registered holders of
Common Stock issued and outstanding, except as otherwise provided by law or by
this Certificate of Designation, will have and possess the exclusive right to
notice of shareholders' meetings and the exclusive voting rights and powers,
and registered holders, as such, of Series B Preferred Stock will not be
entitled to any notice of shareholders' meetings or to vote upon the election of
directors or upon any other matter, except if the notice or vote is required by
law.

(i) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series B Preferred Stock, such number of its shares of Common
Stock as from time to time is sufficient to effect the conversion of all then
outstanding shares of the Series B Preferred Stock; and at any time the number
of authorized but unissued shares of the Common Stock of the Corporation is
insufficient for the conversion of all outstanding shares of Series B Preferred
Stock, the Corporation shall take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as is sufficient for such purpose.

(j) PROTECTIVE PROVISION. So long as shares of Series B Preferred Stock
are outstanding, the Corporation shall not without first

5
<PAGE> 15
obtaining the approval (by vote or written consent, as provided by law)
of the holders of at least a majority of then outstanding shares of
Series B Preferred Stock alter or change the rights, preferences, or
privileges of the shares of Series B Preferred Stock to as to affect
adversely the Series B Preferred Stock.

(k) PERSONS DEEMED OWNERS. The registered holder of any Series
B Preferred Stock shall be treated as the owner of such Preferred Stock
for all purposes.

(l) NO RECOURSE AGAINST OTHERS. A director, officer, employee
or stockholder, as such, of the Corporation shall not have any
liability for any of the obligations of the Corporation in respect of
the Series B Preferred Stock or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each holder of
Series B Preferred Stock by its acceptance thereof waives and releases
all such liability. The waiver and release are a part of the
consideration for the issuance of the Preferred Stock.

Except as set forth hereinabove, the relative powers,
privileges and rights, and qualifications, limitations or restrictions
of the Series B Preferred Stock and the Common Stock are identical.

RESOLVED FURTHER, that the President and the Secretary of this
Corporation are each authorized to execute, verify, and file a
certificate of designation of preferences in accordance with Delaware
law.

3 The authorized number of shares of Preferred Stock of the
Corporation is Ten Million (10,000,000) and the number of shares constituting
Series B Preferred Stock, none of which is issued and outstanding on the date
hereof, is Two Hundred Thousand (200,000).

6
<PAGE> 16
IN WITNESS WHEREOF, the undersigned have executed this Certificate on
May 10th, 1996

/s/ Greg Gilbert
-----------------------------------
Greg Gilbert, President of
Startronix International Inc.

/s/ Gerald Fitch
-----------------------------------
Gerald Fitch, Secretary of
Startronix International Inc.

7
<PAGE> 17
VERIFICATION

The undersigned, Greg Gilbert and Gerald Fitch, President and
Secretary, respectively, of Startronix International, Inc., each declares under
penalty of perjury that the matters set out in the foregoing Certificate are
true to the best of his own knowledge.

Executed at Irvine, California, on May 10th, 1996.

/s/ Greg Gilbert
-----------------------------------
Greg Gilbert, President of
Startronix International Inc.

/s/ Gerald Fitch
-----------------------------------
Gerald Fitch, Secretary of
Startronix International Inc.

<PAGE> 1
EXHIBIT 4.5

CERTIFICATE OF DESIGNATION
OF
RIGHTS, PREFERENCES, PRIVILEGES, AND RESTRICTIONS
OF
SERIES C PREFERRED STOCK
OF
STARTRONIX INTERNATIONAL INC.
(A DELAWARE CORPORATION)

The undersigned, GREG GILBERT and GERALD FITCH, President and
Secretary, respectively, of STARTRONIX INTERNATIONAL INC., a Delaware
corporation (the "Corporation"), hereby certify in such capacities that:

1. They are the duly elected and acting President and Secretary,
respectively, of the Corporation.

2. Pursuant to authority given by the Corporation's Certificate of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:

WHEREAS, the Board of Directors of the Corporation is authorized
to fix the designations and the powers, privileges and rights, and
qualifications, limitations or restrictions, of Preferred Stock and to
fix the number of shares constituting any series thereof; and

WHEREAS, the Corporation has designated Two Hundred Thousand
(200,000) shares of Series B Preferred Stock and issued Ninety Thousand
(90,000) shares of Series B Preferred Stock, all of which remain
outstanding;

WHEREAS, the Board of Directors of the Corporation desires,
pursuant to its authority, to determine and fix the designations and
the powers, privileges and rights, and the qualifications, limitations
or restrictions, relating to a new series of Preferred Stock, as
follows:
<PAGE> 2
(a) DESIGNATION. The series of Preferred Stock designated hereby
is designated "Series C Preferred Stock".

(b) NUMBER; INITIAL ISSUANCE DATE. The number of shares
constituting the Series C Preferred Stock is Four Hundred Thousand
(400,000) shares. The term "Initial Issuance Date" means the date on
which the initial shares of Series C Preferred Stock are issued.

(c) DIVIDEND RIGHTS. The registered holders of outstanding shares
of Series C Preferred Stock are entitled to receive cumulative
dividends at the annual rate of sixty cents ($0.60) per share.
Dividends shall accrue day by day whether or not declared or then due
and payable. Any such dividend shall be payable only in shares of
Common Stock of the Corporation, only upon the conversion of shares of
Series C Preferred Stock into shares of Common Stock, and only with
respect to such shares of Series C Preferred Stock as are then being
converted. The number of shares of Common Stock to be issued as a
dividend will be computed on the basis of the Conversion Price (as
hereinafter defined). Dividends will be calculated on the basis of a
365-day year and actual days elapsed from the Initial Issuance Date for
so long as shares of Series C Preferred Stock shall be outstanding. At
the discretion of the Corporation's Board of Directors, cash dividends
may be declared and paid on shares of Series C Preferred Stock.
Dividends may not be declared and paid on Common Stock of the
Corporation for any period during which any shares of Series C
Preferred Stock are issued and outstanding.

(d) CONVERSION RIGHTS; MECHANICS OF CONVERSION. Each share of
Series C Preferred Stock is convertible at the option of the registered
holder thereof, at the office of the Corporation or its transfer agent,
into such number of fully paid and non-assessable shares of Common
Stock as will be determined by dividing the amount of $10.00 by the
Conversion Price. The Conversion Price is defined as the lesser of (x)
sixty-five percent (65%) of the Average Market Price for the five
trading days immediately preceding the Initial Conversion Date (as
hereinafter defined) or (y) seventy-five percent (75%) of the closing
bid price on the trading day immediately preceding the Initial Issuance
Date. "Average Market Price" means, as to any five trading day period,
the closing bid price reported for the Common Stock of the Corporation
on the OTC Bulletin Board for each trading day during such period, or,
if the Common Stock is listed on an exchange, the average of the last
reported sales price for such days on the principal exchange on which
the Common Stock is listed. In the absence of any such last bid price,
the Board of Directors of the Corporation shall determine the current
market value of the Common Stock on the basis of such prices or
quotations as

2
<PAGE> 3
it deems appropriate. In case of a dispute as to the calculation of the
Conversion Price, the Corporation's calculation will be conclusive,
absent manifest error.

None of the Series C Preferred Stock is convertible prior to the
date which is forty-one (41) days following the date upon which the
Series C Preferred Stock was first offered to persons other than
distributors in reliance upon Regulation S or the date of closing of
the offering of the Series C Preferred Stock, as certified by a person
serving in a capacity similar to that of the managing underwriter or
placement agent for the offering (the "Initial Conversion Date"). Each
record holder may convert up to one hundred percent (100%) of such
holder's shares of Series C Preferred Stock on or after the Initial
Conversion Date for such shares.

Each share of Series C Preferred Stock then outstanding
automatically will be converted into shares of Common Stock of the
Corporation immediately upon the one-year anniversary of the Initial
Issuance Date.

No fractional shares of Common Stock will be issued upon the
conversion of any shares of Series C Preferred Stock. In lieu of any
fractional share to which the registered holder would otherwise be
entitled upon any conversion, the Corporation shall pay to such holder
in cash an amount equal to such fractional share multiplied by the
Conversion Price.

In order to convert shares of Series C Preferred Stock into full
shares of Common Stock, the registered holder shall (i) fax a copy of
the fully executed notice of conversion in the form annexed to the
Subscription Agreement between the Corporation and the registered
holder ("Notice of Conversion") to the Corporation at the office of the
Corporation and of its designated Transfer Agent for the Common Stock
that the registered holder elects to convert the same, which notice
shall specify the number of shares of Series C Preferred Stock to be
converted, the applicable conversion price and a calculation of the
number of shares of Common Stock issuable upon such conversion
(together with a copy of the first page of each certificate to be
converted) prior to Midnight, New York City time (the "Conversion
Notice Deadline") on the date of conversion specified on the Notice of
Conversion and (ii) surrender the original certificates representing
the shares of Series C Preferred Stock being converted (the "Series C
Preferred Stock Certificates"), duly endorsed, along with a copy of the
Notice of Conversion (together with the Series C Preferred Stock
Certificates, the "Conversion Documents") no later than Midnight, New

3
<PAGE> 4
York City time the next business day, to a common courier for either
overnight or 2-day delivery to the office of the Corporation or the
Transfer Agent for the shares of Series C Preferred Stock. The
Corporation shall issue and deliver within three (3) business days
after delivery to the Corporation of the facsimile copies of such
Notice of Conversion and such Series C Preferred Stock Certificates to
such registered holder at the address of the registered holder on the
books of the Corporation or such other address as may be specified by
such registered holder, a certificate or certificates for the number of
shares of Common Stock issuable upon such conversion; provided,
however, that the Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock unless either the
original Series C Preferred Stock Certificates have been received by
the Corporation or its Transfer Agent, or the registered holder
notifies the Corporation or its Transfer Agent, or the registered
holder delivers to the Corporation an affidavit and indemnification to
the effect that such certificates have been lost, stolen or destroyed.

The Transfer Agent or the Corporation (as applicable) shall, no
later than 6:00 p.m. (New York City time) on the third business day
(the "Deadline") after receipt by the Corporation or its Transfer Agent
of a Notice of Conversion and a facsimile copy of the Series C
Preferred Stock Certificates and the applicable Subscription Agreement,
provided the Corporation or Transfer Agent has received the Conversion
Documents, issue a certificate for the number of shares of Common Stock
to which the holder ("Registered Holder") of the shares of Series C
Preferred Stock shall be entitled as aforesaid and surrender such
original Common Stock certificates to a common courier for overnight
delivery to the Registered Holder at the address of the Registered
Holder on the books of the Corporation.

The Corporation understands that a delay in the issuance and
delivery of the shares of Common Stock issuable upon conversion beyond
the Deadline could result in economic loss to the Registered Holder. As
compensation to the Registered Holder for such loss, the Corporation
agrees, provided the Corporation or Transfer Agent has received the
Conversion Documents, to pay late payments to the Registered Holder for
late issuance of shares upon conversion in accordance with the
following schedule (where "No. Business Days Late" is defined as the
number of business days beyond the Deadline):

4
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER OF BUSINESS DAYS LATE LATE PAYMENT FOR EACH 1,000
---------------------------- SHARES OF SERIES B PREFERRED
STOCK BEING CONVERTED
----------------------------

<S> <C>
1 $ 50.00
2 $100.00
3 $150.00
4 $200.00
5 $250.00
6 $300.00
7 $350.00
8 $400.00
9 $450.00
10 $500.00
greater than 10 $500.00 plus $200.00 for each
Business Day Late beyond 10 days
</TABLE>

The Corporation shall pay any such late payments in immediately
available funds within three (3) business days from the date of
issuance of the applicable Common Stock. Nothing herein shall limit a
registered holder's right to pursue actual damages for the
Corporation's failure to issue and deliver Common Stock to the
registered holder pursuant to the terms hereof. In addition, nothing
herein shall limit the Subscriber's right to pursue actual damages for
the Corporation's failure to maintain a sufficient number of authorized
shares of Common Stock.

The registered holder of shares of Series C Preferred Stock may
convert a portion of such shares if the portion is $10.00 or a greater
whole multiple in excess thereof. Upon surrender of share certificates
in the event of a partial conversion, the Corporation shall issue to
the registered holder a new share certificate for the unconverted
shares.

5
<PAGE> 6
the registered holders of Preferred Stock (including without limitation
Series C Preferred Stock) are insufficient to permit the payment to
such holders of the full preferential amount, then the entire assets
and surplus funds of the Corporation legally available for distribution
shall be distributed ratably among the registered holders of Preferred
Stock (including without limitation Series C Preferred Stock) prior to
any distribution to the holders of Common Stock. On and after the
Initial Conversion Date, shares of Series C Preferred Stock shall not
be entitled to any liquidation preference and, subject to the
preferential rights of the holders of any other series of Preferred
Stock then outstanding, the holders of Series C Preferred Stock,
ratably with the holders of Common Stock, will be entitled upon the
occurrence of the liquidation, dissolution or winding up of the
Corporation on or after the Initial Conversion Date, to receive all
remaining assets and surplus funds of the Corporation as if all shares
of Series C Preferred Stock had been converted into Common Stock.

For purposes of this Section (e), a liquidation, dissolution, or
winding up of the Corporation will be deemed to be occasioned by, and
include, (i) the Corporation's sale of all or substantially all of its
assets, (ii) the acquisition of the Corporation by another entity by
means of a merger or consolidation resulting in the exchange of the
outstanding shares of the Corporation for securities or other
consideration issued, or caused to be issued, by the acquiring
corporation or any subsidiary thereof, or (iii) a change in control of
the Corporation (after the Initial Issuance Date) in a single
transaction or a series of related transactions such that the
Corporation's shareholders of record as constituted immediately prior
to such transaction or transactions will, immediately after such
transaction or transactions, hold less than 50% of the voting power of
the Corporation (or any successor entity).

(f) REDEMPTION RIGHTS. Shares of Series C Preferred Stock are not
subject to redemption by the Corporation.

(g) PROVISIONS RELATING TO COMMON STOCK. The registered holders of
Common Stock issued and outstanding, except as otherwise provided by
law or by this Certificate of Designation, will have and possess the
exclusive right to notice of shareholders' meetings and the exclusive
voting rights and powers, and registered holders, as such, of Series C
Preferred Stock will not be entitled to any notice of shareholders'
meetings or to vote upon the election of directors or upon any other
matter, except if the notice or vote is required by law.

(h) REISSUANCE OF SERIES C PREFERRED STOCK. Each share of the
Series C Preferred Stock that has been converted or otherwise
reacquired

6
<PAGE> 7
in any manner by the Corporation after the original issuance thereof
may not be reissued as Series C Preferred Stock, but shall be restored
to the status of authorized but unissued shares of Preferred Stock.

(i) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting
the conversion of the shares of the Series C Preferred Stock, such
number of its shares of Common Stock as from time to time is sufficient
to effect the conversion of all then outstanding shares of the Series C
Preferred Stock; and at any time the number of authorized but unissued
shares of the Common Stock of the Corporation is insufficient for the
conversion of all outstanding shares of Series C Preferred Stock, the
Corporation shall take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such
number of shares as is sufficient for such purpose.

(j) PROTECTIVE PROVISION. So long as shares of Series C Preferred
Stock are outstanding, the Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law)
of the holders of at least a majority of then outstanding shares of
Series C Preferred Stock alter or change the rights, preferences, or
privileges of the shares of Series C Preferred Stock so as to affect
adversely the Series C Preferred Stock.

(k) PERSONS DEEMED OWNERS. The registered holder of any Series C
Preferred Stock shall be treated as the owner of such Preferred Stock
for all purposes.

(l) NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Corporation shall not have any liability
for any of the obligations of the Corporation in respect of the Series
C Preferred Stock or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each holder of Series C
Preferred Stock by its acceptance thereof waives and releases all such
liability. The waiver and release are a part of the consideration for
the issuance of the Preferred Stock.

Except as set forth hereinabove, the relative powers, privileges
and rights, and qualifications, limitations or restrictions of the
Series C Preferred Stock and the Common Stock are identical.

RESOLVED FURTHER, that the President and the Secretary of this
Corporation are each authorized to execute, verify, and file a

7
<PAGE> 8
certificate of designation of preferences in accordance with Delaware
law.

3 The authorized number of shares of Preferred Stock of the
Corporation is Ten Million (10,000,000), of which 90,000 shares of Series B
Preferred Stock are issued and outstanding, and the number of shares
constituting Series C Preferred Stock, none of which is issued and outstanding
on the date hereof, is Four Hundred Thousand (400,000).

IN WITNESS WHEREOF, the undersigned have executed this Certificate on
June 26, 1996.

/s/ Greg Gilbert
-----------------------------------
Greg Gilbert, President of
Startronix International, Inc.

/s/ Gerald Fitch
-----------------------------------
Gerald Fitch, Secretary of
Startronix International, Inc.

8
<PAGE> 9
VERIFICATION

Executed at Irvine, California, on June 26, 1996.

/s/ Greg Gilbert
-----------------------------------
Greg Gilbert, President of
Startronix International, Inc.

/s/ Gerald Fitch
-----------------------------------
Gerald Fitch, Secretary of
Startronix International, Inc.

9
<PAGE> 10
CERTIFICATE OF INCREASE
OF
CERTIFICATE OF DESIGNATION
OF
RIGHTS, PREFERENCES, PRIVILEGES, AND RESTRICTIONS
OF
SERIES C PREFERRED STOCK
OF STARTRONIX INTERNATIONAL INC.
(A DELAWARE CORPORATION)

STARTRONIX INTERNATIONAL INC. (the "Corporation"), a corporation
organized under the Delaware General Corporation Law (the "Code"), for the
purpose of increasing the number of shares constituting the Series C Preferred
Stock of the Corporation pursuant to Section 151(g) of the Code, hereby
certifies that:

1. The Certificate of Incorporation of the Corporation authorizes the
Corporation to issue up to Ten Million (10,000,000) shares of $.01 par value
Preferred Stock issuable from time to time in one or more series.

2. A Certificate of Designation of Rights, Preferences, Privileges,
and Restrictions of Series C Preferred Stock of the Corporation was filed with
the Secretary of State of the State of Delaware on June 27, 1996.

3. The Certificate of Designation designates Four Hundred Thousand
(400,000) shares as the number of shares constituting the Series C Preferred
Stock of the Corporation.

4. Pursuant to authority given by the Corporation's Certificate of
Incorporation and Section 151(g) of the Code, the Board of Directors of the
Corporation duly adopted a resolution on September 20, 1996 increasing the
number of shares constituting the Series C Preferred Stock of the Corporation by
Two Hundred Fifty Thousand (250,000) shares and designating the total number of
shares constituting the Series C Preferred Stock of the Corporation at Six
Hundred Fifty Thousand (650,000) shares.
<PAGE> 11
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Increase on September 12th, 1995.

/s/ Greg Gilbert
-----------------------------------
Greg Gilbert, President of
Startronix International Inc.

/s/ Gerald Fitch
-----------------------------------
Gerald Fitch, Secretary of
Startronix International Inc.

2
<PAGE> 12
VERIFICATION

The undersigned, Greg Gilbert and Gerald Fitch, President and
Secretary, respectively, of Startronix International Inc., each declares under
penalty of perjury that the matters set out in the foregoing Certificate are
true to the best of his own knowledge.

Executed at Irvine, California, on September 12th, 1996.

/s/ Greg Gilbert
-----------------------------------
Greg Gilbert, President of
Startronix International Inc.

/s/ Gerald Fitch
-----------------------------------
Gerald Fitch, Secretary of
Startronix International Inc.

3
<PAGE> 13
CERTIFICATE OF CORRECTION
TO CORRECT
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF DESIGNATION
OF
RIGHTS, PREFERENCES, PRIVILEGES, AND RESTRICTIONS
OF
SERIES C PREFERRED STOCK
OF
STARTRONIX INTERNATIONAL INC.
(A DELAWARE CORPORATION)

STARTRONIX INTERNATIONAL INC. (the "Corporation"), a corporation
organized under the Delaware General Corporation Law (the "Code"), for the
purpose of correcting the Certificate of Designation of Rights, Preferences,
Privileges, and Restrictions of Series C Preferred Stock of the Corporation
pursuant to Section 103(f) of the Code, hereby certifies that:

1. The Certificate, as filed with the Secretary of State of the State
of Delaware on June 27, 1996, is an inaccurate record of the corporate action
therein referred to in that SECTION 2(b) of said Certificate erroneously defines
the Initial Issuance Date of the Series C Preferred Stock of the Corporation as
follows:

"The term `Initial Issuance Date' means the date on which the
initial shares of Series C Preferred Stock are issued."

2. In corrected form, SECTION 2(b) of the Certificate defines the
Initial Issuance Date of the Series C Preferred Stock of the Corporation as
follows:

"The term `Initial Issuance Date' means, as to any shares of
Series C Preferred Stock, the date on which such shares of Series C
Preferred Stock are issued, as certified by a person serving in a
capacity similar to that of the managing underwriter or placement agent
for the offering."

3. The Certificate, as filed with the Secretary of State of the State
of Delaware on June 27, 1996, reflects an inaccurate record of the corporate
action therein referred to in that SECTION 2(d) of said Certificate of
Designation (as corrected) erroneously defines the Conversion Price of the
Series C Preferred Stock of the Corporation as follows:

"The Conversion Price is defined as the lesser of (x) sixty
percent (60%) of the Average Market Price for the five trading days
immediately preceding the Initial Conversion Date (as hereinafter
defined) or (y) seventy percent (70%) of the closing bid price an the
trading day immediately preceding the Initial Issuance Date."
<PAGE> 14
4. In corrected form, SECTION 2(d) of the Certificate defines the
Conversion Price of the Series C Preferred Stock of the Corporation as follows:

"The Conversion Price is defined, as to any shares of Series C
Preferred Stock, as the lesser of (x) sixty percent (60%) of the
Average Market Price for the five trading days immediately preceding
the conversion date specified in a Notice of Conversion (as hereinafter
defined) covering such shares or (y) seventy percent (70%) of the
closing bid price on the trading day immediately preceding the Initial
Issuance Date of such shares."

5. The Certificate, as filed with the Secretary of State of the State
of Delaware on June 27, 1996, is also an inaccurate record of the corporate
action therein referred to in that the heading for the right column of the
schedule of late payments in SECTION 2(d) of said Certificate erroneously refers
to late payments for shares of Series B Preferred Stock of the Corporation as
follows:

"Late Payment for Each 1,000 Shares of Series B Preferred Stock
being Converted"

6. In corrected form, the heading for the right column of the
schedule of late payments in SECTION 2(d) of the Certificate refers to late
payments for shares of Series C Preferred Stock of the Corporation as follows:

"Late Payment for Each 1,000 Shares of Series C Preferred Stock
being Converted"

7. This Certificate of Correction shall become effective as of June
27, 1996, the date the original instrument was filed with the Secretary of
State.

IN WITNESS WHEREOF, the undersigned have executed and attested this
Certificate of Correction on September 12, 1996.

/s/ Greg Gilbert
-----------------------------------------
Greg Gilbert, President of Startronix
International Inc.

Attest:

/s/ Gerald Fitch
- -----------------------------------
Gerald Fitch, Secretary of
Startronix International Inc.

2
<PAGE> 15
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE

[Seal of the State of Delaware in Background]

I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "STARTRONIX INTERNATIONAL INC.", FILED IN THIS OFFICE ON THE
TWENTY-SIXTH DAY Of SEPTEMBER A.D. 1996, AT 9:01 O'CLOCK A.M.

A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.

/s/ Edward J. Freel
--------------------------------------
Edward J. Freel, Secretary of State

AUTHENTICATION: 8128096

2534601 B100 DATE: 10-01-96

960280012

<PAGE> 1
EXHIBIT 10.1(a)

EMPLOYMENT AGREEMENT

THIS AGREEMENT made and entered into on this 1st day of July, 1995 (the
"Effective Date"), by and between GOLD EXPRESS CORPORATION, a Washington
corporation (the "Company"), and GREG GILBERT, a resident of the State of
California ("Employee").

In consideration of the employment by the Company and of the
compensation and other remuneration paid, and to be paid, by the Company and
received by Employee for such employment, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
Employee, it is agreed by and between the parties hereto as follows:

1. EMPLOYMENT: The Company agrees to employ Employee and Employee
agrees that he will devote his full productive time, skill, energy, knowledge
and best efforts during the period of his employment to such duties as the Board
of Directors of the Company may reasonably assign to him, and he will faithfully
and diligently endeavor to the best of his ability to further the best interest
of the Company during the period of his employment. However, Employee is not
prohibited from making personal investments in any other businesses, as long as
those investments do not require Employee to participate in the operation of the
companies in which he invests and such other businesses are not in competition
with the Company or any of its subsidiaries.

2. TERMS OF EMPLOYMENT: Employee's employment will begin on the 1st
day of July, 1995, and will end on the 1st day of July, 2000, a term of five (5)
years, unless earlier terminated in accordance with Sections 7 or 9 hereof or
extended upon the mutual consent of both parties.

3. COMPENSATION: On the terms and subject to the conditions of this
Agreement, (i) the Company will pay Employee a salary and a bonus determined in
accordance with Schedule A, (ii) Employee will be entitled to participate in the
Company's Employee Stock Option Plan as in effect from time to time, and (iii)
the Company will provide Employee with employee benefits consistent with those
provided by the Company to similarly situated executives. The Company's Employee
Stock Option Plan is summarized in Schedule B. The employee benefits provided by
the Company as of the date hereof are summarized in Schedule C.

4. TITLE AND DUTIES: The Company hires Employee as President and
Chief Executive Officer. Employee shall perform such duties and functions for
the Company as shall be specified from time to time by the Board of Directors of
the Company, including, but not limited to the duties and functions expressly
set forth on Schedule D, and which are consistent with Employee's duties set
forth on Schedule D.

1
<PAGE> 2
year, the Company may terminate this Agreement upon thirty (30) days' written
notice to Employee. Employee is not entitled to receive, and the Company shall
not be required to pay, Employee's compensation hereunder for absences because
of illness or incapacity other than the total of ninety (90) days in each year
granted to Employee under this Paragraph 5. If Employee returns to work and is
able to discharge his duties in full, Employee shall be deemed reinstated and
thereafter shall be entitled to full compensation hereunder.

6. TERMINATION OF AGREEMENT UPON SALE OR TERMINATION OF COMPANY'S
BUSINESS:

a. Notwithstanding anything to the contrary contained in this
Agreement, the Company may terminate Employee's employment upon thirty (30)
days' written notice to Employee upon the occurrence of any of the following
events:

(1) The acquisition, directly or indirectly, of any "person"
(excluding any "person" who on the date hereof owns or controls ten percent
(50%) or more of the voting power of the Company's common stock), as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended, within any twelve (12) month period of securities of the Company
representing an aggregate of fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities; provided, that for purposes
of this Paragraph (a), "acquisition" shall not include shares which are received
by a person through gift, inheritance, under a will or otherwise through the
laws of descent and distribution;

(2) During any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors of the
Company (the "Board"), cease for any reason to constitute at least a majority
thereof, unless the election of each new director was approved in advance by a
vote of at least a majority of the directors then still in office who were
directors at the beginning of such period; or

(3) The occurrence of any other event or circumstance which
is not covered by (1) or (2) above which the Board determines affects control of
the Company and, in order to implement the purposes of this Agreement, adopts a
resolution that such event or circumstance constitutes an "event" under this
Paragraph 6.

b. If the Company terminates Employee pursuant to Paragraph
6(a), Company will, for the Applicable Period (as defined in Paragraph 8(c)),
pay Employee his then current salary (subject to decrease pursuant to Schedule
A, but without any increase pursuant to Schedule A) and provide Employee with
Group Health Insurance, but Company shall not be required to pay any other
compensation or provide any other benefits.

7. DISCLOSURE OF INFORMATION; NONSOLICITATION.

a. DEFINITIONS. For purposes of this Paragraph 8, the following
terms shall have the meanings specified below:
<PAGE> 3
"BUSINESS" - the development, marketing and distribution of
products or services of the type offered by the Company or any of its
subsidiaries, including (i) the development, marketing and distribution of (1)
screen phones, touch screens and other receiving hardware to provide home
shopping, bill paying, banking, utility meter reading, swipe-card services,
access to video and audio programming (whether from low-orbiting satellites or
other sources), wireless communications and emergency response, and related
hardware or software, and (2) wireless communications and/or pagers, including
without limitation hardware and services related to a telecom/pager wrist watch
with access to information, including winning lottery numbers, weather
conditions, sports scores and stock market and financial data, and related
hardware and software; (ii) the provision of international long distance,
domestic long distance or local telephone time or services in the United States,
including (1) the prepayment of telephone charges, (2) telephone debit cards,
(3) international or domestic long distance local telephone sales or resales,
(4) international calling from non-U.S. locations to the United States, (5) "1
plus 1" residential telephone service, (6) business telephone service and (iii)
the provision of environmental, surveying, engineering, mapping and right-of-way
acquisition consulting services, or (7) the development and marketing of an
"On-Line" service;

"CONFIDENTIAL INFORMATION" - information relating to the
operations, customers, or finances of the Company, or the Business, that derives
value from not being generally known to other Persons, including, but not
limited to, technical or nontechnical data, formulas, patterns, compilations,
programs, devices, methods, techniques, drawings, processes, financial data, and
lists of or identifying information about actual or potential customers or
suppliers, whether or not reduced to writing, certain unpatented information
relating to the research and development, manufacture or serving of the
Company's products, information concerning proposed new products, market
feasibility studies and proposed or existing marketing techniques or plans.
Confidential Information also includes the same types of information relating to
the operations, customers, finances, or Business of any affiliate of the
Company, if such information is learned by Employee during the term of this
Agreement or in connection with Employee's performance of Services. Confidential
Information also includes information disclosed to the Company by third parties
that the Company is obligated to maintain as confidential. Confidential
Information may include information that is not a trade secret, but Confidential
Information that is not also a trade secret shall constitute Confidential
Information only for three (3) years after the Termination Date;

"CUSTOMER" - any customer of the Company in the United
States that Employee, during the one year period prior to the Termination Date,
(i) provided goods or services to or solicited on behalf of the Company; or (ii)
about whom Employee possesses Confidential Information;

"PERSON" - any individual, corporation, partnership, limited
liability company, association, municipality, government agency, government,
unincorporated organization or other entity;

"SERVICES" - the duties and functions that Employee shall
provide in the United States as an employee of the Company and that Employee
shall be prohibited from providing in the United States in competition with the
Company in accordance with the terms of
<PAGE> 4
this Agreement, including the duties and functions expressly set forth on
Schedule B attached hereto. Employee acknowledges that Employee has been
informed of and discussed with the Company the specific activities that Employee
will perform as Services and that Employee understands the scope of the
activities that constitute Services under this Agreement;

"TERMINATION DATE" - the last day Employee is employed by the
Company, whether the termination is voluntary or involuntary and whether with or
without cause; and

b. CONFIDENTIAL INFORMATION. Employee shall protect Confidential
Information. Except as required in connection with work for the Company,
Employee will not use, disclose or give to others, during or after Employee's
employment, any Confidential Information.

c. RETURN OF MATERIALS. On the Termination Date or for any
reason or at any time at the Company's request, Employee will deliver promptly
to the Company all materials, documents, plans, records, notes, manuals,
subcontracts, procedures and other papers and any copies thereof in Employee's
possession, custody or control relating to the Company or the Business, all of
which at all times shall be the property of the Company.

d. SOLICITATION OF CUSTOMERS. During employment and for two (2)
years after the Termination Date, Employee will not solicit Customers within the
United States for the purpose of providing products or services comparable to
those provided by the Business, except on behalf of the Company.

e. SOLICITATION OF COMPANY EMPLOYEES. During employment and for
two (2) years after the Termination Date, Employee will not solicit for
employment with another Person anyone who is or was, at any time during the one
year period prior to the Termination Date, an employee of the Company.

f. DISPARAGEMENT. Employee shall not at any time make false,
misleading or disparaging statements about the Company, including the Business,
management, employees and Customers.

g. PRIOR AGREEMENTS. Employee represents and warrants that
Employee is not under any obligation, contractual or otherwise, limiting,
impairing or affecting Employee's performance of Services. Upon execution of
this Agreement, Employee shall give the Company any agreement with a prior
employer or other Person purporting to limit or affect, in any way, Employee's
ability to work for the Company, to solicit customers or potential customers or
employees or to use any type of information.

h. FUTURE EMPLOYMENT OPPORTUNITIES. Prior to and for two (2)
years after the Termination Date, Employee shall (a) provide any prospective
employer with a copy of this Agreement, and (b) upon accepting any position,
provide the Company with the employer's name and a description of the services,
if any, Employee will provide for such employer.
<PAGE> 5
"BUSINESS" - the development, marketing and distribution of
products or services of the type offered by the Company or any of its
subsidiaries, including (i) the development, marketing and distribution of (1)
screen phones, touch screens and other receiving hardware to provide home
shopping, bill paying, banking, utility meter reading, swipe-card services,
access to video and audio programming (whether from low-orbiting satellites or
other sources), wireless communications and emergency response, and related
hardware or software, and (2) wireless communications and/or pagers, including
without limitation hardware and services related to a telecom/pager wrist watch
with access to information, including winning lottery numbers, weather
conditions, sports scores and stock market and financial data, and related
hardware and software; (ii) the provision of international long distance,
domestic long distance or local telephone time or services in the United States,
including (1) the prepayment of telephone charges, (2) telephone debit cards,
(3) international or domestic long distance local telephone sales or resales,
(4) international calling from non-U.S. locations to the United States, (5) "1
plus 1" residential telephone service, (6) business telephone service and (iii)
the provision of environmental, surveying, engineering, mapping and right-of-way
acquisition consulting services, or (7) the development and marketing of an
"On-Line" service;

"CONFIDENTIAL INFORMATION" - information relating to the
operations, customers, or finances of the Company, or the Business, that derives
value from not being generally known to other Persons, including, but not
limited to, technical or nontechnical data, formulas, patterns, compilations,
programs, devices, methods, techniques, drawings, processes, financial data, and
lists of or identifying information about actual or potential customers or
suppliers, whether or not reduced to writing, certain unpatented information
relating to the research and development, manufacture or serving of the
Company's products, information concerning proposed new products, market
feasibility studies and proposed or existing marketing techniques or plans.
Confidential Information also includes the same types of information relating to
the operations, customers, finances, or Business of any affiliate of the
Company, if such information is learned by Employee during the term of this
Agreement or in connection with Employee's performance of Services. Confidential
Information also includes information disclosed to the Company by third parties
that the Company is obligated to maintain as confidential. Confidential
Information may include information that is not a trade secret, but
Confidential Information that is not also a trade secret shall constitute
Confidential Information only for three (3) years after the Termination Date;

"CUSTOMER" - any customer of the Company in the United States
that Employee, during the one year period prior to the Termination Date, (i)
provided goods or services to or solicited on behalf of the Company; or (ii)
about whom Employee possesses Confidential Information;

"PERSON" - any individual, corporation, partnership, limited
liability company, association, municipality, government agency, government,
unincorporated organization or other entity;

"SERVICES" - the duties and functions that Employee shall
provide in the United States as an employee of the Company and that Employee
shall be prohibited from providing in the United States in competition with the
Company in accordance with the terms of
<PAGE> 6
i. WORK FOR HIRE ACKNOWLEDGMENT; ASSIGNMENT. All writings,
drawings, photographs, tapes, recordings, computer programs and other works in
any tangible medium of expression, regardless of the form of medium which have
been or are prepared by Employee, or to which Employee contributes, in
connection with Employee's employment by the Company (collectively the "Works")
and all copyrights and other rights in and to the Works, belong solely,
irrevocably and exclusively throughout the world to the Company as works made
for hire. However, to the extent any court or agency should conclude that the
Works (or any of them) do not constitute or qualify as a "work made for hire,"
Employee hereby assigns, grants and delivers, solely, irrevocably, exclusively
and throughout the world to the Company all copyrights and other rights to the
Works. Employee also agrees to cooperate with the Company and to execute such
other further grants and assignments of all rights as the Company from time to
time reasonably may request for the purpose of evidencing, enforcing,
registering or defending its ownership of the Works and the copyrights in them,
and Employee hereby irrevocably constitutes and appoints the Company as
Employee's agent and attorney-in-fact, with full power of substitution, in
Employee's name, place and stead, to execute and deliver any and all such
assignments or other instruments which Employee shall fail or refuse promptly to
execute and deliver, this power and agency being coupled with an interest and
being irrevocable. Without limiting the preceding provisions of this Paragraph
8(j), Employee agrees that the Company may edit and otherwise modify, and use,
publish and otherwise exploit, the Works in all media and in such manner as the
Company, in its discretion, may determine.

j. INVENTIONS, IDEAS AND PATENTS. Employee shall disclose
promptly to the Company (which shall receive it in confidence), and only to the
Company, any invention or idea of Employee (developed alone or with others)
conceived or made during Employee's employment by the Company (or, if related to
the Business, during employment or within one year after the Termination Date).
Employee assigns to the Company any such invention or idea in any way
connected with Employee's employment or related to the Business, research or
development of the Company, or demonstrably anticipated research or development
of the Company, and will cooperate with the Company and sign all papers deemed
necessary by the Company to enable it to obtain, maintain, protect and defend
patents covering such inventions and ideas and to confirm the exclusive
ownership of the Company of all rights in such inventions, ideas and patents,
and irrevocably appoints the Company as its agent to execute and deliver any
assignments or documents Employee fails or refuses to execute and deliver
promptly, this power and agency being coupled with an interest and being
irrevocable. This constitutes written notification to Employee that this
assignment does not apply to an invention for which no equipment, supplies,
facility or trade secret information of the Company or any Customer was used and
which was developed entirely on Employee's own time, unless (a) the invention
relates (i) directly to the Business or (ii) to the actual or demonstrably
anticipated research or development of the Company, or (b) the invention results
from any work performed by Employee for the Company.

k. INDEPENDENCE OF COVENANTS. The covenants contained herein
shall be construed as agreements independent of each other and of any other
provision of this or any other contract between the parties hereto, and the
existence of any claim or cause of action by Employee against the Company,
whether predicated upon this or any other contract, shall not constitute a
defense to the enforcement by the Company of said covenants.
<PAGE> 7
l. RIGHT TO INJUNCTIVE RELIEF. Employee recognizes and agrees
that the injury the Company will suffer in the event of the Employee's breach of
any covenant or agreement contained herein cannot be compensated by monetary
damages alone, and Employee therefore agrees that the Company, in addition and
without limiting any other remedies or rights that it may have, either under his
Agreement or otherwise, shall have the night to obtain an injunction against
Employee from any court of competent jurisdiction enjoining any such breach.

8. TERMINATION.

a. This Agreement and the employment of Employee may be
terminated as follows:

(1) By the Company (i) pursuant to Paragraph 5, 6 or 7, (ii)
upon commission by the Employee of any felony or material misdemeanor under
federal, state or local laws or ordinances, except traffic violations or (iii)
upon the failure of Employee to diligently or competently discharge the duties
assigned to him pursuant to this Agreement; or

(2) (i) By Employee upon thirty (30) days' written notice to
the Company or (ii) by the Company upon thirty (30) days' written notice to
Employee, or

(4) By the Company upon the death of Employee.

b. In the event Employee is terminated by the Company for any
reason (including, without limitation, in accordance with Paragraph
8(a)(2)(ii)) other than pursuant to Paragraph 8(a)(1) or 8(a)(3), the Company
shall (i) pay Employee his then current salary (subject to decrease pursuant to
Schedule A, but without any increase thereafter pursuant to Schedule A) and
provide Employee with Group Health Insurance, but no other compensation or
benefits, for the Applicable Period beginning with the date of termination and
(ii) subject to the Employee's strict adherence to and performance of the
covenants set forth in Paragraph 7. If Employee is terminated pursuant to
Paragraph 8(a)(1) or 8(a)(3) or Employee terminates his employment pursuant to
Paragraph 8(a)(2)(i), Employee shall be entitled only to compensation accrued
through the date of termination and all benefits accrued as of such date, and
shall not be entitled to any portion of the payment set forth in clause (ii) of
this Paragraph (b).

<PAGE> 8
"Employment Date"); (ii) one hundred eighty (180) days, in the case of a notice
given to Employee on or after the first anniversary and prior to the second
anniversary of his Employment Date, and (iii) one (1) year, in the case of a
notice given to Employee on or after the second anniversary of his Employment
Date.

9. MISCELLANEOUS.

a. This Agreement may be assigned by the Company to any
successor in interest to its business, which successor in interest shall be
bound herein to the same extent as the Company. Employee agrees to perform his
duties for such successor in interest to the same extent as he would for the
Company.

b. This is a personal agreement on the part of Employee and may
not be sold, assigned, transferred or conveyed by Employee.

c. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by the other party.

d. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia.

e. This Agreement states the entire agreement and understanding
between the parties and supersedes all prior understandings and agreements.

f. No change or modification to this Agreement shall be valid
unless in writing and signed by both parties hereto.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.

GOLD EXPRESS CORPORATION

DIRECTORS: By: /s/ J. Michael Sellards
-------------------------------------
/s/ Greg Gilbert Name: J. Michael Sellards
- ---------------------------- ------------------------------------
/s/ J. Michael Sellards Title: Executive Vice President
- ---------------------------- -----------------------------------

EMPLOYEE

/s/ Greg Gilbert
-----------------------------------------
Name: Greg Gilbert
------------------------------------
<PAGE> 9
SCHEDULE A - SALARY AND BONUS

BASE SALARY. $120,000 Annually

SALARY ADJUSTMENT. Annually, commencing on the first day of the second fiscal
quarter of the fiscal year of the Company the Company shall pay Employee for
each of the next twelve months, a Monthly Salary (as defined below) based on the
Net Income Amount (as defined below) for the previous full fiscal year,
according to the following table:

<TABLE>
<CAPTION>
ANNUAL NET INCOME AMOUNT CORRESPONDING MONTHLY
SALARY

<S> <C>
less than or equal to $1 million $10,000

greater than $1 million but less than or equal to $3 million $15,000

greater than $3 million but less than or equal to $5 million $20,000

greater than $5 million $25,000
</TABLE>

*For purposes of this Agreement, "Net Income Amount" means the
Company's annual net income before income taxes and "Monthly Salary" means
Employee's monthly salary, before deductions. The Company will deduct from
payments of Monthly Salary to Employee all federal, state and local income tax,
FICA, FUTA, and other withholdings as required by law. For purposes of this
Agreement, the Company's net income and gross sales shall be determined in
accordance with generally accepted accounting principles in the United States,
applied as a basis consistent with prior periods.

CASH BONUS. On the last day of each of the second, third and fourth
fiscal quarters following the end of the previous full fiscal year of the
Company, the Company shall pay Employee a cash bonus equal to one-third of the
Net Income Amount for such full fiscal year multiplied by the Applicable
Percentage; provided that no cash bonus shall be payable to Employee on any date
unless Employee is employed by the Company on that date.

<TABLE>
<CAPTION>
ANNUAL NET INCOME AMOUNT APPLICABLE PERCENTAGE

<S> <C>
less than or equal to $1 million 0%

greater than $1 million but less than or equal to $3 million 1%

greater than $3 million but less than or equal to $5 million 2%

greater than $5 million 3%
</TABLE>

CEO STOCK BONUS PLAN. During the term of this Agreement, Employee shall be
granted an annual exclusive option to purchase shares of Gold Express
Corporation stock at One ($1) Dollar per share. The Number of share per annum
shall be determined by the Net Income Amount multiplied by Fifteen (15%)
percent.
(Example: Assume $1,000,000 Net Income Amount x 15% = #150,000 shares.)
<PAGE> 10
SCHEDULE B - SUMMARY OF EMPLOYEE STOCK OPTION PLAN

As of the date hereof, the Company's Employee Stock Option Plan (the
"Option Plan") provides for the Employee to earn, as of the last day of the
first fiscal quarter of each fiscal year (the "Issuance Date") options for
restricted common stock of the Company in an aggregate amount (the "Annual
Amount") equal to (i) one percent (1%) of the Net Income Amount divided by the
average closing price of such common stock during the last thirty days of the
previous fiscal year (the "Stock Price"), on the following terms and conditions
and the other terms and conditions as now are, and may in the future be, set
forth as the Option Plan: The exercise price for the options issued shall equal
seventy-five percent (75%) of the Stock Price. The options shall vest over a
five year period, exercisable in an amount equal to up to twenty percent (20%)
of the Annual Amount on each of the first five anniversaries of the Issuance
Date.

Employee understands that the above is a summary of key items in a
proposed stock plan. The details of the Stock Option Plan will be provided to
Employee upon the approval of the Board of Directors of the Company.
<PAGE> 11
SCHEDULE C- SUMMARY OF EMPLOYEE BENEFITS

1. Employee shall receive full medical and dental benefits for Employee
and Employee's spouse and dependents. Included in the benefit package
will be a 401K plan, the terms of which are not determined at the
time of signing this Agreement.

2. Company shall provide Employee with the exclusive use of a leased
automobile. Such automobile shall be replaced at the end of the
original lease term or sooner if needed due to serious mechanical
malfunction. At the end of the lease term, Employee shall have the
right to purchase the vehicle at its residual value pursuant to the
lease agreement. Company shall provide all maintenance and repair of
the vehicle and automobile insurance in an amount equal to or greater
than the requirements of the lease agreement.

3. Company shall pay Employee $2,000 per month for unaccountable business
expenses, payable on the fifteenth (15th) day of each month commencing
July 1, 1995 and continuing thereafter on a monthly basis for the term
of this Agreement and as extended upon mutual consent of the parties.
This payment shall not be offset for accountable Employee expenses,
which shall be payable upon presentation to Company.

4. Company shall pay for Employee's clothing required for Company
presentations.

5. Employee shall be entitled to four (4) weeks vacation per year.

6. Company shall pay Employee's monthly cellular telephone bill.
<PAGE> 12
SCHEDULE D - DUTIES AND RESPONSIBILITIES

PRESIDENT AND CHIEF EXECUTIVE OFFICER

As President and Chief Executive Officer Employee will manage and
direct the Company toward its primary objectives, based on profit and return on
capital by performing the following duties personally or through subordinate
managers.

The essential duties and responsibilities will include but not be
limited to the following:

Establish current and long range objectives, plans, and policies,
subject to the approval of the Board of Directors.

Dispense advice, guidance, direction, and authorization to carry out
major plans and procedures, consistent with established policies and Board
approval.

Oversee the adequacy and soundness of the organization's financial
structure.

Review operating results of the organization, compare them to the
established objectives, and take steps to ensure that appropriate measures are
taken to correct unsatisfactory results.

Plan and direct all investigation and negotiation pertaining to
mergers, joint ventures, the acquisition of businesses, or the sale of major
assets with the approval of the Board of Directors.

Establish and maintain an effective system of communication throughout
the entire organizational.

Represent the organization with major customers, shareholders, the
financial community and the public.

<PAGE> 1
EXHIBIT 10.1(b)

EMPLOYMENT AGREEMENT

THIS AGREEMENT made and entered into on this 1st day of October, 1995
(the "Effective Date"), by and between STARTRONIX INTERNATIONAL, INC., a
Delaware corporation (the "Company"), and GERALD FITCH, a resident of the State
of California ("Employee").

2. TERMS OF EMPLOYMENT: Employee's employment will begin on the 1st day
of October, 1995, and will end on the 30th day of September, 2000, a term of
five (5) years, unless earlier terminated in accordance with Paragraph 5, 6 or 8
hereof or extended upon the mutual consent of both parties.

3. COMPENSATION: On the terms and subject to the conditions of this
Agreement, (i) the Company will pay Employee a salary and a bonus determined in
accordance with Schedule A, (ii) Employee will be entitled to participate in the
Company's stock option plan as is in effect from time to time, and (iii) the
Company will provide Employee with employee benefits consistent with those
provided by the Company to similarly situated executives. The Company's Employee
Stock Option Plan is summarized in Schedule B. The employee benefits provided by
the Company as of the date hereof are summarized in Schedule C. The Company has
granted the Employee a Sign-up Bonus of 250,000 shares of Company stock and a
Stock Option Plan. Employee agrees in the event of termination of his employment

<PAGE> 2
during the terms of this Agreement the Company shall have the right but not the
obligation to repurchase the Bonus Stock within 60 days of the termination date,
based on the following schedule:

Length of Service Re-purchase Price
----------------- -----------------
0 to 12 months 25 percent of current market value.
13 to 24 months 50 percent of current market value.
25 to 36 months 75 percent of current market value.
thereafter 100 percent of current market value.

*Market value shall be determined by the average share price for the 20
trading days prior to the date of termination.

4. TITLE AND DUTIES: The Company hires Employee as Chief Operating
Officer. Employee shall perform such duties and functions for the Company as
shall be specified from time to time by the President and/or the Board of
Directors of the Company, including, but not limited to the duties and
functions expressly set forth on Schedule D, and which are consistent with
Employee's duties set forth on Schedule D.

5. ILLNESS OR INCAPACITY: Employee is entitled to absences because of
illness or incapacity of no more than a total of ninety (90) days in each
calendar year. If Employee cannot perform his duties because of illness or
incapacity for more than a total of ninety (90) days in any year, the Company
may terminate this Agreement upon thirty (30) days' written notice to Employee.
Employee is not entitled to receive, and the Company shall not be required to
pay, Employee's compensation hereunder for absences because of illness or
incapacity other than the total of ninety (90) days in each year granted to
Employee under this Paragraph 5. If Employee returns to work and is able to
discharge his duties in full, Employee shall be deemed reinstated and thereafter
shall be entitled to full compensation hereunder.

6. TERMINATION OF AGREEMENT UPON SALE OR TERMINATION OF COMPANY'S
BUSINESS:

(1) The acquisition, directly or indirectly, of any "person"
(excluding any "Person" who on the date hereof owns or controls ten percent
(10%) or more of the voting power of the Company's common stock), as such term
is used in Sections 13(d) and

<PAGE> 3
14(d) of the Securities Exchange Act of 1934, as amended, within any twelve (12)
month period of securities of the Company representing an aggregate of fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities; provided, that for purposes of this Paragraph (a),
"acquisition" shall not include shares which are received by a person through
gift, inheritance, under a will or otherwise through the laws of descent and
distribution;

(3) The occurrence of any other event or circumstance which is
not covered by (1) or (2) above which the Board determines affects control of
the Company and, in order to implement the purposes of this Agreement, adopts a
resolution that such event or circumstance constitutes an "event" under this
Paragraph 6.

b. If the Company terminates Employee pursuant to Paragraph 6(a),
Company will, for the Applicable Period (as defined in Paragraph 8(c)), pay
Employee his then current salary (subject to decrease pursuant to Schedule A,
but without any increase pursuant to Schedule A) and provide Employee with Group
Health Insurance, but Company shall not be required to pay any other
compensation or provide any other benefits.

7. DISCLOSURE OF INFORMATION; NON-SOLICITATION.

a. DEFINITIONS. For purposes of this Paragraph 8, the following
terms shall have the meanings specified below:

<PAGE> 4
distance or local telephone time or services in the United States, including (1)
the prepayment of telephone charges, (2) telephone debit cards, (3)
international or domestic long distance local telephone sales or resales, (4)
international calling from non-U.S. locations to the United States, (5) "1 plus
1" residential telephone service, (6) business telephone service and (iii) the
provision of environmental, surveying, engineering, mapping and right-of-way
acquisition consulting services;

"CONFIDENTIAL INFORMATION" - information relating to the
operations, customers, or finances of the Company, or the Business, that derives
value from not being generally known to other Persons, including, but not
limited to, technical or non-technical data, formulas, patterns, compilations,
programs, devices, methods, techniques, drawings, processes, financial data, and
lists of or identifying information about actual or potential customers or
suppliers, whether or not reduced to writing, certain unpatented information
relating to the research and development, manufacture or serving of the
Company's products, information concerning proposed new products, market
feasibility studies and proposed or existing marketing techniques or plans.
Confidential Information also includes the same types of information relating to
the operations, customers, finances, or Business of any affiliate of the
Company, if such information is learned by Employee during the term of this
Agreement or in connection with Employee's performance of Services. Confidential
Information also includes information disclosed to the Company by third parties
that the Company is obligated to maintain as confidential. Confidential
Information may include information that is not a trade secret, but Confidential
Information that is not also a trade secret shall constitute Confidential
Information only for three (3) years after the Termination Date;

"CUSTOMER" - any customer of the Company in the United States
that Employee, during the one year period prior to the Termination Date, (i)
provided goods or services to or solicited on behalf of the Company; or (ii)
about whom Employee possesses Confidential Information;

"PERSON" - any individual, corporation, partnership, limited
liability company, association, municipality, government agency, government,
unincorporated organization or other entity;

"SERVICES" - the duties and functions that Employee shall
provide in the United States as an employee of the Company and that Employee
shall be prohibited from providing in the United States in competition with the
Company in accordance with the terms of this Agreement, including the duties
and functions expressly set forth on Schedule B

<PAGE> 5
attached hereto. Employee acknowledges that Employee has been informed of and
discussed with the Company the specific activities that Employee will perform as
Services and that Employee understands the scope of the activities that
constitute Services under this Agreement;

"TERMINATION DATE" - the last day Employee is employed by the
Company, whether the termination is voluntary or involuntary and whether with or
without cause; and

c. RETURN OF MATERIALS. On the Termination Date or for any reason
or at any time at the Company's request, Employee will deliver promptly to the
Company all materials, documents, plans, records, notes, manuals, subcontracts,
procedures and other papers and any copies thereof in Employee's possession,
custody or control relating to the Company or the Business, all of which at all
times sha1l be the property of the Company.

f. DISPARAGEMENT. Employee shall not at any time make false,
misleading or disparaging statements about the Company, including the Business,
management, employees and Customers.

<PAGE> 6
affect, in any way, Employee's ability to work for the Company, to solicit
customers or potential customers or employees or to use any type of information.

i. WORK FOR HIRE ACKNOWLEDGMENT; Assignment. All writings,
drawings, photographs, tapes, recordings, computer programs and other works in
any tangible medium of expression, regardless of the form of medium, which have
been or are prepared by Employee, or to which Employee contributes, in
connection with Employee's employment by the Company (collectively the "Works")
and all copyrights and other rights in and to the Works, belong solely,
irrevocably and exclusively throughout the world to the Company as works made
for hire. However, to the extent any court or agency should conclude that the
Works (or any of them) do not constitute or qualify as a "work made for hire,"
Employee hereby assigns, grants and delivers, solely, irrevocably, exclusively
and throughout the world to the Company all copyrights and other rights to the
Works. Employee also agrees to cooperate with the Company and to execute such
other further grants and assignments of all rights as the Company from time to
time reasonably may request for the purpose of evidencing, enforcing,
registering or defending its ownership of the Works and the copyrights in them,
and Employee hereby irrevocably constitutes and appoints the Company as
Employee's agent and attorney-in-fact, with full power of substitution, in
Employee's name, place and stead, to execute and deliver any and all such
assignments or other instruments which Employee shall fail or refuse promptly to
execute and deliver, this power and agency being coupled with an interest and
being irrevocable. Without limiting the preceding provisions of this Paragraph
7(i), Employee agrees that the Company may edit and otherwise modify, and use,
publish and otherwise exploit, the Works in all media and in such manner as the
Company, in its discretion, may determine.

j. Inventions, Ideas and Patents. Employee shall disclose
promptly to the Company (which shall receive it in confidence), and only to the
Company, any invention or idea of Employee (developed alone or with others)
conceived or made during Employee's employment by the Company (or, if related
to the Business, during employment or within one year after the Termination
Date). Employee assigns to the Company any such invention or idea in any way
connected with Employee's employment or related to the Business, research or
development of the Company, or demonstrably anticipated research or development
of the Company, and will cooperate with the Company and sign all papers deemed
necessary by the

<PAGE> 7
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions and ideas and to confirm the exclusive ownership of the Company
of all rights in such inventions, ideas and patents, and irrevocably appoints
the Company as its agent to execute and deliver any assignments or documents
Employee fails or refuses to execute and deliver promptly, this power and agency
being coupled with an interest and being irrevocable. This constitutes written
notification to Employee that this assignment does not apply to an invention
for which no equipment, supplies, facility or trade secret information of the
Company or any Customer was used and which was developed entirely on Employee's
own time, unless (a) the invention relates (i) directly to the Business or (ii)
to the actual or demonstrably anticipated research or development of the
Company, or (b) the invention results from any work performed by Employee for
the Company.

l. RIGHT TO INJUNCTIVE RELIEF. Employee recognizes and agrees
that the injury the Company will suffer in the event of the Employee's breach of
any covenant or agreement contained herein cannot be compensated by monetary
damages alone, and Employee therefore agrees that the Company, in addition and
without limiting any other remedies or rights that it may have, either under his
Agreement or otherwise, shall have the right to obtain an injunction against
Employee from any court of competent jurisdiction enjoining any such breach.

8. TERMINATION.

a. This Agreement and the employment of Employee may be terminated
as follows:

(l) By the Company (i) pursuant to Paragraph 5 or 6, (ii) upon
commission by the Employee of any felony or material misdemeanor under federal,
state or local laws or ordinances, except traffic violations or (iii) upon the
failure of Employee to diligently or competently discharge the duties assigned
to him pursuant to this Agreement; or

(2) (i) By Employee upon thirty (30) days' written notice to
the Company or (ii) by the Company upon thirty (30) days' written notice to
Employee, or

<PAGE> 8
(3) By the Company upon material violation by Employee of any
of the terms and conditions of this Agreement or the breach by Employee of any
representation or warranty made to the Company herein or in any other agreement,
document or instrument executed by Employee and delivered to the Company, or
should any representation or warranty made by Employee hereunder or thereunder
prove to have been false or misleading in any material respect when made or
furnished; or

(4) By the Company upon the death of Employee.

b. In the event Employee is terminated by the Company for any
reason (including, without limitation, in accordance with Paragraph 8(a)(2)(ii))
other than pursuant to Paragraph 8(a)(1) or 8(a)(3), the Company shall (i) pay
Employee his then current salary (subject to decrease pursuant to Schedule A,
but without any increase thereafter pursuant to Schedule A) and provide Employee
with Group Health Insurance, but no other compensation or benefits, for the
Applicable Period beginning with the date of termination and (ii) subject to the
Employee's strict adherence to and performance of the covenants set forth in
Paragraph 7. If Employee is terminated pursuant to Paragraph 8(a)(1) or 8(a)(3)
or Employee terminates his employment pursuant to Paragraph 8(a)(2)(i), Employee
shall be entitled only to compensation accrued through the date of termination
and all benefits accrued as of such date, and shall not be entitled to any
portion of the payment set forth in clause (ii) of this Paragraph (b).

c. For purposes of this Agreement, the term "Applicable Period"
means: (i) ninety (90) days, in the case of a notice given to Employee prior to
the first anniversary of the date on which Employee commenced his employment
with the Company or its affiliate (the "Employment Date"); (ii) one hundred
eighty (180) days, in the case of a notice given to Employee on or after the
first anniversary and prior to the second anniversary of his Employment Date,
and (iii) one (1) year, in the case of a notice given to Employee on or after
the second anniversary of his Employment Date.

9. MISCELLANEOUS.

a. This Agreement may be assigned by the Company to any successor
in interest to its business, which successor in interest shall be bound herein
to the same extent as the Company. Employee agrees to perform his duties for
such successor in interest to the same extent as he would for the Company.

<PAGE> 9
b. This is a personal agreement on the part of Employee and
may not be sold, assigned, transferred or conveyed by Employee.

c. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by the other party.

d. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

e. This Agreement states the entire agreement and
understanding between the parties and supersedes all prior understandings and
agreements.

f. No change or modification to this Agreement shall be valid
unless in writing and signed by both parties hereto.

g. Confidentiality. Employee agrees that the contents of this
Agreement are totally confidential in nature and will not be revealed to anyone
without the express written permission of Mr. Greg Gilbert, the Chief Executive
Officer of the Company.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.

STARTRONIX INTERNATIONAL, INC.

By: /s/Greg Gilbert
------------------------------
Greg Gilbert, President

Title:

EMPLOYEE:

/s/Gerald Fitch
----------------------------------
Gerald Fitch

<PAGE> 10
SCHEDULE A - SALARY AND BONUS

BASE SALARY. $120,000 Annually

SALARY ADJUSTMENT. Quarterly, commencing on the first day of the second fiscal
quarter of the Company the Company shall pay Employee for each of the next
twelve months a monthly salary based on the Net Income Amount (as defined below)
for the previous full fiscal year of the Company, according to the table below:

ANNUAL NET INCOME LEVELS MONTHLY SALARY
------------------------ --------------

greater than $1.5 million but less than or equal to $3 million $15,000
greater than $3 million $20,000

For purposes of this Agreement, "Net Income Amount" means the Company's
annual net income before income taxes. The Company will deduct from payments of
Monthly Salary to Employee all federal, state and local income tax, FICA, FUTA,
and other withholdings as required by law. For purposes of this Agreement, the
Company's net income and gross sales shall be determined in accordance with
generally accepted accounting principles in the United States, applied on a
basis consistent with prior periods.

CASH BONUS
The Company has the option to issue a Cash Bonus to employee at Company's
discretion

<PAGE> 11
SCHEDULE B - SUMMARY OF EMPLOYEE STOCK OPTION PLAN

As of the date hereof, the Company's Employee Stock Option Plan (the "Option
Plan") provides for the Employee to earn, as of the last day of the First fiscal
quarter of each fiscal year (the "Issuance Date") options for restricted common
stock of the Company in an aggregate amount (the "Annual Amount") equal to (I)
one percent (1%) of the Net Income Amount divided by the average closing price
of such common during the last thirty days of the previous fiscal year (the
"Stock Price"), on the following terms and conditions and the other terms and
conditions as now are, and may in the future be, set forth as the Option Plan:
The exercise price for the options issued shall equal seventy-five percent (75%)
of the Stock Price. The options shall vest over a five year period, exercisable
in an amount equal to up to twenty percent (20%) of the Annual Amount on each of
the first five anniversaries of the Issuance Date.

Employee understands that the above is a summary of key items in a proposed
stock plan, the details of the Stock Option Plan will be provided to Employee
upon the approval of the Board of Directors of the Company.

<PAGE> 12
SCHEDULE C - SUMMARY OF EMPLOYEE BENEFITS

1. Medical and Dental Plan
2. Auto allowance - $650 per month
3. Car/cell phone
4. Normal Company expenses

<PAGE> 13
SCHEDULE D - DUTIES AND FUNCTIONS

CHIEF OPERATING OFFICER

As the Chief Operating Officer of the Company, the Employee shall
direct, administer, and coordinate the activities of the organization in support
of policies, goals, and objectives established by the Chief Executive Officer
and in accordance with the lawful directives of the Company's Board of Directors
by performing various duties and responsibilities which shall include but not be
limited to the following:

Guide and direct management in the development, production, promotion,
and sale of the organization's products and services.

Direct the preparation of short term and long range plans and budgets
based on broad corporate goals and growth objectives.

Maintain a sound plan of corporate organization establishing policies
to insure adequate management development and to provide for capable management
succession.

Develop and install procedures and controls to promote communication
and adequate information flow.

Establish operating consistent with Chief Executive Officer's broad
policies an objectives and ensures their execution.

Evaluates the results of overall operations regularly and
systematically and reports these results to the Chief Executive Officer.

Ensures that the responsibilities, authorities, and accountability of
all direct subordinates are defined and understood.

Ensures that all organization activities and operations are carried out
in compliance with local, state, and federal regulations and laws governing
business operations.

<PAGE> 1
EXHIBIT 10.1(c)

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into as of this 1st day of March,
1996 (the "Effective Date"), by and between STARTRONIX USA, INC., a Delaware
corporation (the "Company"), and NORMAN MITCHELL SHINK, a resident of the State
of Arizona ("Executive"). In consideration of the employment by the Company and
of the compensation and other remuneration paid, and to be paid, by the Company
and received by Executive for such employment, and for other good and valuable
consideration, the receipt and sufficiency of which is here acknowledged by
Executive, it is agreed by and between the parties hereto as follows:

1. Employment. The Company agrees to employ Executive as its President
and Chief Operating Officer and Executive agrees that he will devote his
productive time, skill, energy, knowledge and best efforts during the period of
his employment to such duties as the President and Chief Executive Officer and
the Board of Directors of the Company may reasonably assign to him, and he will
faithfully and diligently endeavor to the best of his ability to further the
best interest of the Company during the period of employment. Certain of such
duties are summarized in Schedule A. However, Executive is not prohibited from
(a) making personal investments in any other businesses, as long as those
investments do not require Executive to participate in the operation of the
companies in which he invests and such other businesses are not in competition
with the Company or any of its subsidiaries or (b) from participating as a Board
member of a not for profit entity or of a non-competing business enterprise,
provided such activities do not impinge on the time available to provide his
services to Company.

2. Terms. Executive's employment will begin on the date hereof and will
end on February 28, 2001, a term of five (5) years, unless earlier terminated in
accordance with the terms hereof or extended upon the mutual consent of both
parties.

3. Compensation. On the terms and subject to the conditions of this
Agreement, (i) the Company will pay Executive a salary and a bonus determined in
accordance with Schedule B, and (ii) the Company will provide Executive with
three weeks of vacation per year and other employee benefits consistent with
those provided by the Company to similarly situated executives. Such additional
benefits shall include medical (including hospital) and dental insurance for
Executive and his dependents. However, the parties acknowledge that at present
the Company does not have medical insurance for its key employees. Accordingly,
until such time as the Company obtains and makes available to Executive medical
insurance for Executive and his dependents comparable to that afforded to
Executive by his prior employer, the Company shall pay Executive $500 per month
to allow him to pay for such insurance. Executive will be entitled to
reimbursement of all expenses incurred by him in the performance of his duties,
in accordance with the Company's normal policy, subject to presenting of
appropriate vouchers.

4. Termination. (a) Notwithstanding anything to the contrary contained
in this Agreement, the Company may terminate Executive's employment (i) upon
thirty (30) days'

<PAGE> 2
written notice to Executive, without cause or reason or (ii) without notice,
with "cause" (as hereinafter defined). In addition, this Agreement will
terminate automatically upon the death of the Executive. "Cause" means any act
or omission by Executive which, in the reasonable judgment of the Company, is
inimical to the Company's best interests. In the event of any dispute between
the Company and Executive as to whether the Company's basis for such termination
constituted "cause," Executive will have the burden of proving that the
Company's determination was unreasonable.

(b) If the Company terminates Executive's employment without cause
(including a resignation by Executive upon or following breach or constructive
termination by the Company under applicable law), the Company shall thereupon
pay Executive in a lump sum (in addition to base salary and any bonus, as
provided in Schedule B, during the thirty (30) day notice period) severance pay
in an amount equal to:

(i) one month's base salary, if termination occurs
prior to September 1, 1996;

(ii) five months' base salary, if termination
occurs on or after September 1, 1996 but before February 29, 1997; or

(iii) six months' base salary, if termination occurs
on or after February 28, 1997 but before February 28, 2001.

(c) If termination of Executive's employment shall occur by reason of
the death or resignation of Executive (except for a resignation upon or
following breach or constructive termination by the Company under applicable
law), or because the Company terminates Executive's employment for "cause" (as
hereinafter defined), no severance pay or benefits will be payable beyond the
date of such termination.

(d) If the Executive's employment hereunder terminates for any reason,
Executive will be entitled to a bonus, pro rated to the date of termination,
determined in accordance with Schedule B.

5. Disclosure of Information.

(a) Definitions. For purposes of this Paragraph 5, the following terms
have the meanings specified below:

"Business" means the development, marketing and distribution of
products or services of the type offered by the Company or any of its
subsidiaries, including: (i) the development, marketing and distribution of (1)
screen phones, touch screens and other receiving hardware to provide home
shopping, bill paying, banking, utility meter reading, swipe-card services,
access to video and audio programming (whether from low-orbiting satellites or
other sources),

2
<PAGE> 3

wireless communications, emergency response, Services for "On-Line" home-based
businesses accessing the Internet, and related hardware or software, and (2)
wireless communications and/or pagers, including without limitation hardware and
services related to a telecom./pager wrist watch with access to information,
including winning lottery numbers, weather conditions, sports scores and stock
market and financial data, and related hardware and software; and (ii) the
provision of international long distance, domestic long distance or local
telephone time or services in the United States, including (1) the prepayment of
telephone charges, (2) telephone debit cards, (3) international or domestic long
distance local telephone sales or resales, (4) international calling from
non-U.S. locations to the United States, (5) "1 plus 1" residential telephone
service, (6) business telephone service.

"Confidential Information" means information relating to the operations,
customers, or finances of the Company, or the Business, that derives value from
not being generally known to other Persons, including, but not limited to,
technical or nontechnical data, formulas, patterns, compilations, programs,
devices, methods, techniques, drawings, processes, financial data, and lists of
or identifying information about actual or potential customers or suppliers,
whether or not reduced to writing, certain unpatented information relating to
the research and development, manufacture or serving of the Company's products,
information concerning proposed new products, market feasibility studies and
proposed or existing marketing techniques or plans. Confidential Information
also includes the same types of confidential information relating to the
operations, customers, finances or Business of any affiliate of the Company, if
such information is learned by Executive during the term of this Agreement or in
connection with Executive's performance of Services. Confidential Information
also includes information disclosed to the Company by third parties that the
Company is obligated to maintain as confidential. Notwithstanding the
foregoing, Confidential Information does not include information which (i) is
already known to Executive at the time it is disclosed to Executive, (ii) has
become generally known to the public through no wrongful act of Executive or
(iii) has been rightfully received by Executive from a third party without
restriction on disclosure and without, to Executive's knowledge, a breach of an
obligation of confidentiality running directly or indirectly to the Company or
any affiliate thereof. Confidential Information that is not also a trade secret
will constitute Confidential Information only for three (3) years after the
Termination Date.

"Customer" means any customer of the Company in the United States that
Executive, during the one (1) year period prior to the Termination Date, (i)
provided goods or services to or solicited on behalf of the Company; or (ii)
about whom Executive possesses Confidential Information.

3
<PAGE> 4
"Person" means any individual, corporation, partnership, limited
liability company, association, municipality, government agency, government,
unincorporated organization or other entity.

"Services" means the duties and functions that Executive provides in the
United States as an employee of the Company, including the duties and functions
expressly set forth on Schedule A attached hereto. Executive acknowledges that
Executive has been informed of and discussed with the Company the specific
activities that Executive will perform as Services and that Executive
understands the scope of the activities that constitute Services under this
Agreement.

"Termination Date" means the last day Executive is employed by the
Company, whether the termination is voluntary or involuntary and whether with or
without cause.

b. Confidential Information. Executive shall protect Confidential
Information. Except as required in connection with work for the Company,
Executive shall not use, disclose or give to others, during or after Executive's
employment, any Confidential Information.

c. Return of Materials. On the Termination Date or for any reason or at
any time at the Company's request, Executive shall deliver promptly to the
Company all materials, documents, plans, records, notes, manuals, subcontracts,
procedures and other papers and any copies thereof in Executive's possession,
custody or control relating to the Company or the Business, all of which at all
times will be the property of the Company.

d. Solicitation of Customers. During employment and, if Executive is
employed by the Company for at least six (6) months, for at least three (3)
months after the Termination Date, Executive shall not solicit Customers within
the United States for the purpose of providing products or services comparable
to those provided by the Business, except on behalf of the Company.

e. Solicitation of Company Employees. During employment and, if
Executive is employed by the Company for at least six (6) months, for at least
three (3) months after the Termination Date, Executive shall not solicit for
employment with another Person anyone who is an employee of the Company.

f. Disparagement. Executive shall not at any time make false, misleading
or disparaging statements about the Company, including the Business, management,
employees and Customers. The Company shall not make false, misleading or
disparaging statements about Executive.

4
<PAGE> 5
g. Future Employment Opportunities. If Executive is employed by Company
for at least three (3) months, for a period commencing on the Termination Date
and ending three (3) months thereafter, Executive shall (a) provide any
prospective employer with a copy of this Section 5, and (b) upon accepting any
position, provide the Company with the employer's name and a description of
the services, if any, Executive will provide for such employer.

h. Work for Hire Acknowledgment; Assignment. All writings, drawings,
photographs, tapes, recordings, computer programs and other works in any
tangible medium of expression, regardless of the form of medium, which are
prepared by Executive, or to which Executive contributes, in connection with
Executive's employment by the Company (collectively the "Works") and all
copyrights and other rights in and to the Works, belong solely, irrevocably and
exclusively throughout the world to the Company as works made for hire. However,
to the extent any court or agency should conclude that the Works (or any of
them) do not constitute or qualify as a "work made for hire," Executive hereby
assigns, grants and delivers, Solely, irrevocably, exclusively and throughout
the world to the Company all copyrights and other rights to the Works. Executive
also agrees to cooperate with the Company and to execute such other further
grants and assignments of all rights as the Company from time to time reasonably
may request for the purpose of evidencing, enforcing, registering or defending
its ownership of the Works and the copyrights in them, and Executive hereby
irrevocably constitutes and appoints the Company as Executive's agent and
attorney-in-fact, with full power of substitution, in Executive's name, place
and stead, to execute and deliver any and all such assignments or other
instruments which Executive shall fail or refuse promptly to execute and
deliver, this power and agency being coupled with an interest and being
irrevocable. Without limiting the preceding provisions of this Paragraph 5(h),
Executive agrees that the Company may edit and otherwise modify, and use,
publish and otherwise exploit, the Works in all media and in such manner as the
Company, in its discretion, may determine.

i. Inventions, Ideas and Patents. Executive shall disclose promptly to
the Company (which shall receive it in confidence), and only to the Company, any
invention or idea of Executive (developed alone or with others) conceived or
made during and related to Executive's employment by the Company. Executive
assigns to the Company any such invention or idea in any way connected with
Executive's employment or related to the Business, research or development of
the Company, or demonstrably anticipated research or development of the
Company, and will cooperate with the Company and sign all papers deemed
necessary by the Company to enable it to obtain, maintain, protect and defend
patents covering such inventions and ideas and conform the exclusive ownership
of the Company of all rights in such inventions, ideas and patents, and
irrevocably appoints the Company as its agent to execute and deliver any

5
<PAGE> 6
assignments or documents Executive fails or refuses to execute and
deliver promptly, this power and agency being coupled with an interest
and being irrevocable. This constitutes written notification to Executive
that this assignment does not apply to an invention for which no
equipment, supplies, facility or trade secret information of the Company
or any Customer was used and which was developed entirely on Executive's
own time, unless (a) the invention relates (i) directly to the Business
or (ii) to the actual or demonstrably anticipated research or development
of the Company, or (b) the invention results from any work performed by
Executive for the Company.

j. Independence of Covenants. The covenants contained herein are
to be construed as agreements independent of each other and of any other
provision of this or any other contract between the parties hereto, and
the existence of any claim or cause of action by Executive against the
Company, whether predicated upon this or any other contract, will not
constitute a defense to the enforcement by the Company of said covenants.

6. Right to Injunctive Relief. (a) Executive recognizes and agrees that
the injury the Company will suffer in the event of the Executive's breach of any
covenant or agreement contained herein cannot be compensated by monetary damages
alone, and Executive therefore agrees that the Company, in addition and without
limiting any other remedies or rights that the Company may have, either under
this Agreement or otherwise, the Company will have the right to obtain an
injunction against Executive from any court of competent jurisdiction enjoining
any such breach.

(b) The Company recognizes and agrees that the injury Executive
will suffer in the event of the Company's breach of any covenant or agreement
contained herein cannot be compensated by monetary damages alone, and the
Company therefore agrees that Executive, in addition and without limiting any
other remedies or rights that Executive may have, either under this Agreement or
otherwise, Executive will have the right to obtain an injunction against the
Company from any court of competent jurisdiction enjoining any such breach.

7. Indemnification. The Company shall indemnify, hold harmless and
defend Executive with respect to any claims which may be asserted against him by
reason of his title, position or acts or omissions in regard to his employment,
to the maximum extent permitted by applicable law, except to the extent such
acts or omissions constitute gross negligence, willful misconduct or a breach
of his obligations hereunder.

8. Relocation; Location of Performance. (a) The parties acknowledge that
Executive and his family reside in Phoenix, Arizona. Executive intends to spend
his weekends at home, arriving in Orange County before noon on Monday's and
leaving for Arizona after the lunch hour on Friday. At such time as he decides
to move his family's residence to California, the parties will reach an
agreement with respect to reimbursement of the relocation expenses as is
customary

<PAGE> 7
for Southern California as applied to an incoming President and Chief Operating
Officer of a company similar to the Company.

(b) Executive's services will be performed primarily in the area
of Irvine, California. Executive's performance hereunder will be within such
area or its environs. The Company will not be required to reimburse Executive
for any expenses he incurs for commuting between Phoenix and Irvine. The parties
acknowledge, however, that Executive may be required to travel in connection
with the performance of his duties hereunder. Such travel will be on a Business
Class basis.

9. Miscellaneous. (a) This Agreement may be assigned by the Company to
any successor in interest to its business, which successor in interest will be
bound hereby to the same extent as the Company. Executive agrees to perform his
duties for such successor in interest to the same extent as he would for the
Company.

(b) This is a personal agreement on the part of Executive and
neither this Agreement nor any right or duty hereunder may be sold, assigned,
transferred, delegated or conveyed by Executive.

(c) The waiver by either party of a breach of any provision of
this Agreement by the other party will not operate or be construed as a waiver
of any subsequent breach by the other party.

(d) This Agreement is to be governed by and construed in
accordance with the laws of the State of California.

(e) This Agreement states the entire agreement and understanding
between the parties and supersedes all prior understandings and agreements.

(f) No change or modification to this Agreement will be valid
unless in writing and signed by both parties hereto.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.

STARTRONIX USA, INC.

By: /s/ Greg Gilbert
__________________________________________

Name: Greg Gilbert
____________________________________

Title: Executive Chairman & CEO
___________________________________

7
<PAGE> 8
/s/ Norman M. Shink
_____________________________________________

NAME: Norman M. Shink
_______________________________________

8
<PAGE> 9
SCHEDULE A - DUTIES AND FUNCTIONS

PRESIDENT AND CHIEF OPERATING OFFICER

As the President and Chief Operating Officer of the Company, the Executive shall
direct, administer, and coordinate the activities of the organization in support
of policies, goals, and objectives established by the Chief Executive Officer
and in accordance with the lawful directives of the Company's Board of Directors
by performing various duties and responsibilities which shall include but not be
limited to the following:

Guide and direct management in the development, production, promotion, and sale
of the organization's products and services.

Direct the preparation of short term and long range plans and budgets based on
broad corporate goals and growth objectives.

Maintain a sound plan of corporate organization establishing policies to insure
adequate management development and to provide for capable management
succession.

Develop and install procedures and controls to promote communication and
adequate information flow.

Establish operations consistent with the Chief Executive Officer's broad
policies and objectives and ensure their execution.

Evaluate the results of overall operations regularly and systematically and
report these results to the Chief Executive Officer.

Ensure that the responsibilities, authorities, and accountability of all direct
subordinates are defined and understood.

Ensure that all organization activities and operations are carried out in
compliance with local, state, and federal regulations and laws governing
business operations.

9
<PAGE> 10
SCHEDULE B - SALARY AND BONUS

BASE SALARY. $12,000 monthly, subject to increase.

SALARY ADJUSTMENT. Quarterly. Executive's salary for each month in a
fiscal quarter "will be increased, effective as of the first day of such fiscal
quarter, if the Company attained a higher level of estimated Quarterly Net
Income (as defined below) for the previous full fiscal quarter of the Company,
according to the table below:

QUARTERLY NET INCOME LEVELS MONTHLY SALARY
--------------------------- --------------
<S> <C>
less than $1.5 million $12,000

greater than $1.5 million but less than or equal to $3 $15,000
million

greater than $3 million $20,000
</TABLE>

For all purposes of this Schedule B "Quarterly Net Income" means the
Company's quarterly net income before income taxes. The Company will deduct from
payments of monthly salary to Executive all federal, state and local income tax,
FICA, FUTA and other withholdings as required by law. For purposes of this
Agreement, the Company's net income and gross sales shall be determined in
accordance with generally accepted accounting principles in the United States,
applied on a basis consistent with prior periods ("GAAP").

For all purposes of this Schedule B where the consolidated net income
of the Company is to be determined, inter-company transactions and relations
shall be charged on a reasonable arm's-length basis and GAAP shall apply, to the
extent reasonable and practicable. Further, although consolidated net income can
be estimated from quarter to quarter, it is determined with more dependability
upon completion and audit of the Company's annual financial statements.
Accordingly, within ten (10) days after the delivery to the Board of Directors
of StarTronix International, Inc. of the annual report of the Company's
independent certified public accountants, the Company and the Executive shall
settle their accounts to pay or reimburse, as the case may be, any base salary
and bonus payments made to the Executive which were less than or more than that
which should have been paid with respect to the just audited fiscal year.

BONUS; STOCK PURCHASE RIGHTS. As soon as is reasonably practicable
following the end of each fiscal quarter and, in any event as of the date on
which the Company files a 10Q (or, in the case of the fourth fiscal quarter, a
10K) for such quarter, the Company shall pay Executive a cash bonus equal to two
percent (2%) of the Quarterly Net Income for such fiscal quarter, subject to pro
ration if the Executive's employment terminated during such fiscal quarter for
any reason, on the basis of the actual number of days having elapsed in such
quarter until termination.

The Executive will have the right to purchase, from the last day of the
first fiscal quarter of each fiscal year until the last day of the second fiscal
quarter of such fiscal year, restricted common stock of StarTronix
International, Inc. in an aggregate amount (the "Annual Amount") equal to (i)
the aggregate amount of bonuses paid to such Executive in the previous fiscal
year pursuant to this Schedule B divided by (ii) 75% of the average closing
price of such common stock during the last thirty days of the previous fiscal
year (the "Stock Price"). Executive will be entitled to purchase such restricted
common stock at a price equal to 75% of the aggregate Stock Price therefor.

<PAGE> 11
STARTRONIX INTERNATIONAL, INC.
2402 MICHELSON DRIVE
SUITE 200
IRVINE, CALIFORNIA 92715

March 6, 1996

Mr. Norman Shink
2402 Michelson Drive
Suite 200
Irvine, California 92715

Dear Mr. Shink:

This letter confirms that, so long as you are employed by StarTronix
USA, Inc. and you reside in Phoenix, Arizona, StarTronix International, Inc. or
StarTronix USA, Inc. will allow you to use its company-owned apartment and
automobile when you are working in southern California.

Very truly yours,

STARTRONIX INTERNATIONAL, INC.

By: /s/ Greg Gilbert
------------------------------
Greg Gilbert, President

GG/jbl

<PAGE> 1
EXHIBIT 10.1(d)

EMPLOYMENT AGREEMENT

THIS AGREEMENT made and entered into on this 1st day of June, 1996
(the "Effective Date"), by and between StarTronix Inc., a Delaware corporation
(the "Company"), and J. Micheal Sellards, a resident of the State of California
("Employee").

2. TERMS OF EMPLOYMENT: Employee's employment will begin on the 1st day
of June, 1996, and will end on the 1st day of June, 2001, a term of five (5)
years, unless earlier terminated in accordance with Sections 7 or 9 hereof or
extended upon the mutual consent of both parties.

4. TITLE AND DUTIES: The Company hires Employee as Executive Vice
President. Employee shall perform such duties and functions for the Company as
shall be specified from time to time by the President or Board of Directors of
the Company, including, but not limited to the duties and functions expressly
set forth on Schedule D, and which are consistent with Employee's duties set
forth on Schedule D.

____________________________
<PAGE> 2
5. ILLNESS OR INCAPACITY: Employee is entitled to absences because of
illness or incapacity of no more than a total of ninety (90) days in each
calendar year. If Employee cannot perform his duties because of illness or
incapacity for more than a total of ninety (90) days in any year, the Company
may terminate this Agreement upon thirty (30) days' written notice to Employee.
Employee is not entitled to receive, and the Company shall not be required to
pay, Employee's compensation hereunder for absences because of illness or
incapacity other than the total of ninety (90) days in each year granted to
Employee under this Section 5. If Employee returns to work and is able to
discharge his duties in full, Employee shall be deemed reinstated and thereafter
shall be entitled to full compensation hereunder.

6. TERMINATION OF AGREEMENT UPON SALE OR TERMINATION OF COMPANY'S
BUSINESS:

(1) The acquisition, directly or indirectly, of any
"person" (excluding any "person" who on the date hereof owns or controls
ten percent (10%) or more of the voting power of the Company's common
stock), as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, within any twelve (12)
month period of securities of the Company representing an aggregate of
fifty percent (50%) or more of the combined voting power of the
Company's then outstanding securities; provided, that for purposes of
this Paragraph (a), "acquisition" shall not include shares which are
received by a person through gift, inheritance, under a will or
otherwise through the laws of descent and distribution;

(2) During any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company (the "Board"), cease for any reason to
constitute at least a majority thereof, unless the election of each new
director was approved in advance by a vote of at least a majority of the
directors then still in office who were directors at the beginning of
such period; or

(3) The occurrence of any other event or circumstance
which is not covered by (1) or (2) above which the Board determines
affects control of the Company and, in order to implement the purposes
of this Agreement, adopts a resolution that such event or circumstance
constitutes an "event" under this Paragraph 6.

a. DEFINITIONS. For purposes of this Paragraph 8, the following
terms shall have the meanings specified below:

"BUSINESS" - the development, marketing and distribution of
products or services of the type offered by the Company or any of
its subsidiaries, including (i) the development, marketing and
distribution of (1) screen phones, touch screens and other receiving
hardware to provide home shopping, bill paying, banking, utility
meter reading, swipe-card services, access to video and audio
programming (whether from low-orbiting satellites or other sources),
wireless communications and emergency response, and related hardware
or software, and (2) wireless communications and/or pagers,
including without limitation hardware and services related to a
telecom/pager wrist watch with access to information, including
winning lottery numbers, weather conditions, sports scores and stock
market and financial data, and related hardware and software; (ii)
the provision of international long distance, domestic long distance
or local telephone time or services in the United States, including
(1) the prepayment of telephone charges, (2) telephone debit cards,
(3) international or domestic long distance local telephone sales or
resales, (4) international calling from non-U.S. locations to the
United States, (5) "1 plus 1" residential telephone service, or (6)
business telephone service and (iii) the provision of environmental,
surveying, engineering, mapping and right-of-way acquisition
consulting services;

"CONFIDENTIAL INFORMATION" - information relating to the
operations, customers, or finances of the Company, or the Business,
that derives value from not being generally known to other Persons,
including, but not limited to, technical or nontechnical data,
formulas, patterns, compilations, programs, devices, methods,
techniques, drawings, processes, financial data, and lists of or
identifying information about actual or potential customers or
suppliers, whether or not reduced to writing, certain unpatented
information relating to the research and development, manufacture or
serving of the Company's products, information concerning proposed
new products, market feasibility studies and proposed or existing
marketing techniques or plans. Confidential Information also
includes the same types of information relating to the operations,
customers, finances, or Business of any affiliate of the Company, if
such information is learned by Employee during the term of this
Agreement or in connection with Employee's performance of Services.
Confidential Information also includes information disclosed to the
Company by third parties that the Company is obligated to maintain
as confidential. Confidential Information may include information
that is not a trade secret, but Confidential Information that is not
also a trade secret shall constitute Confidential Information only
for three (3) years after the Termination Date;

"CUSTOMER" - any customer of the Company in the United
States that Employee, during the one year period prior to the
Termination Date, (i) provided
<PAGE> 4
to any Person that offers or provides products or services of the types provided
by the Company in the Business.

g. DISPARAGEMENT. Employee shall not at any time make false, misleading
or disparaging statements about the Company, including the Business, management,
employees and Customers.

h. PRIOR AGREEMENTS. Employee represents and warrants that Employee is
not under any obligation, contractual or otherwise, limiting, impairing or
affecting Employee's performance of Services. Upon execution of this Agreement,
Employee shall give the Company any agreement with a prior employer or other
Person purporting to limit or affect, in any way, Employee's ability to work for
the Company, to solicit customers or potential customers or employees or to use
any type of information.

i. FUTURE EMPLOYMENT OPPORTUNITIES. Prior to and for two (2) years
after the Temination Date, Employee shall (a) provide any prospective employer
with a copy of this Agreement, and (b) upon accepting any position, provide the
Company with the employer's name and a description of the services, if any,
Employee will provide for such employer.

j. WORK FOR HIRE ACKNOWLEDGMENT; ASSIGNMENT. All writings, drawings,
photographs, tapes, recordings, computer programs and other works in any
tangible medium of expression, regardless of the form of medium, which have been
or are prepared by Employee, or to which Employee contributes, in connection
with Employee's employment by the Company (collectively the "Works") and all
copyrights and other rights in and to the Works, belong solely, irrevocably and
exclusively throughout the world to the Company as works made for hire. However,
to the extent any court or agency should conclude that the Works (or any of
them) do not constitute or qualify as a "work made for hire," Employee hereby
assigns, grants and delivers, solely, irrevocably, exclusively and throughout
the world to the Company all copyrights and other rights to the Works. Employee
also agrees to cooperate with the Company and to execute such other further
grants and assignments of all rights as the Company from time to time reasonably
may request for the purpose of evidencing, enforcing, registering or defending
its ownership of the Works and the copyrights in them, and Employee hereby
irrevocably constitutes and appoints the Company as Employee's agent and
attoney-in-fact, with full power of substitution, in Employee's name, place and
stead, to execute and deliver any and all such assignments or other instruments
which Employee shall fail or refuse promptly to execute and deliver, this power
and agency being coupled with an interest and being irrevocable. Without
limiting the preceding provisions of this Paragraph 8(j), Employee agrees that
the Company may edit and otherwise modify, and use, publish and otherwise
exploit, the Works in all media and in such manner as the Company, in its
discretion, may determine.

k. INVENTIONS, IDEAS AND PATENTS. Employee shall disclose promptly to
the Company (which shall receive it in confidence), and only to the Company, any
invention or idea
<PAGE> 5
of Employee (developed alone or with others) conceived or made during Employee's
employment by the Company (or, if related to the Business, during employment or
within one year after the Termnination Date). Employee assigns to the Company
any such invention or idea in any way connected with Employee's employment or
related to the Business, research or development of the Company, or demonstrably
anticipated research or development of the Company, and will cooperate with the
Company and sign all papers deemed necessary by the Company to enable it to
obtain, maintain, protect and defend patents covering such inventions and ideas
and to confirm the exclusive ownership of the Company of all rights in such
inventions, ideas and patents, and irrevocably appoints the Company as its agent
to execute and deliver any assignments or documents Employee fails or refuses to
execute and deliver promptly, this power and agency being coupled with an
interest and being irrevocable. This constitutes written notification to
Employee that this assignment does not apply to an invention for which no
equipment, supplies, facility or trade secret information of the Company or any
Customer was used and which was developed entirely on Employee's own time,
unless (a) the invention relates (i) directly to the Business or (ii) to the
actual or demonstrably anticipated research or development of the Company, or
(b) the invention results from any work performed by Employee for the Company.

l. INDEPENDENCE OF COVENANTS. The covenants contained herein shall be
construed as agreements independent of each other and of any other provision of
this or any other contract between the parties hereto, and the existence of any
claim or cause of action by Employee against the Company, whether predicated
upon this or any other contract, shall not constitute a defense to the
enforcement by the Company of said covenants.

m. RIGHT TO INJUNCTIVE RELIEF. Employee recognizes and agrees that the
injury the Company will suffer in the event of the Employee's breach of any
covenant or agreement contained herein cannot be compensated by monetary damages
alone, and Employee therefore agrees that the Company, in addition and without
limiting any other remedies or rights that it may have, either under his
Agreement or otherwise, shall have the right to obtain an injunction against
Employee from any court of competent jurisdiction enjoining any such breach.

8. TERMINATION.

a. This Agreement and the employment of Employee may be terminated as
follows:

(1) By the Company (i) pursuant to Paragraph 5, 6 or 7, (ii)
upon commission by the Employee of any felony or material misdemeanor
under federal, state or local laws or ordinances, except traffic
violations or (iii) upon the failure of Employee to diligently or
competently discharge the duties assigned to him pursuant to this
Agreement; or

(2) (i) By Employee upon thirty (30) days' written notice to
the Company or (ii) by the Company upon thirty (30) days' written
notice to Employee, or
<PAGE> 6
(3) By the Company upon material violation by Employee of any
of the terms and conditions of this Agreement or the breach by Employee
of any representation or warranty made to the Company herein or in any
other agreement, document or instrument executed by Employee and
delivered to the Company, or should any representation or warranty made
by Employee hereunder or thereunder prove to have been false or
misleading in any material respect when made or furnished; or

(4) By the Company upon the death of Employee.

b. In the event Employee is terminated by the Company for any reason
(including, without limitation, in accordance with Paragraph 8(a)(2)(ii)) other
than pursuant to Paragraph 8(a)(1) or 8(a)(3), the Company shall (i) pay
Employee his then current salary (subject to decrease pursuant to Schedule A,
but without any increase thereafter pursuant to Schedule A) and provide Employee
with Group Health Insurance, but no other compensation or benefits, for the
Applicable Period beginning with the date of termination and (ii) subject to the
Employee's strict adherence to and performance of the covenants set forth in
Paragraph 7, not later than twenty-four (24) months after the date of such
termination, an amount equal to [the lesser of (x) $250,000 and (y) two percent
(2%) of the average Net Income Amount (as defined in Schedule A) of the Company
for the two full twelve (12) month periods following the date of such
termination]. If Employee is terminated pursuant to Paragraph 8(a)(1) or 8(a)(3)
or Employee teminates his employment pursuant to Paragraph 8(a)(2)(i), Employee
shall be entitled only to compensation accrued through the date of termination
and all benefits accrued as of such date, and shall not be entitled to any
portion of the payment set forth in clause (ii) of this Paragraph (b).

c. For purposes of this Agreement, the term "Applicable Period" means:
(i) ninety (90) days, in the case of a notice given to Employee prior to the
first anniversary of the date on which Employee commenced his employment with
the Company or its affiliate (the "Employment Date"); (ii) one hundred eighty
(180) days, in the case of a notice given to Employee on or after the first
anniversary and prior to the second anniversary of his Employment Date, and
(iii) one (1) year, in the case of a notice given to Employee on or after the
second anniversary of his Employment Date.

9. MISCELLANEOUS.

a. This Agreement may be assigned by the Company to any successor in
interest to its business, which successor in interest shall be bound herein to
the same extent as the Company. Employee agrees to perform his duties for such
successor in interest to the same extent as he would for the Company.

b. This is a personal agreement on the part of Employee and may not be
sold, assigned, transferred or conveyed by Employee.
<PAGE> 7
c. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as
a waiver of any subsequent breach by the other party.

d. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia.

e. This Agreement states the entire agreement and understanding
between the parties and supersedes all prior understandings and
agreements.

f. No change or modification to this Agreement shall be valid
unless in writing and signed by both parties hereto.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.

STARTRONIX INC

By:/s/ Norman M. Shink
-------------------------------
Norman Shink, President

EMPLOYEE:

/s/ J. Michael Sellards
-------------------------------
J. Michael Sellards
<PAGE> 8
SCHEDULE A - SALARY AND BONUS

SALARY. Commencing on the first day of the second fiscal quarter, the
Company shall pay Employee for each of the next twelve months, a Monthly Salary
(as defined below) based on the Net Income Amount (as defined below) for the
previous full fiscal year, according to the following table:

<TABLE>
<CAPTION>
ANNUAL NET INCOME AMOUNT CORRESPONDING MONTHLY SALARY
<S> <C>
less than or equal to $1.2 million $10,000

greater than $1.2 million but less than or equal to $6 million $12,500

greater than $6 million but less than or equal to $12 million $15,000

greater than $12 million $20,000
</TABLE>

For purposes of this Agreement, "Net Income Amount" means the Company's
annual net income before income taxes and "Monthly Salary" means
Employee's monthly salary, before deductions. The Company will deduct
from payments of Monthly Salary to Employee all federal, state and
local income tax, FICA, FUTA, and other withholdings as required by
law. For purposes of this Agreement, the Company's net income and gross
sales shall be determined in accordance with generally accepted
accounting principles in the United States, applied as a basis
consistent with prior periods.

BONUS. On the last day of each of the second, third
and fourth fiscal quarters following the end of the previous full fiscal year of
the Company, the Company shall pay Employee a cash bonus equal to one-third of
the Net Income Amount for such full fiscal year multiplied by the Applicable
Percentage; provided that no cash bonus shall be payable to Employee on any date
unless Employee is employed by the Company on that date.

<TABLE>
<CAPTION>
ANNUAL NET INCOME AMOUNT APPLICABLE PERCENTAGE
<S> <C>
less than or equal to $1.2 million 0%

greater than $1.2 million but less than or equal to $6 million 1%

greater than $6 million but less than or equal to $12 million 2%

greater than $12 million 3%
</TABLE>
<PAGE> 9
Schedule B - Summary of Employee Stock Option Plan

<PAGE> 1
EXHIBIT 10.1(e)

EMPLOYMENT AGREEMENT

THIS AGREEMENT made and entered into on this 15th day of August, 1996
(the "Effective Date"), by and between StarTronix International Inc., a Delaware
corporation (the "Company"), and James Valle, a resident of the State of
California ("Employee").

2. TERMS OF EMPLOYMENT: Employee's employment will begin on the 15th
day of August, 1996, and will end on the 15th day of August, 2001, a term of
five ( 5 ) years, unless earlier terminated in accordance with Sections 7 or 9
hereof or extended upon the mutual consent of both parties.

4. TITLE AND DUTIES: The Company hires Employee as Vice President,
Chief Financial Officer and Treasurer. Employee shall perform such duties and
functions for the Company as shall be specified from time to time by the Chief
Executive Officer or Board of Directors of the Company, including, but not
limited to the duties and functions expressly set forth on Schedule D, and which
are consistent with Employee's duties set forth on Schedule D. Employee shall
report directly to the Chief Executive Officer.

5. ILLNESS OR INCAPACITY: Employee is entitled to absences because of
illness or incapacity of no more than a total of ninety (90) days in each
calendar year. If Employee cannot
<PAGE> 2
perform his duties because of illness or incapacity for more than a total of
ninety (90) days in any year, the Company may terminate this Agreement upon
thirty (30) days' written notice to Employee. Employee is not entitled to
receive, and the Company shall not be required to pay, Employee's compensation
hereunder for absences because of illness or incapacity other than the total of
ninety (90) days in each year granted to Employee under this Section 5. If
Employee returns to work and is able to discharge his duties in full, Employee
shall be deemed reinstated and thereafter shall be entitled to full
compensation hereunder.

6. TERMINATION OF AGREEMENT UPON SALE OR TERMINATION OF COMPANY'S
BUSINESS:

(1) The acquisition, directly or indirectly, of any
"person" (excluding any "person" who on the date hereof owns or
controls ten percent (10%) or more of the voting power of the Company's
common stock), as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, within any twelve (12)
month period of securities of the Company representing an aggregate of
fifty percent (50%) or more of the combined voting power of the
Company's then outstanding securities; provided, that for purposes of
this Paragraph (a), "acquisition" shall not include shares which are
received by a person through gift, inheritance, under a will or
otherwise through the laws of descent and distribution;

(2) The occurrence of any other event or circumstance
which is not covered by (1) above which the Board reasonably determines
affects control of the Company and, in order to implement the purposes
of this Agreement, adopts a resolution that such event or circumstance
constitutes an "event" under this Paragraph 6.

b. If the Company terminates Employee pursuant to Paragraph
6(a), Company will for the Applicable Period (as defined in Paragraph 8(c)), pay
Employee his then current salary and provide Employee, with Group Health
Insurance, but Company shall not be required to pay any other compensation or
provide any other benefits.

7. DISCLOSURE OF INFORMATION; NON-SOLICITATION; NON-COMPETITION.

a. DEFINITIONS. For Purposes Of this Paragraph 8, the following
terms shall have the meanings specified below:
<PAGE> 3
"BUSINESS" - the development and marketing and distribution of products
or services of the type offered by the Company or any of its subsidiaries,
utilizing a multi-level marketing structure, including (i) the development,
marketing and distribution of (1) screen phones, touch screens and other
receiving hardware to provide home shopping, bill paying, banking, swipe-card
services, access to video and audio programming (whether from low-orbiting
satellites or other sources), and (2) the provision of international long
distance, domestic long distance or local telephone time or services in the
United States and Canada;

"CONFIDENTIAL INFORMATION" - information relating to the operations,
customers, or finances of the Company, or the Business, that derives value from
not being generally known to other Persons, including, but not limited to,
technical or non-technical data, formulas, patterns, compilations, programs,
devices, methods, techniques, drawings, processes, financial data, and lists of
or identifying information about actual or potential customers or suppliers,
whether or not reduced to writing, certain non-patented information relating to
the research and development, manufacture or serving of the Company's products,
information concerning proposed new products, market feasibility studies and
proposed or existing marketing techniques or plans. Confidential Information
also includes the same types of information relating to the operations,
customers, finances, or Business of any affiliate of the Company, if such
information is learned by Employee during the term of this Agreement or in
connection with Employee's performance of Services. Confidential Information
also includes information disclosed to the Company by third parties that the
Company is obligated to maintain as confidential. Confidential Information may
include information that is not a trade secret, but Confidential Information
that is not also a trade secret shall constitute Confidential Information only
for three (3) years after the Termination Date;

"CUSTOMER" - any customer of the Company in the United States that
Employee, during the one year period prior to the Termination Date, (i) provided
goods or services to or solicited on behalf of the Company; or (ii) about whom
Employee possesses Confidential Information;

"PERSON" - any individual, corporation, partnership, limited liability
company, association, municipality, government agency, government,
unincorporated organization or other entity;
<PAGE> 4
"SERVICES" - the duties and functions that Employee shall provide in
the United States as an employee of the Company and that Employee shall
be prohibited from providing in the United States in competition with
the Company in accordance with the terms of this Agreement, including
the duties and functions expressly set forth on Schedule B attached
hereto. Employee acknowledges that Employee has been informed of and
discussed with the Company the specific activities that Employee will
perform as Services and that Employee understands the scope of the
activities that constitute Services under this Agreement;

"TERMINATION DATE" - the last day Employee is employed by the
Company, whether the termination is voluntary or involuntary and
whether with or without cause; and

c. RETURN OF MATERIALS. On the Termination Date or for any reason or at
any time at the Company's request, Employee will deliver promptly to the Company
all materials, documents, plans, records, notes, manuals, subcontracts,
procedures and other papers and any copies thereof in Employee's possession,
custody or control relating to the Company or the Business, all of which at all
times shall be the property of the Company.

d. SOLICITATION OF CUSTOMERS. During employment and for two (2) years
after the Termination Date, Employee will not solicit Customers within the
United States for the purpose of providing products or services comparable to
those provided by the Business, except on behalf of the Company.

c. SOLICITATION OF COMPANY EMPLOYEES. During employment and for two (2)
years after the Termination Date, Employee will not solicit for employment with
another Person anyone who is or was, at any time during the one year period
prior to the Termination Date, an employee of the Company.

f. DISPARAGEMENT. Employee shall not at any time make false, misleading
or disparaging statements about the Company, including the Business,
management, employees and Customers.

g. PRIOR AGREEMENTS. Employee represents and warrants that Employee is
not under any obligation, contractual or otherwise, limiting, impairing or
affecting Employee's performance of Services. Upon execution of this Agreement,
Employee shall give the
<PAGE> 5
Company any agreement with a prior employer or other Person purporting to
limit or affect, in any way, Employee's ability to work for the Company, to
solicit customers or potential customers or employees or to use any type of
information.

i. WORK FOR HIRE ACKNOWLEDGMENT; ASSIGNMENT. All writings, drawings,
photographs, tapes, recordings, computer programs and other works in any
tangible medium of expression, regardless of the form of medium, which have been
or are prepared by Employee, or to which Employee contributes, in connection
with Employee's employment by the Company (collectively the "Works") and all
copyrights and other rights in and to the Works, belong solely, irrevocably and
exclusively throughout the world to the Company as works made for hire. However,
to the extent any court or agency should conclude that the Works (or any of
them) do not constitute or qualify as a "work made for hire," Employee hereby
assigns, grants and delivers, solely, irrevocably, exclusively and throughout
the world to the Company all copyrights and other rights to the Works. Employee
also agrees to cooperate with the Company and to execute such other further
grants and assignments of all rights as the Company from time to time reasonably
may request for the purpose of evidencing, enforcing, registering or defending
its ownership of the Works and the copyrights in them, and Employee hereby
irrevocably constitutes and appoints the Company as Employee's agent and
attorney-in-fact, with full power of substitution, in Employee's name, place and
stead, to execute and deliver any and all such assignments or other instruments
which Employee shall fail or refuse promptly to execute and deliver, this power
and agency being coupled with an interest and being irrevocable. Without
limiting the preceding provisions of this Paragraph 8(j), Employee agrees that
the Company may edit and otherwise modify, and use, publish and otherwise
exploit, the Works in all media and in such manner as the Company, in its
discretion, may determine.

j. INVENTIONS, IDEAS AND PATENTS. Employee shall disclose promptly to
the Company (which shall receive it in confidence), and only to the Company, any
invention or idea of Employee (developed alone or with others) conceived or made
during Employee's employment by the Company (or, if related to the Business,
during employment or within one year after the Termination Date). Employee
assigns to the Company any such invention or idea in any way connected with
Employee's employment or related to the Business, research or development of the
Company, or demonstrably anticipated research or development of the Company, and
will cooperate with the Company and sign all papers deemed necessary by the
Company to enable it to obtain, maintain, protect and defend patents covering
such inventions
<PAGE> 6
and ideas and to confirm the exclusive ownership of the Company of all rights in
such inventions, ideas and patents, and irrevocably appoints the Company as its
agent to execute and deliver any assignments or documents Employee fails or
refuses to execute and deliver promptly, this power and agency being coupled
with an interest and being irrevocable. This constitutes written notification to
Employee that this assignment does not apply to an invention for which no
equipment, supplies, facility or trade secret information of the Company or any
Customer was used and which was developed entirely on Employee's own time,
unless (a) the invention relates (i) directly to the Business or (ii) to the
actual or demonstrably anticipated research or development of the Company, or
(b) the invention results from any work performed by Employee for the Company.

l. RIGHT TO INJUNCTIVE RELIEF. Employee recognizes and agrees that the
injury the Company will suffer in the event of the Employee's breach of any
covenant or agreement contained herein cannot be compensated by monetary damages
alone, and Employee therefore agrees that the Company, in addition and without
limiting any other remedies or rights that it may have, either under his
Agreement or otherwise, shall have the night to obtain an injunction against
Employee from any court of competent jurisdiction enjoining any such breach.

8. TERMINATION.

a. This Agreement and the employment of Employee may be terminated as
follows:

(1) By the Company (i) pursuant to Paragraph 5, 6 or 7,
(ii) upon commission by the Employee of any felony
under federal, state or local laws or ordinances,
except traffic violations or

(2) (i) By Employee upon thirty (30) days' written notice
to the Company,

(3) By the Company upon material violation by Employee of
any of the terms and conditions of this Agreement or
the breach by Employee of any representation or
warranty made to the Company herein or in any other
agreement, document or instrument executed by
Employee and delivered to the Company, or should any
representation or warranty made by Employee hereunder
or thereunder
<PAGE> 7
prove to have been false or misleading in any material respect
when made or furnished. Company may terminate pursuant to this
paragraph only upon providing Employee written notice of
request to cure such material violation, breach or
misrepresentation and the failure of employee cure such
material violation, breach or misrepresentation within ninety
(90) days of notice; or

(4) By the Company upon the death of Employee.

b. In the event Employee is terminated by the Company for any
reason, the Company shall (i) pay Employee his then current salary and
provide Employee with Group Health Insurance, but no other compensation
or benefits, for the Applicable Period beginning with the date of
termination and (ii) subject to the Employee's strict adherence to and
performance of the covenants set forth in Paragraph 7, not later than
twenty-four (24) months after the date of such termination, an amount
equal to the lesser of (x) $250,000 and (y) two percent (2%) of the
average Net Income Amount (as defined in Schedule A) of the Company for
the two full twelve (12) month periods fol1owing the date of such
termination), however, in no event less than One Hundred Thousand
dollars ($100,000.00). If Employee terminates his employment pursuant
to Paragraph 8(a)(2)(i), Employee shall be entitled only to
compensation accrued through the date of termination and all benefits
accrued as of such date, and shall not be entitled to any portion of
the payment set forth in clause (ii) of this Paragraph (b).

c. For purposes of this Agreement, the term "Applicable Period"
means one year.

9. MISCELLANEOUS.

a. This Agreement may be assigned by the Company to any
successor in interest to its business, which successor in interest
shall be bound herein to the same extent as the Company. Employee
agrees to perform his duties for such successor in interest to the same
extent as he would for the Company.

b. This is a personal agreement on the part of Employee and may
not be sold, assigned, transferred or conveyed by Employee.

c. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as
a waiver of any subsequent breach by the other party.

d. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
<PAGE> 8
e. This Agreement states the entire agreement and understanding
between the parties and supersedes all prior understandings and
agreements.

f. No change or modification to this Agreement shall be valid
unless in writing and signed by both parties hereto.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.

STARTRONIX INTERNATIONAL INC. EMPLOYEE:

By: /s/ Greg Gilbert /s/ James Valle
------------------------------- ---------------------------
Greg Gilbert, President James Valle
<PAGE> 9
SCHEDULE A - SALARY AND BONUS

ANNUAL SALARY: $120,000

SALARY ADJUSTMENT. Commencing on the first day of employment the
Company shall pay Employee for each of the next twelve months, a Monthly Salary
(as defined below) based upon the Net Income Amount (as defined below) for the
current fiscal year, according to the following table:

<TABLE>
<CAPTION>
NET INCOME AMOUNT CORRESPONDING MONTHLY SALARY
<S> <C>
less than or equal to $1.2 million $ 10,000
greater than $1.2 million but less than or equal to $6 million $ 15,000
greater than $6 million $ 20,000
</TABLE>

For purposes of this Agreement, "Net Income Amount" means the Company's
annual net income before income taxes and employee bonuses and
"Monthly Salary" means Employee's monthly salary, before deductions.
The Company will deduct from payments of Monthly Salary to Employee all
federal, state and local income tax, FICA, FUTA, and other withholdings
as required by law. For purposes of this Agreement, the Company's net
income and gross sales shall be determined in accordance with generally
accepted accounting principles in the United States, applied as a basis
consistent with prior periods.

BONUS. On the last day of each of the first, second, third
and fourth fiscal quarters following the end of the previous full fiscal year of
the Company, the Company shall pay Employee a cash bonus equal to the Net Income
Amount for such full fiscal year multiplied by the Applicable Percentage;
provided that no cash bonus shall be payable to Employee on any date unless
Employee is employed by the Company on that date.

<TABLE>
<CAPTION>
ANNUAL NET INCOME AMOUNT APPLICABLE PERCENTAGE
<S> <C>
less than or equal to $1.2 million 0%
greater than $1.2 million but less than or equal to $6 million 0.5%
greater than $6 million but less than or equal to $12 million 1%
greater than $12 million 1.5%
</TABLE>
<PAGE> 10
SCHEDULE B - SUMMARY OF EMPLOYEE STOCK OPTION PLAN

As of the date hereof, the Company's Employee Stock Option Plan (the
"Option Plan") provides for the Employee to earn, as of the last day of the
first fiscal quarter of each fiscal year (the "Issuance Date") options for
restricted common stock of StarTronix International Inc., in an aggregate amount
(the "Annual Amount") equal to (i) one percent (1%) of the Net Income Amount
divided by the average closing price of such common stock during the last thirty
days of the previous fiscal year (the "Stock Price"), on the following terms and
conditions and the other terms and conditions as now are, and may in the future
be, set forth as the Option Plan: The exercise price for the options issued
shall equal seventy-five percent (75%) of the Stock Price. The options shall
vest over a five year period, exercisable in an amount equal to up to twenty
percent (20%) of the Annual Amount on each of the first five anniversaries of
the Issuance Date.

In addition to the Option Plan, the Employee is hereby granted a sign up stock
option bonus of one-hundred thousand shares (100,000) of common stock of the
Company at a purchase price of one dollar ($1.00) per share. Such stock shall be
subject to the legal restrictions imposed by the Securities and Exchange
Commission. The option shall be excercisable for a period of five (5) years from
the Employment Date.
<PAGE> 11
SCHEDULE C- SUMMARY OF EMPLOYEE BENEFITS

1. Employee shall receive full medical and dental benefits for
Employee and Employee's spouse and dependents. Included in the
benefit package will be a 401K plan, the terms of which are not
determined at the time of signing this Agreement.

2. Company shall provide, at Employees option: (a) Employee with the exclusive
use of a leased automobile with a monthly payment not to exceed $650 per month,
plus taxes, over a maximum five year term. Such automobile shall be replaced at
the end of the original lease term or sooner if needed due to serious mechanical
malfunction. At the end of the lease term, Employee shall have the right to
purchase the vehicle at its residual value pursuant to the lease agreement.
Company shall provide all maintenance and repair of the vehicle and automobile
insurance in an amount equal to or greater than the requirements of the lease
agreement, or (b) a monthly car allowance of six hundred fifty dollars ($650).

3. Company shall pay Employee $2,000 per month for unaccountable business
expenses, payable on the fifteenth (15th) day of each month commencing August
15, 1996 and continuing thereafter on a monthly basis for the term of this
Agreement and as extended upon mutual consent of the parties. This payment shall
not be offset for accountable Employee expenses, which shall be payable upon
presentation to Company.

4. Company shall pay for Employee's yearly membership fees for professional
societies and CPA license requirements.

5. Employee shall be entitled to four (4) weeks vacation per year.

6. Company shall pay Employee's Continuing Professional Education (CPE)
expenses. All coursework shall be acceptable to the California State Board of
Accountancy. Employee will use best efforts to attend eighty (80) hours per year
of CPE courses. Company shall pay tuition, supplies, travel and lodging.
Pre-approved time spent at the courses shall not be deducted from vacation time.

7. Company shall pay Employee's monthly cellular telephone bill.
<PAGE> 12
SCHEDULE D - DUTIES AND FUNCTIONS

Employee will use his best efforts to carry out the following duties and
functions:

The Chief Financial Officer/Treasurer directs the organization's financial
planning and accounting practices as well as its relationship with lending
institutions, shareholders, and financial community by performing the following
duties personally or through subordinate managers.

Oversees and directs budgeting, audit, tax, accounting, purchasing and insurance
activities of the Company.

Provides direction and institutes procedures and systems necessary to maintain
proper records and to afford adequate accounting controls and services for the
Company.

Provides direction in activities as custodian of funds, securities, and assets
of the Company.

Appraises the Company's financial position and issues periodic financial and
operating reports.

Directs and coordinates the establishment of budget programs.

Analyzes, consolidates, and directs all cost accounting procedures together with
other statistical and routine reports.

Oversees and directs the preparation and issuance of the Company's Annual
Report.

Directs and analyzes studies of general economic, business, and financial
conditions and their impact on the Company's policies and operations.

<PAGE> 1
EXHIBIT 10.1(f)

EMPLOYMENT AGREEMENT

THIS AGREEMENT made and entered into on this 1st day of September,
1995 (the "Effective Date"), by and between StarTronix Inc., a Delaware
corporation (the "Company"), and Christopher A. Reid, a resident of the State of
Arizona ("Employee").

2. TERMS OF EMPLOYMENT: Employee's employment will begin on the 5th
day of September, 1996, and will end on the 5th day of September, 2001, a term
of five (5) years, unless earlier terminated in accordance with Sections 7 or
9 hereof or extended upon the mutual consent of both parties.

4. TITLE AND DUTIES: The Company hires Employee as Senior Vice
President, General Counsel and Canadian General Manager, reporting to the
President. Employee shall perform such duties and functions for the Company as
shall be specified from time to time by the President or Board of Directors of
the Company, including, but not limited to the duties and functions expressly
set forth on Schedule D, and which are consistent with Employee's duties set
forth on Schedule D.

1
<PAGE> 2
5. ILLNESS OR INCAPACITY: Employee is entitled to absences because of
illness or incapacity of no more than a total of ninety (90) days in each
calendar year. If Employee cannot perform his duties because of illness or
incapacity for more than a total of ninety (90) days in any year, the Company
may terminate this Agreement upon thirty (30) days' written notice to Employee.
Employee is not entitled to receive, and the Company shall not be required to
pay, Employee's compensation hereunder for absences because of illness or
incapacity other than the total of ninety (90) days in each year granted to
Employee under this Section 5. If Employee returns to work and is able to
discharge his duties in full, Employee shall be deemed reinstated and
thereafter shall be entitled to full compensation hereunder.

6. TERMINATION OF AGREEMENT UPON SALE OR TERMINATION OF COMPANY'S
BUSINESS:

(1) The acquisition, directly or indirectly, of any "person"
(excluding any "person" who on the date hereof owns or controls ten
percent (10%) or more of the voting power of the Company's common
stock), as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, within any twelve (12)
month period of securities of the Company representing an aggregate of
fifty percent (50%) or more of the combined voting power of the
Company's then outstanding securities; provided, that for purposes of
this Paragraph (a), "acquisition" shall not include shares which are
received by a person through gift, inheritance, under a will or
otherwise through the laws of descent and distribution;

(2) During any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors
of the Company (the "Board"), cease for any reason to constitute at
least a majority thereof, unless the election of each new director was
approved in advance by a vote of at least a majority of the directors
then still in office who were directors at the beginning of such
period; or

(3) The occurrence of any other event or circumstance which
is not covered by (1) or (2) above which the Board reasonably
determines affects control of the Company and, in order to implement
the purposes of this Agreement, adopts a resolution that such event or
circumstance constitutes an "event" under this Paragraph 6.

2
<PAGE> 3
7. DISCLOSURE OF INFORMATION; NONSOLICITATION; NON-COMPETITION.

a. DEFINITIONS. For purposes of this Paragraph 8, the following
terms shall have the meanings specified below:

"BUSINESS" - the development, marketing and distribution of
products or services of the type offered by the Company or any of its
subsidiaries utilizing a multi-level marketing structure, including (i)
the development, marketing and distribution of (1) screen phones, touch
screens and other receiving hardware to provide home shopping, bill
paying, banking, swipe-card services, access to video and audio
programming (whether from low-orbiting satellites or other sources),
and (2) the provision of international long distance, domestic long
distance or local telephone time or services in the United States and
Canada;

"CONFIDENTIAL INFORMATION" - information relating to the
operations, customers, or finances of the Company, or the Business,
that derives value from not being generally known to other Persons,
including, but not limited to, technical or non-technical data,
formulas, patterns, compilations, programs, devices, methods,
techniques, drawings, processes, financial data, and lists of or
identifying information about actual or potential customers or
suppliers, whether or not reduced to writing, certain non-patented
information relating to the research and development, manufacture or
serving of the Company's products, information concerning proposed new
products, market feasibility studies and proposed or existing marketing
techniques or plans. Confidential Information also includes the same
types of information relating to the operations, customers, finances,
or Business of any affiliate of the Company, if such information is
learned by Employee during the term of this Agreement or in connection
with Employee's performance of Services. Confidential Information also
includes information disclosed to the Company by third parties that the
Company is obligated to maintain as confidential. Confidential
Information may include information that is not a trade secret, but
Confidential Information that is not also a trade secret shall
constitute Confidential Information only for three (3) years after the
Termination Date;

3
<PAGE> 4
"CUSTOMER" - any customer of the Company in the United
States that Employee, during the one year period prior to the
Termination Date, (i) provided goods or services to or solicited on
behalf of the Company; or (ii) about whom Employee possesses
Confidential Information;

"PERSON" - any individual, corporation, partnership, limited
liability company, association, municipality, government agency,
government, unincorporated organization or other entity;

"SERVICES" - the duties and functions that Employee shall
provide in the United States as an employee of the Company and that
Employee shall be prohibited from providing in the United States in
competition with the Company in accordance with the terms of this
Agreement, including the duties and functions expressly set forth on
Schedule B attached hereto. Employee acknowledges that Employee has
been informed of and discussed with the Company the specific activities
that Employee will perform as Services and that Employee understands
the scope of the activities that constitute Services under this
Agreement;

"TERMINATION DATE" - the last day Employee is employed by the
Company, whether the termination is voluntary or involuntary and
whether with or without cause; and

f. SERVICES PROVIDED TO COMPETITORS. During employment and for
two (2) years after the Termination Date, Employee will not provide Services
within the United States to any Person that offers or provides products or
services through multi-level marketing involving screen phones as its main
product line.

4
<PAGE> 5
g. DISPARAGEMENT. Employee shall not at any time make false,
misleading or disparaging statements about the Company, including the Business,
management, employees and Customers.

h. PRIOR AGREEMENTS. Employee represents and warrants that
Employee is not under any obligation, contractual or otherwise, limiting,
impairing or affecting Employee's performance of Services. Upon execution of
this Agreement, Employee shall give the Company any agreement with a prior
employer or other Person purporting to limit or affect, in any way, Employee's
ability to work for the Company, to solicit customers or potential customers or
employees or to use any type of information.

i. FUTURE EMPLOYMENT OPPORTUNITIES. Prior to and for two (2)
years after the Termination Date, Employee shall (a) provide any prospective
employer with a copy of this Agreement, and (b) upon accepting any position,
provide the Company with the employer's name and a description of the services,
if any, Employee will provide for such employer.

j. WORK FOR HIRE ACKNOWLEDGMENT; ASSIGNMENT. All writings,
drawings, photographs, tapes, recordings, computer programs and other works in
any tangible medium of expression, regardless of the form of medium, which have
been or are prepared by Employee, or to which Employee contributes, in
connection with Employee's employment by the Company (collectively the "Works")
and all copyrights and other rights in and to the Works, belong solely,
irrevocably and exclusively throughout the world to the Company as works made
for hire. However, to the extent any court or agency should conclude that the
Works (or any of them) do not constitute or qualify as a "work made for hire,"
Employee hereby assigns, grants and delivers, solely, irrevocably, exclusively
and throughout the world to the Company all copyrights and other rights to the
Works. Employee also agrees to cooperate with the Company and to execute such
other further grants and assignments of all rights as the Company from time to
time reasonably may request for the purpose of evidencing, enforcing,
registering or defending its ownership of the Works and the copyrights in them,
and Employee hereby irrevocably constitutes and appoints the Company as
Employee's agent and attorney-in-fact, with full power of substitution, in
Employee's name, place and stead, to execute and deliver any and all such
assignments or other instruments which Employee shall fail or refuse promptly to
execute and deliver, this power and agency being coupled with an interest and
being irrevocable. Without limiting the preceding provisions of this Paragraph
8(j), Employee agrees that the Company may edit and otherwise modify, and use,
publish and otherwise exploit, the Works in all media and in such manner as the
Company, in its discretion, may determine.

5
<PAGE> 6
k. INVENTIONS, IDEAS AND PATENTS. Employee shall disclose
promptly to the Company (which shall receive it in confidence), and only to the
Company, any invention or idea of Employee (developed alone or with others)
conceived or made during Employee's employment by the Company. Employee assigns
to the Company any such invention or idea in any way connected with Employee's
employment or related to the Business, research or development of the Company,
or demonstrably anticipated research or development of the Company, and will
cooperate with the Company and sign all papers deemed necessary by the Company
to enable it to obtain, maintain, protect and defend patents covering such
inventions and ideas and to confirm the exclusive ownership of the Company of
all rights in such inventions, ideas and patents, and irrevocably appoints the
Company as its agent to execute and deliver any assignments or documents
Employee fails or refuses to execute and deliver promptly, this power and agency
being coupled with an interest and being irrevocable. This constitutes written
notification to Employee that this assignment does not apply to an invention for
which no equipment, supplies, facility or trade secret information of the
Company or any Customer was used and which was developed entirely on Employee's
own time, unless (a) the invention relates (i) directly to the Business or (ii)
to the actual or demonstrably anticipated research or development of the
Company, or (b) the invention results from any work performed by Employee for
the Company.

l. INDEPENDENCE OF COVENANTS. The covenants contained herein
shall be construed as agreements independent of each other and of any other
provision of this or any other contract between the parties hereto, and the
existence of any claim or cause of action by Employee against the Company,
whether predicated upon this or any other contract, shall not constitute a
defense to the enforcement by the Company of said covenants.

m. RIGHT TO INJUNCTIVE RELIEF. Employee recognizes and agrees
that the injury the Company will suffer in the event of the Employee's breach of
any covenant or agreement contained herein cannot be compensated by monetary
damages alone, and Employee therefore agrees that the Company, in addition and
without limiting any other remedies or rights that it may have, either under his
Agreement or otherwise, shall have the night to obtain an injunction against
Employee from any court of competent jurisdiction enjoining any such breach.

6
<PAGE> 7
8. TERMINATION.

a. This Agreement and the employment of Employee may be
terminated as follows:

(1) By the Company (i) pursuant to Paragraph 5 or 6, (ii)
upon the conviction of the Employee of any felony or material
misdemeanor under federal, state or local laws or ordinances, except
traffic violations or (iii) upon the failure of Employee to diligently
or competently discharge the duties assigned to him pursuant to this
Agreement. Company may terminate pursuant to this paragraph only upon
providing Employee written notice of request to cure such failure to
diligently or competently discharge the duties assigned and the failure
of employee cure such failure to diligently or competently discharge
the duties assigned within thirty (30) days of notice; or

(2) (i) By Employee upon thirty (30) days' written notice to
the Company or (ii) by the Company upon thirty (30) days' written
notice to Employee, or

(3) By the Company upon material violation by Employee of
any of the terms and conditions of this Agreement or the breach by
Employee of any representation or warranty made to the Company herein
or in any other agreement, document or instrument executed by Employee
and delivered to the Company, or should any representation or warranty
made by Employee hereunder or thereunder prove to have been false or
misleading in any material respect when made or furnished. Company may
terminate pursuant to this paragraph only upon providing Employee
written notice of request to cure such material violation, breach or
misrepresentation and the failure of employee cure such material
violation, breach or misrepresentation within thirty (30) days of
notice; or

(4) By the Company upon the death of Employee.

b. In the event Employee is terminated by the Company for any
reason (including, without limitation, in accordance with Paragraph
8(a)(2)(ii)) other than pursuant to Paragraph 8(a)(1) or 8(a)(3), the Company
shall (i) pay Employee his then current salary (subject to decrease pursuant to
Schedule A, but without any increase thereafter pursuant to Schedule A) and
provide Employee with Group Health Insurance, but no other compensation or
benefits, for the Applicable Period beginning with the date of termination and
(ii) subject to the Employee's strict adherence to and performance of the
covenants set forth in Paragraph 7, not later than twenty-four (24) months
after the date of such termination, an amount equal to [the lesser of (x)
$250,000 and (y) two percent (2%) of the average Net Income Amount (as defined
in Schedule A) of the Company for the two full twelve (12) month periods
following the date of such termination), however, in no event less than One
Hundred Thousand dollars ($100,000.00). If Employee is terminated pursuant to
Paragraph 8(a)(1) or 8(a)(3) or Employee terminates his employment pursuant to
Paragraph 8(a)(2)(i), Employee shall be entitled only to compensation accrued
through the date of termination and all benefits accrued as of such date, and
shall not be entitled to any portion of the payment set forth in clause (ii) of
this Paragraph (b).

7
<PAGE> 8
c. For purposes of this Agreement, the term "Applicable Period"
means: (i) one hundred eighty (180) days, in the case of a notice given to
Employee prior to the six (6) month anniversary of the date on which Employee
commenced his employment with the Company or its affiliate (the "Employment
Date"); (ii) two hundred seventy (270) days, in the case of a notice given to
Employee on or after the six (6) month anniversary and prior to the second
anniversary of his Employment Date, and (iii) one (1) year, in the case of a
notice given to Employee on or after the second anniversary of his Employment
Date.

9. MISCELLANEOUS.

b. This is a personal agreement on the part of Employee and may
not be sold, assigned, transferred or conveyed by Employee.

c. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by the other party.

d. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia.

e. This Agreement states the entire agreement and understanding
between the parties and supersedes all prior understandings and agreements.

f. No change or modification to this Agreement shall be valid
unless in writing and signed by both parties hereto.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.

STARTRONIX INC.

By: /s/ NORMAN SHINK
------------------------------
Norman Shink
President

EMPLOYEE

/s/ CHRISTOPHER A. REID
----------------------------------
Christopher A. Reid

8
<PAGE> 9
SCHEDULE A - SALARY AND BONUS

SALARY. Commencing on the first day of employment the Company shall pay
Employee for each of the next twelve months, a Monthly Salary (as defined
below) based upon the Net Income Amount (as defined below) for the current
fiscal year, according to the following table:

<TABLE>
<CAPTION>
CORRESPONDING MONTHLY
NET INCOME AMOUNT SALARY
----------------- ---------------------
<S> <C>
less than or equal to $1.2 million $ 8,500

greater than $1.2 million but less than or equal to $6 million $10,500

greater than $6 million but less than or equal to $12 million $12,500

greater than $12 million $15,000
</TABLE>

For purposes of this Agreement, "Net Income Amount" means the
Company's annual net income before income taxes and "Monthly Salary"
means Employee's monthly salary, before deductions. The Company will
deduct from payments of Monthly Salary to Employee all federal, state
and local income tax, FICA, FUTA, and other withholdings as required by
law. For purposes of this Agreement, the Company's net income and gross
sales shall be determined in accordance with generally accepted
accounting principles in the United States, applied as a basis
consistent with prior periods.

BONUS. On the last day of each of the second, third and fourth
fiscal quarters following the end of the previous full fiscal year of the
Company, the Company shall pay Employee a cash bonus equal to one-third of the
Net Income Amount for such full fiscal year multiplied by the Applicable
Percentage; provided that no cash bonus shall be payable to Employee on any date
unless Employee is employed by the Company on that date.

<TABLE>
<CAPTION>
ANNUAL NET INCOME AMOUNT APPLICABLE PERCENTAGE
------------------------ ---------------------
<S> <C>
less than or equal to $1.2 million 0%

greater than $1.2 million but less than or equal to $6 million 0.5%

greater than $6 million but less than or equal to $12 million 1%

greater than $12 million 1.5%
</TABLE>

<PAGE> 10
SCHEDULE B - SUMMARY OF EMPLOYEE STOCK OPTION PLAN

As of the date hereof, the Company's Employee Stock Option Plan (the
"Option Plan") provides for the Employee to earn, as of the last day of the
first fiscal quarter of each fiscal year (the "Issuance Date") options for
restricted common stock of StarTronix International, Inc., in an aggregate
amount (the "Annual Amount") equal to (i) one percent (1%) of the Net Income
Amount divided by the average closing price of such common stock during the last
thirty days of the previous fiscal year (the "Stock Price"), on the following
terms and conditions and the other terms and conditions as now are, and may in
the future be, set forth as the Option Plan: The exercise price for the options
issued shall equal seventy-five percent (75%) of the Stock Price. The options
shall vest over a five year period, exercisable in an amount equal to up to
twenty percent (20%) of the Annual Amount on each of the first five
anniversaries of the Issuance Date.
<PAGE> 11
SCHEDULE C -- SUMMARY OF EMPLOYEE BENEFITS

1. Senior management level medical and dental benefits for Employee and
Employee's spouse and dependents and other employee benefits phased in over
the term of this Agreement. Included in the benefit package will be a 401K
plan, the terms of which are not determined at the time of signing this
Agreement. Company shall pay for Employee's yearly membership fees in the
Law Society of Upper Canada. Employee shall be entitled to three (3) weeks
vacation per anniversary year.

2. Company shall provide Employee with the use of an automobile with a base
price equal to or less than $25,500. Such automobile shall be replaced no
later than every three years commencing on the Employment Date or sooner if
needed due to serious mechanical malfunction. At the end of the lease term,
Employee shall have the right to purchase the vehicle at its residual value
pursuant to terms of the lease agreement. Company shall provide all
maintenance and repair of the vehicle and automobile insurance in an amount
equal to or greater than the requirements of the lease agreement.

3. Company shall pay Employee $2,000 per month for travel and lodging expense
payable on the fifteenth (15th) day of each month commencing September 15,
1996 and continuing thereafter on a monthly basis for the term of this
Agreement and as extended upon mutual consent of the parties.

4. Company shall provide office equipment to Employee for his Scottsdale
office including, computer, printer, optical scanner, fax modem, business
and fax phone lines, long distance telephone service and mobile phone
service.

<PAGE> 12
SCHEDULE D - DUTIES AND FUNCTIONS

Position Summary:

Directs the legal affairs of the organization. Provides legal counsel and
guidance in the ordinary and special activities of the organization to insure
maximum protection of its legal rights utilizing broad familiarity with most
major legal disciplines. Participates in senior management policy deliberations.
Directs the defense of the organization against suits or claims and prepares
the prosecution of the organization's claims against others. Supervises the
legal aspects of organization transactions and the preparation of reports and
statements of a legal nature.

Position Responsibilities:

Directs the legal department, including internal lawyers and staff and outside
counsel.

Organizes and directs the organization's legal activities to protect the
organization's interests from a legal standpoint.

Initiates legal action on behalf of and defends the organization in any legal
action initiated against it.

Counsels and advises all organization executives on the legal aspects of
activities within their assigned areas such as human resources, taxes,
insurance, patents and the acquisition, protection and disposal of real and
personal property.

Counsels in the conduct of all relations with municipal, state and federal
bureaus, departments and agencies.

Reviews legal implications on the purchase of other organizations or on the
assessment of the assets of other organizations.

Provides counsel to executives of the organization and to all other personnel
on organization matters involving legal problems.

Reviews legal aspects of sales pricing and promotion programs.

Retains and supervises outside counsel, as required, to obtain legal opinions
or handle claims and litigation.

Supervises the registration, renewal and protection of trademarks and
copyrights.

Assists, as required, in connection with meetings of shareholders, the Board of
Directors or the Executive Committee.

Supervises preparation or review of proposed contracts, leases, and other legal
instruments to safeguard the organization's interests.

Prepares departmental budget and operates within approved budget.

Performs other related duties as assigned by management.

<PAGE> 1
EXHIBIT 10.5

STARTRONIX INC.

MANUFACTURING AGREEMENT

This agreement is by and between StarTronix Inc., 2402 Michelson Drive, Suite
160, Irvine, California, USA, and Golden Source Electronics Ltd., 2/F, Unit A,
Union Hing Yip Fty. Bldg., 20 Hing Yip Street, Kwun Tong, Howloon, Hong Kong.

The purpose of this Manufacturing Agreement is to outline the terms and
specifications of the OEM project given to Golden Source by StarTronix Inc.

PRODUCT SPECIFICATIONS:

Telephone/Answering Machine: Telephone
2 Lines
2 Connectors (1 RJ-45, 1 RJ-11)
Built-in Telephone Answering Device
Built-in Speakerphone Capability

INTERNET TERMINAL:

Hardware: Processor: 486 DX4/100
Processor Cache: 256K
RAM: 8 MB Base, Upgradeable to 32 MB
ROM: Award Bios
Keyboard: Full Size
Display: 10.4" Diagonal Dual-Scan Passive LCD
External Display: VGA Connector on Rear Panel
Hard Drive: 200 MB IDE, Notebook Form Factor
Modem: 28.8 Kbps Fax/Data, V.42, V.42bis
Magnetic Strip Reader: 3 Track
Serial Ports: 2
Parallel Ports: 1
Pointing Device: External Serial Mouse (uses one of the
two serial ports)
Sound Card: Built-in

Software: Operating System: ROMDOS
GUI: Windows 3.1
Browser: Netscape 2.01
Fax TX/RX: Software Provided
Office Suite: TBD (will include at least a word
processor and a spreadsheet)

2402 Michelson Drive, Suite 160
Tel: 714-474-8400 Fax: 714-223-8977
<PAGE> 2
STARTRONIX INC.

FINANCIAL TERMS:

Cost Per Unit: $840 USD per unit FOB Hong Kong
$40 per unit Surcharge for the upgrade to a soundcard
and 8 MB of memory. This surcharge will be in effect
for the first 6,000 units; thereafter, the surcharge
will be $30 per unit.

TOOLING:

Golden Source is responsible for the complete tooling of the StarScreen and
they acknowledge that all rights, and ownership belong to StarTronix Inc.

Tooling Start: April 1996
First Shot at Tooling: August 15, 1996
Last Shot at Tooling: August 30, 1996

TOOLING PAYMENT SCHEDULE:

Total Cost Tooling: $230,000 USD
$ 75,000 USD to be paid in May 1996 (already paid)
$ 75,000 USD to be paid upon confirmation of receipt
of the first off tool plastic from
Golden Source to StarTronix Inc.
$ 80,000 USD Final paid upon acceptance of final
plastic from tooling for production
on or about August 30, 1996.

DELIVERY SCHEDULE:

Initial Purchase Order: 12,000 units and company will be issuing P/O for
ongoing quantities.

Golden Source confirms that they will deliver on or before the 25th of
September the first 100 units of the StarScreen; and between that 100 units on
the 25th of September and October 30 will deliver not less than 5,000 units.
The balance to be delivered during the month of November and completed no later
than the first week of December 1996.

UNIT COST:

It is agreed that StarTronix will give to Golden Source the sum of $120,000 USD
as an engineering deposit. This will be offset against the cost of the first
3,000 units (already paid).

StarTronix will give Golden Source $1.5 million during the month of August
representing approximately 60% of final amount owed which will be paid at time
of delivery of the units by Golden Source to StarTronix.

2402 Michelson Drive, Suite 160
Tel: 714-474-8400 Fax: 714-223-8977
<PAGE> 3
STARTRONIX INC.

A second L/C for $2,640,000 will be open on or about September 1, 1996, to
cover the second 3,000 units.

Golden Source acknowledges they will manufacture to International AQL
Level 0.65%.

It is understood that it is the responsibility of StarTronix to obtain the FCC
and IC approval for the StarScreen. Golden Source will provide samples,
technical data, and whatever else is required to do this in a timely manner.

StarTronix is fully responsible for paying licenses required for the software
being imbedded into the StarScreen hardware.

Golden Source confirms as long as StarTronix purchases not less than the 12,000
units already contracted for, they will not OEM a similar product for any other
company without the written approval by StarTronix.

For and on behalf of StarTronix Inc. For and on behalf of Golden Source
Electronics Ltd.

/s/ NORMAN M. SHINK /s/ FRANKY WONG
- ------------------------------------ ----------------------------------
Norman M. Shink Franky Wong
President/COO Managing Director

8/21/96 8/22/96
- ----------------- ---------------------
Date Date

2402 Michelson Drive, Suite 160
Tel: 714-474-8400 Fax: 714-223-8977

<PAGE> 1
EXHIBIT 10.6

September 27, 1996 (3:59PM)

SETTLEMENT AGREEMENT AND RELEASE

This Settlement Agreement and Release (this "Agreement") is entered
into as of September 27, 1996, by and between:

(a) The following parties, on one hand, referred to herein
as "Plaintiff":

John R. King

(b) The following parties, on the other hand, collectively
referred to herein as "Defendants":

StarTronix International, Inc., formerly known as
Gold Express Corporation ("GEC")

Robert Sterling

RECITALS

A. Disputes have arisen between Plaintiff and Defendants in various
contexts, primarily related to matters arising out of Plaintiff's former
employment with GEC.

B. The disputes have resulted in the filing of an arbitration
proceeding. On May 22, 1996 a panel of arbitrators awarded King a total of
$155,014 less a $3,600 set-off for a total of $151,414.

C. On August 15, 1996, pursuant to a motion filed by Plaintiff, the
District Court for Arapahoe County in Civil Action No. 94 CV 668, John R. King
v. Gold Express Corporation and Robert Sterling, confirmed the arbitration
award, making it a judgment (the "Judgment") in favor of Plaintiff. The
foregoing action is referred to herein as the "Litigation". The above-referenced
disputes may result in other litigation absent this Agreement.

D. Plaintiff and Defendants desire to settle all of their respective
disputes and controversies, including those asserted in the Litigation, and all
matters pending between them, and hereby agree to the following satisfaction of
this judgment.

AGREEMENT

1. Settlement. This Agreement shall be effective immediately upon the
execution of this Agreement by all parties hereto, and delivery to counsel for
the respective parties of such executed copies and the additional documents
required to be delivered hereunder. This Agreement shall constitute a full and

<PAGE> 2
final settlement of all claims, demands, disputes and controversies between the
parties hereto.

2. Consideration.

(a) No later than three business days from receipt by GEC or
its counsel of a copy of this Settlement Agreement duly executed by
Plaintiff, GEC will pay to Plaintiff the gross amount of $75,000, by
check payable jointly to Brauer, Buescher and John R. King. Of that
amount, $46,014 will be considered the payment for loan reimbursement,
reimbursable expenses, interest, attorney's fees and filing and service
fees as set forth in the arbitration award. No taxes will be withheld
from any of those payments. In January 1997 GEC will provide an IRS
Form 1099 to Plaintiff in the amount of $39,814 which represents the
interest and attorneys' fees portion of this payment. Of the $75,000
payment, $28,986 will be considered back wages and will be subtracted
from the amount of back wages owed pursuant to the award less the
$3,600 offset. From the $28,986 payment GEC will deduct and pay to
appropriate state and federal taxing authorities 28% for federal
withholding tax, 5% for Colorado withholding tax and Plaintiff's share
of FICA tax. GEC shall pay the employer's share of FICA tax on this
amount. In January 1997 Plaintiff will receive a W-2 in the amount of
$28,986.

(b) The balance due under the Judgment, consisting of the
principal sum of $76,414, will be paid and discharged by the issuance
to Plaintiff of 110,000 shares of the common stock of GEC. Such stock
shall be unregistered stock, and Plaintiff shall sign and deliver to
GEC, concurrently with execution and delivery of this Agreement, an
Investment Agreement in the form of Exhibit "A" attached hereto. Such
stock may, at plaintiff's option, be issued in multiple certificates,
but all certificates shall be legended as restricted stock and shall be
subject to a stop transfer order placed with GEC's stock transfer agent
until such time as the restrictions on transferability thereof have
been lifted. The parties acknowledge that this stock transfer
represents payment for back wages under the arbitration award and
Judgment. At the time the restrictions are removed from the stock, the
money (up to a maximum of $76,414) will become taxable wages to
Plaintiff. At that time, GEC will make timely payment to the
appropriate tax authorities its share of the FICA tax. GEC shall also
withhold and pay all Federal and State withholding taxes, including
Plaintiff's share of FICA, due on the value of the stock up to $76,414.
In order to fund such withholding, GEC will retain 55715 shares out of
the stock issued to Plaintiff hereunder in GEC's name but for the
account of Plaintiff. That amount is based on withholding estimated at
28% FIT, 5% Colorado SIT, 7.65% FICA & Medicare (employee's share), and
10% for errors and increases. GEC is hereby authorized and directed to
adjust State or Federal income tax withholding if and to the extent

- 2 -

<PAGE> 3
necessary to meet legal withholding requirements within the limits of
funds available from the 55715 shares retained. At such time as the
restrictions on Plaintiff's shares in GEC lapse, GEC may demand payment
in cash from Plaintiff of the withholding taxes due and, upon payment
thereof, release to Plaintiff and reissue in Plaintiff's name, the
unrestricted shares of GEC common stock so held. Upon failure of
Plaintiff to tender to GEC the necessary amount of withholding, GEC
shall be entitled to sell for Plaintiff's account so much of such stock
as is reasonable and appropriate to generate sufficient funds for GEC
to fund the withholding taxes and shall, thereafter, deliver to
Plaintiff the remaining cash proceeds and stock, if any.

(c) In the event Plaintiff desires to sell his Stock pursuant
to an exemption from registration under the Securities Exchange Act of
1933, as amended, and that an opinion of counsel with respect thereto
is required by GEC in its sole discretion, GEC shall pay the actual
attorneys fees expense incurred for preparation of such opinion to a
maximum of $1,000. Plaintiff shall be responsible for any charges or
costs above that sum.

(d) If at any time prior to the Termination Date the Company
proposes to file a registration statement under the Securities Act of
1933 for the purpose of registering the sale by the Company of any
Common Stock, other than a registration statement on Form S-4 or S-8 or
any successor or equivalent forms, it shall provide Plaintiff with 15
days advance notice of such proposed registration. If Plaintiff
notifies the Company in writing within 15 days of the giving of such
notice that he desires to include in such registration statement any or
all of the Shares issued to Plaintiff hereunder, the Company shall,
subject to the terms hereof, use all reasonable efforts to include the
Shares in such registration statement.

(i) For purposes hereof, the term "Termination Date"
shall mean the date that the Company reasonably determines
that the Shares may be sold pursuant to Rule 144 under the
Securities Act (or any successor provision).

(ii) The Company shall be entitled to abandon any
registration referred to in this Section 2.(d) at any time,
without the consent of the Plaintiff. In the event the sale
proposed to be registered is a underwritten public offering,
Plaintiff agrees to enter into any reasonable and customary
underwriting agreement required by the underwriter(s) in
connection with such transaction, which underwriting agreement
may contain, if required by the underwriter(s), customary
provisions by which the Plaintiff agrees to indemnify the
Company

- 3 -

<PAGE> 4
and the underwriter with respect to information provided by
the Plaintiff.

(iii) Notwithstanding any other provision of this
Section 2.(d), if the representative of the Company's
underwriters advises the Company in writing that marketing or
other factors require limitation on the number of shares to be
underwritten, the representative may exclude the Shares from,
or limit the number of Shares to be included in, the
registration and underwriting. Any Shares so excluded shall
continue to be eligible for registration in accordance with
the terms of this Section 2.(d) on any subsequent Registration
Statement filed by the Company, on the same terms and subject
to the same conditions set forth herein.

(iv) Plaintiff shall be responsible for, and shall
pay to the Company upon request, a pro rata portion, based on
the value of the securities to be registered, of the costs of
registration, including filing fees, costs of the Company's
legal counsel and accounting firm, printing expenses and other
reasonable expenses of the registration, to the extent that,
and in the amount by which, such pro rata share exceeds
$1,000. GEC shall pay the first $1,000 thereof, but the
maximum amount GEC shall pay for Plaintiff's account pursuant
to the preceding sentence plus any sums paid pursuant to
Section 2.(c) above shall be a total of $1,000, and Plaintiff
shall be responsible for all sums over and above that amount
if Plaintiff elects to take advantage of both provisions.
Plaintiff shall also be responsible for all of Plaintiff's own
legal and accounting expenses and for commissions or discounts
applicable to the sale of the Shares.

(e) Nothing in this agreement impacts in any way the parties'
individual responsibilities for payment of the fees of the Board of
Arbitrators as set forth in the award of the arbitrators.

3. Termination of Action. Immediately upon receipt of this Agreement,
duly executed by Defendants, together with the payment and delivery of documents
required as provided hereunder, Plaintiff shall file with the District Court for
Arapahoe County a Satisfaction of Judgment in the form attached hereto as
Exhibit "B" hereto.

4. Defendants' Representations. Defendants jointly and severally
represent and warrant to Plaintiff:

(a) Defendants are duly authorized to enter into this
Agreement and to perform the terms and obligations herein contained,
and have not assigned, transferred or conveyed,

- 4 -

<PAGE> 5
either voluntarily or by operation of law (including, without
limitation, by way of having suffered any liens or encumbrances
thereon), any of their rights or claims as against Plaintiff, nor any
of the rights, claims or obligations being terminated and released
hereunder. To the extent that any such claims have, contrary to such
representation, heretofore been assigned or transferred, the party
having made or suffered such transfer, assignment or conveyance shall,
and hereby agrees to, defend, indemnify, and hold Plaintiff harmless
from and against any and all claims that may be asserted against
Plaintiff by reason of such transfer, assignment or conveyance.

5. Plaintiff's Representations. Plaintiff represents and warrants to
Defendants:

(a) Plaintiff is duly authorized to enter into this Agreement
and to perform the terms and obligations herein contained, and has not
assigned, transferred or conveyed, either voluntarily or by operation
of law (including, without limitation, by way of having suffered any
liens or encumbrances thereon), any of its rights or claims as against
Defendants, nor any of the rights, claims or obligations being
terminated and released hereunder. To the extent that any such claims
have, contrary to such representation, heretofore been assigned or
transferred, the party having made or suffered such transfer,
assignment or conveyance shall, and hereby agrees to, defend,
indemnify, and hold Defendants harmless from and against any and all
claims that may be asserted against Defendants by reason of such
transfer, assignment or conveyance.

6. Release of Defendants. Plaintiff hereby releases Defendants, and
each of them, and their parent, subsidiary and affiliated corporations,
officers, directors, stockholders, agents, attorneys, employees,
representatives, successors and assigns, jointly and severally, from all claims,
demands, acts or omissions, and/or causes of action, known or unknown, suspected
or unsuspected, which may now exist or later be discovered, arising from,
related to, or connected with the Litigation, the facts and circumstances from
which the Litigation arose, or any dispute or relationship between the parties.
This release shall not apply to or detract from the obligations of the
Defendants to Plaintiff arising under this Agreement.

7. Release of Plaintiff. Defendants, and each of them, hereby release
Plaintiff, and his heirs, executors, administrators, agents, attorneys,
representatives, successors and assigns, jointly and severally, from all claims,
demands, acts or omissions, and/or causes of action, known or unknown, suspected
or unsuspected, which may now exist or later be discovered, arising out of,
related to or connected with the Litigation, the facts and circumstances from
which the Litigation arose, or any dispute or relationship between the parties.
This release shall not apply to

-5-

<PAGE> 6
or detract from the obligations of Plaintiff to Defendants arising under this
Agreement.

8. Waiver of Civil Code Section 1542. Each of the parties to this
Agreement waives the benefits of California Civil Code Section 1542 which
provides as follows:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

9. Legal Representation. Each party acknowledges the receipt of the
advice of independent legal counsel prior to the execution of this Agreement;
that the legal nature and effect of this Agreement has been fully explained to
it by counsel; and that each party fully understands the terms and provisions of
this Agreement and its nature and effect. Each party further represents that it
is relying solely on the advice of its own counsel in executing this Agreement
and has not relied on the representation of any other party, except as expressly
set forth herein, or of the counsel for any other party. Each party further
represents that this Agreement, and the terms hereof, were arrived at after
bargaining and negotiation among the parties, and each provision hereof shall be
construed as having been drafted by each and all of the parties hereto.

10. Unknown Damages. There is a risk that subsequent to the execution
of this Agreement one party will incur damage or loss which that party deems in
some way attributable to the prior actions of the other party or parties, but
which are unknown and unanticipated at the time this Agreement is signed. Each
party acknowledges and assumes the risk that damages presently known may become
progressive, greater or more serious than is now known, expected or anticipated.

11. Reliance on Known Facts. Each party agrees that if the facts with
respect to this Agreement are found hereafter to be different from the facts now
believed by such party to be true, that party nevertheless expressly accepts and
assumes the risk of such possible difference in facts and agrees that this
Agreement is and will remain effective notwithstanding such difference in facts.

12. Further Acts. The parties to this Agreement shall promptly take
such further acts and execute such other documents as shall be necessary to
carry out the spirit and letter of this Agreement. Without limiting the
generality of the foregoing, in the event any court, county recorder, secretary
of state, or other governmental agency may require any additional or different
documents or actions in order to effect the purposes contemplated by this
Agreement, the parties to this Agreement shall execute the necessary documents
and take the necessary steps to comply with those requirements.

- 6 -

<PAGE> 7
13. Notice. Unless otherwise provided herein, any notice, offer,
exercise of rights or other communication required or permitted to be given
hereunder shall be in writing and shall be given by registered or certified
mail, confirmed facsimile or telecopy, overnight delivery service such as
Federal Express if a receipt is obtained showing delivery, or personal delivery
against receipt to the party to whom it is given, at such party's address set
forth next below or such other address as such party may hereafter specify by
notice to the other parties hereto. Any notice or other communication shall be
deemed to have been given as of the date so personally delivered or transmitted
by confirmed telecopy or like transmission, on the date of delivery shown on the
receipt when sent by overnight delivery service, or on the date shown on the
return receipt for delivery or refusal when given by registered or certified
mail. Address and fax numbers for such notice are as follows:

If to Plaintiff, to:

Mr. John R. King
7891 Arrowhead Court
Littleton, CO 80124
Fax: 303-649-1858

With a copy to:

Mr. Thomas B. Buescher
Brauer, Buescher, Valentine, Goldhammer & Kelman,
P.C.
1563 Gaylord Street
Denver, Colorado 80206
Phone: 303-333-7751
Fax: 303-333-7758

If to the Defendants, to:

Mr. Greg Gilbert
StarTronix International, Inc.
2402 Michaelson
Suite 160
Irvine, CA 92715
Phone: 714-474-1700
Fax: 714-474-9200

With a copy to:

Edward D. Sybesma, Jr., Esq.
Rutan & Tucker
611 Anton Boulevard
Suite 1400
Costa Mesa, CA 92626
Phone: 714-641-3427
Fax: 714-546-9035

- 7 -

<PAGE> 8
If delivered by mail, the date of delivery shall be deemed to be five
calendar days (including Sundays and holidays) from the date of deposit in the
United States mail.

14. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto concerning the subject matter hereof and supersedes
all prior and contemporaneous agreements, understandings, negotiations, and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or agreements among the parties except as set forth
herein. No amendment, supplement, modification, waiver, or termination of this
Agreement, or any provision hereof, shall be binding unless executed in writing
by the party against whom any of the foregoing is sought to be enforced. No
waiver of any provision of this Agreement shall constitute a waiver of any other
provision (whether similar or not), nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided hereunder or in writing signed by the
party against whom any such waiver is sought to be enforced.

15. Counterparts. This Agreement may be executed in counterparts, and
each executed counterpart shall be deemed to be a duplicate original of this
Agreement.

16. Successors and Assigns. This Agreement shall be binding on and
inure to the benefit of the heirs, executors, administrators, successors and
assigns of the parties to it.

17. Attorneys' Fees. If any party breaches any obligation under this
Agreement, the non-breaching party (or the prevailing party in the event of any
litigation or alternate dispute resolution procedure) shall be entitled to its
reasonable expenses, attorneys' fees, and costs incurred in any action taken,
with or without litigation, to enforce, work out, or renegotiate the terms of
this Agreement, or to remedy or compensate for such breach.

18. Severability. In the event that any one or more of the provisions
of this Agreement shall be invalid, illegal, or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not be in any way affected or impaired thereby.

- 8 -

<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

Dated: September 27, 1996 _____________________________________
John R. King
BY AFFIXING MY SIGNATURE
HERETO, I HEREBY ACKNOWLEDGE
THAT THE SUBJECT OF UNKNOWN
CLAIMS WAS DISCUSSED WITH MY
COUNSEL, AND THAT I UNDERSTAND THAT I
AM RELEASING CLAIMS THAT MAY BE
DISCOVERED IN THE FUTURE WHICH ARISE
OUT OF FACTS OR EVENTS WHICH NOW
EXIST OR HAVE PREVIOUSLY OCCURRED.

Dated: September 27, 1996 _____________________________________
Robert Sterling
BY AFFIXING MY SIGNATURE
HERETO, I HEREBY ACKNOWLEDGE THAT THE
SUBJECT OF UNKNOWN CLAIMS WAS
DISCUSSED WITH MY COUNSEL, AND THAT I
UNDERSTAND THAT I AM RELEASING CLAIMS
THAT MAY BE DISCOVERED IN THE FUTURE
WHICH ARISE OUT OF FACTS OR EVENTS
WHICH NOW EXIST OR HAVE PREVIOUSLY
OCCURRED.

-9-

<PAGE> 10
StarTronix International, Inc.,
formerly known as Gold Express
Corporation

/s/ Greg Gilbert
Dated: September 27, 1996 ------------------------------------
By Greg Gilbert
Its President
BY AFFIXING MY SIGNATURE HERETO, I
HEREBY ACKNOWLEDGE THAT THE SUBJECT
OF UNKNOWN CLAIMS WAS DISCUSSED WITH
MY COUNSEL, AND THAT I UNDERSTAND
THAT I AM RELEASING CLAIMS THAT MAY
BE DISCOVERED IN THE FUTURE WHICH
ARISE OUT OF FACTS OR EVENTS WHICH
NOW EXIST OR HAVE PREVIOUSLY
OCCURRED.

-10-

<PAGE> 1
EXHIBIT 10.7

SETTLEMENT AGREEMENT

THIS SETTLEMENT AGREEMENT ("Settlement Agreement"), effective June 28,
1996, is made and entered into by and between ALTA GOLD CO., a Nevada
corporation ("Alta Gold"), and STARTRONIX INTERNATIONAL, INC., a Delaware
corporation ("StarTronix"), the successor in interest to GOLD EXPRESS
CORPORATION, a Washington corporation ("Gold Express").

RECITALS:

A. Alta Gold and Gold Express previously entered into an Asset Purchase
Agreement ("Purchase Agreement") dated effective June 14, 1994, wherein Alta
Gold purchased from Gold Express certain assets and property referred to in the
Purchase Agreement as the "Copper Flat Property."

B. The purchase price for the Copper Flat Property consisted of (1) cash;
(2) the issuance by Alta Gold of a 6% convertible subordinated debenture in the
principal amount of $1,500,000 due June 14, 1996 (the "1996 Debenture"); (3)
the issuance by Alta Gold of a 6% convertible subordinated debenture in the
principal amount of $1,500,000 due June 14, 1998 (the "1998 Debenture"); (4)
the issuance by Alta Gold of a subordinated Zero Coupon Debenture with a
redemption price of $4,000,000 due fourteen years from the date of closing
("Zero Coupon Debenture"); and (5) the grant of a provisional copper
production royalty, payments pursuant to which would constitute credits against
the Zero Coupon Debenture.

C. Disputes have arisen between StarTronix and Alta Gold in various
contexts, primarily related to the Purchase Agreement, certain representations
and warranties by Gold Express about the Copper Flat Property, and Alta Gold's
withholding of certain payments due under the 1996 and 1998 Debentures based on
claimed rights of offset against the Debentures.

D. In November, 1995, StarTronix, in the name of Gold Express, initiated
an arbitration requesting an adjudication of Alta Gold's right to an adjustment
of the purchase price and corresponding right of offset.

E. Alta Gold answered, denying Gold Express' claim and counterclaimed,
asserting a breach of contract by Gold Express.

AGREEMENT:

Based upon the foregoing, and in consideration of the mutual covenants and
obligations herein, the parties agree to compromise their claims as follows:
<PAGE> 2

1. 1996 and 1998 Debentures. StarTronix shall surrender to Alta Gold
the 1996 and 1998 Debentures contemporaneously with the execution of this
Settlement Agreement and shall exercise and compromise its conversion rights
under said Debentures as follows:

(a) Stock. Alta Gold shall issue to StarTronix contemporaneously with
the execution of this Settlement Agreement 400,000 shares of Alta Gold common
stock par value $0.001 (the "Shares"). StarTronix specifically agrees that
neither it nor any assignee will sell any of the Shares to the public (pursuant
to Rule 144 or otherwise) prior to January 1, 1997, and thereafter such sales
shall be limited, through and including the month of October, 1997, to not more
than 40,000 shares each month. All such permitted sales, and any other
assignments or dispositions of the Shares, shall be subject to the provisions
of paragraph 6 hereof. The shares will contain a legend to reflect this
agreement.

(b) Warrants. Alta Gold shall issue to StarTronix contemporaneously
with the execution of this Settlement Agreement warrants to purchase up to
400,000 shares of Alta Gold's $0.001 par value common stock ("Warrants"). The
Warrants shall be in the form of Exhibit "A" hereto and may be converted into
common stock of Alta Gold at a cash purchase price of $4.00 per share at any
time prior to five years from the date of this Settlement Agreement.

(c) The foregoing modification and exercise of the conversion rights
under the 1996 and 1998 Debentures, together with the other terms contained in
this Settlement Agreement, constitute a full and final compromise and release
of Alta Gold's rights of offset and the foregoing modification and exercise of
the conversion rights under the 1996 and 1998 Debentures are accepted by
StarTronix in lieu of payment and in full satisfaction and compromise of the
1996 and 1998 Debentures, including any claim for principal and interest under
said Debentures.

2. Zero Coupon Debenture and Royalty Agreement

(a) Amendment. The Zero Coupon Debenture and the Provisional Copper
Production Royalty Agreement dated June 14, 1994 between Alta Gold and Gold
Express ("Royalty Agreement"), which is currently held by StarTronix, shall be
and remain fully binding, valid and payable according to the terms thereof,
except that the Zero Coupon Debenture shall be amended in the form of Exhibit
"B" hereto ("Amended Zero Coupon Debenture"). All provisions of the Zero Coupon
Debenture and the Royalty Agreement which link the Zero Coupon Debenture and
the Royalty Agreement shall remain in full force and effect, including all
provisions which make payment under either one of those instruments a
discharge, to that extent, of payment obligations under the other. As of the
effective date of this Settlement Agreement, Alta Gold shall have no right of
offset or defense of any kind to the performance of the Zero Coupon Debenture
and the Royalty Agreement.

(b) Execution of Amended Zero Coupon Debenture. The Amended Zero
Coupon Debenture, in the form of Exhibit "B", will be executed by Alta Gold

2
<PAGE> 3
contemporaneously with the execution of this Settlement Agreement and upon
surrender of the Zero Coupon Debenture.

(c) Assignment of Zero Coupon Debenture. Alta Gold agrees that it
will not reasonably withhold its consent to an assignment of the Amended Zero
Coupon Debenture by StarTronix to a third party (the "Third Party"), subject to
the following: (1) Alta Gold receiving notification of the intended assignment;
(2) Alta Gold, StarTronix and the Third Party agreeing as to balance owing
under the Amended Zero Coupon Debenture, utilizing the procedure set forth in
paragraph 2(d) herein; (3) StarTronix assigning to the Third Party all of its
rights, obligations and duties under said Amended Zero Coupon Debenture and the
Royalty Agreement; and (4) that no further assignment or transfer of the
Amended Zero Coupon Debenture shall be permitted without the further consent of
Alta Gold. All subsequent assignments shall be subject to the provisions of
this Section 2(c).

(d) Accounting Procedure. Payments made under the Royalty
Agreement will be credited as an offset against the Amended Zero Coupon
Debenture. The amounts due and owing under the Amended Zero Coupon Debentures
shall be determined by utilizing the following procedure: Each time a
provisional copper royalty payment is made by Alta Gold, said payment shall be
accompanied by a Statement of Account in the form attached hereto as Exhibit
"C", which shall set forth the amount of said royalty payment as well as the
Maturity Amount owing under the Amended Zero Coupon Debenture (after credit is
given for the accompanying payment) ("Balance Owing"). The Statement of Account
shall be sent by certified mail or similar delivery showing the date of
receipt. If StarTronix (or its assignee) does not give notice to Alta Gold that
it disputes the Balance Owing within 60 days of receipt of the Statement of
Account, said amount shall be deemed to be the amount agreed to by the parties
as due and owing, and StarTronix (or its assignee) will be deemed to have
waived any and all right to dispute said Balance Owing. As of the date of this
Settlement Agreement, no payments have been made under the Royalty Agreement
and the Maturity Amount which remains owing on the Zero Coupon Debenture is
$4,000,000.00.

3. Assumption Agreement. All of Alta Gold's executory obligations under
the terms of the "Assumption Agreement" attached as Exhibit "D" to the Purchase
Agreement shall remain in full effect.

4. Mutual Releases.

(a) Except as otherwise set forth in this Settlement Agreement,
StarTronix on behalf of itself, its agents, successors, predecessors, assigns
and all affiliated or related persons or entities, both past and present,
hereby waive, discharge and release Alta Gold, its agents, successors,
predecessors, assigns and all affiliated or related persons or entities, both
past and present, from any and all liabilities, debts, demands, contracts,
promises, agreements, claims, causes of action, injuries, costs, attorneys'
fees, or damages of any kind or character, both known or unknown, which may now
exist or later be discovered, arising from, related to, or connected with any
and all disputes and relationships between the

<PAGE> 4
parties including, without limitation, all claims directly or indirectly
related to or arising out of the Purchase Agreement, the 1996 Debenture, the
1998 Debenture, and all matters asserted in or relating in any way to that
certain arbitration entitled Gold Express Corporation v. Alta Gold Co.,
American Arbitration Association File No. 2650-9001-0001.

(b) Except as otherwise set forth in this Settlement Agreement, Alta
Gold, on behalf of itself, its agents, successors, predecessors, assigns and
all affiliated or related persons or entities, both past and present, hereby
waive, discharge and release StarTronix, its agents, successors, predecessors,
assigns and all affiliated or related persons or entities, both past and
present, from any and all liabilities, debts, demands, contracts, promises,
agreements, claims, causes of action, injuries, costs, attorneys' fees, or
damages of any kind or character, both known or unknown, which may now exist or
later be discovered, arising from, related to, or connected with any and all
disputes and relationships between the parties including, without limitation,
all claims directly or indirectly related to or arising out of the Purchase
Agreement, the 1996 Debenture, the 1998 Debenture, and all matters asserted in
or relating in any way to that certain arbitration entitled Gold Express
Corporation v. Alta Gold Co., American Arbitration Association File No.
2650-9001-0001. This release does not extend to: (a) counsel who have issued
those opinion letters attached as Exhibits 1(G), 15, 16 and 17 to the Purchase
Agreement and Alta Gold and StarTronix expressly agree that Alta Gold reserves
any and all rights related to or flowing from said opinion letters or (b) any
Seller or assignor, other than Gold Express or its successors in interest,
from whom Alta Gold acquired, directly or indirectly, any right, title or
interest in assets of any nature whatsoever.

Alta Gold shall defend and indemnify StarTronix, and hold it
harmless, against any and all claims, defenses, liabilities, or expenses
resulting or arising from Alta Gold's reservations of its claims as set forth
in the preceding sentence including, without limitation, any and all claims,
defenses, liabilities, or expenses resulting or arising from any claim, cross
complaint, third party claim, or action, or threats of same, asserted by any
person against whom Alta Gold asserts any claim within the scope of those
claims released by Alta Gold as to StarTronix under this Section 4(b).

(c) Legal Representation. Each party acknowledges the receipt of the
advice of independent legal counsel prior to the execution of this Settlement
Agreement; that the legal nature and effect of this Settlement Agreement has
been fully explained to it by counsel; and that each party fully understands
the terms and provisions of this Settlement Agreement and its nature and
effect. Each party further represents that it is relying solely on the advice
of its own counsel in executing this Settlement Agreement and has not relied on
the representation of any other party, except as expressly set forth herein, or
of the counsel for any other party. Each party further represents that this
Settlement Agreement, and the terms hereof, were arrived at after bargaining
and negotiation among the parties, and each provision hereof shall be
construed as having been drafted by each and all of the parties hereto.

(d) Unknown Damages. There is a risk that subsequent to the
execution of this Settlement Agreement one party will incur damage or loss
which that party deems

4
<PAGE> 5
in some way attributable to the prior actions of the other party or parties,
but which are unknown and unanticipated at the time this Settlement Agreement
is signed. Except as may be otherwise set forth in this Settlement Agreement,
each party acknowledges and assumes the risk that damages presently known may
become progressive, greater or more serious than is now known, expected or
anticipated.

(e) Reliance on Known Facts. Each party agrees that if the facts
with respect to this Settlement Agreement are found hereafter to be different
from the facts now believed by such party to be true, that party nevertheless
expressly accepts and assumes the risk of such possible difference in facts and
agrees that this Settlement Agreement is and will remain effective
notwithstanding such difference in facts.

5. Degerstrom Acknowledgement. StarTronix will provide to Alta Gold an
acknowledgment in the form of Exhibit "D" attached hereto, executed by N.A.
Degerstrom, Inc., acknowledging that the 1996 and 1998 Debentures and the Zero
Coupon Debenture may be surrendered by StarTronix to Alta Gold free and clear
of any and all interest, right or entitlement N.A. Degerstrom, Inc. may have,
directly or indirectly, to said Debentures, the interest in the proceeds to be
received thereunder, or any conversion rights or stock to be issued pursuant to
said conversion rights.

6. Restricted Securities. StarTronix acknowledges and agrees that the
Shares, the Warrants, and any shares of Alta Gold common stock that are issued
upon the exercise of the Warrants have not been and will not be registered
under the Securities Act of 1933, as amended ("Act") or the securities laws of
any state, and will constitute "restricted securities" as that term is defined
in the rules and regulations promulgated under the Act, and may not be sold or
otherwise transferred in the absence of (i) an effective registration statement
with respect thereto under the Act or (ii) an opinion of counsel acceptable to
Alta Gold that such registration is not required in connection with the sale or
transfer in question.

7. No Assignment. Each party represents and warrants that there has been
no assignment or other transfer of any claim, said party has or may have, one
against the other.

8. Governing Law.

(a) This Settlement Agreement shall be governed by and interpreted in
accordance with the laws of the State of Nevada without giving effect to any
choice or conflict of law provision or rule (whether of the State of Nevada or
any other jurisdiction) that would cause the application of the laws of any
other jurisdiction other than the State of Nevada.

(b) Although the parties do not intend this Settlement Agreement to
be governed or interpreted by the laws of the State of California to the extent
it is held applicable, each of the parties to this Agreement waives the
benefits of California Civil Code Section 1542 which provides as follows:

<PAGE> 6
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR."

9. No Third Party Beneficiaries. This Settlement Agreement shall confer
rights and remedies only upon the parties hereto and their respective
successors and permitted assigns and shall not confer any rights or remedies
upon any other person or entity.

10. Corporate Authority.

(a) Each party has full corporate power and authority to execute and
deliver this Settlement Agreement and to perform its obligations hereunder.
Specifically, StarTronix represents and warrants to Alta Gold that it is the
sole and complete successor in interest to Gold Express and, in such capacity
(i) owns and holds all of the rights and has all of the obligations of Gold
Express under the Purchase Agreement, the 1996 Debenture, the 1998 Debenture,
the Zero Coupon Debenture and the Royalty Agreement and in connection with the
arbitration proceeding referred to in paragraph 4 hereof, and (ii) has the full
legal right and authority to modify, compromise and settle the foregoing, as
contemplated by this Settlement Agreement, in a manner which is valid and
binding as to StarTronix in all respects and for all purposes.

(b) In connection with the execution and delivery of this Settlement
Agreement, each party (the "Delivering Party") will provide the other party
(the "Receiving Party") with all documents and certifications that the
Receiving Party shall reasonably request in regard to the corporate existence
of the Delivering Party and power and authority of the Delivering Party to
execute and deliver this Settlement Agreement, including without limitation (i)
true and complete copies of the Articles of Incorporation of the Delivering
Party, certified by an appropriate governmental official within a reasonable
number of days of the effective date of this Settlement Agreement, (ii) a
certificate of corporate good standing issued by the appropriate governmental
authority and dated within a reasonable number of days of the effective date
hereof; (iii) certified copies of resolutions of the Board of Directors of the
Delivering Party authorizing the execution and delivery of this Settlement
Agreement and the performance by the Delivering Party all of its obligations
hereunder, and (iv) a certificate of the corporate secretary of the Delivering
Party as to the incumbency of the officer executing this Settlement Agreement
on behalf of the Delivering Party.

11. Further Acts. The parties to this Settlement Agreement shall promptly
take such further acts and execute such other documents as shall be necessary
to carry out the spirit and letter of this Settlement Agreement. Without
limiting the generality of the foregoing, in the event any court, county
recorder, secretary of state, or other governmental agency may require any
additional or different documents or actions in order to effect the purposes
contemplated by this Settlement Agreement, the parties to this Settlement

6
<PAGE> 7
Agreement shall execute the necessary documents and take the necessary steps to
comply with those requirements.

12. Attorneys' Fees. If any party breaches any obligation under this
Settlement Agreement, the non-breaching party (or the prevailing party in the
event of any litigation or alternate dispute resolution procedure) shall be
entitled to its reasonable expenses, attorneys' fees, and costs incurred in any
action taken, with or without litigation, to enforce, work out, or renegotiate
the terms of this Settlement Agreement, or to remedy or compensate for such
breach.

13. Severability. In the event that any one or more of the provisions of
this Settlement Agreement shall be invalid, illegal, or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not be in any way affected or imposed thereby.

14. Counterparts. This Settlement Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement.

IN WITNESS WHEREOF, the parties have executed this Settlement Agreement
effective as set forth above.

ALTA GOLD CO.

By: /s/ ROBERT N. PRATT
---------------------------
Robert N. Pratt
Its: President

BY AFFIXING MY SIGNATURE HERETO, I
HEREBY ACKNOWLEDGE THAT THE SUBJECT OF
UNKNOWN CLAIMS WAS DISCUSSED WITH
COUNSEL FOR ALTA GOLD, AND THAT I
UNDERSTAND THAT ALTA GOLD IS RELEASING
CLAIMS THAT MAY BE DISCOVERED IN THE
FUTURE WHICH ARISE OUT OF FACTS OR
EVENTS WHICH NOW EXIST OR HAVE
PREVIOUSLY OCCURRED.

<PAGE> 8
STARTRONIX INTERNATIONAL, INC.

By: /s/ GREG GILBERT
---------------------------
Its: President

BY AFFIXING MY SIGNATURE HERETO, I
HEREBY ACKNOWLEDGE THAT THE SUBJECT OF
UNKNOWN CLAIMS WAS DISCUSSED WITH
COUNSEL FOR STARTRONIX, AND THAT I
UNDERSTAND THAT STARTRONIX IS RELEASING
CLAIMS THAT MAY BE DISCOVERED IN THE
FUTURE WHICH ARISE OUT OF FACTS OR
EVENTS WHICH NOW EXIST OR HAVE
PREVIOUSLY OCCURRED.

The undersigned counsel for the respective parties have pointed out to and
discussed with their respective clients the fact that the releases given by
their clients under this Settlement Agreement apply to unknown claims, and the
significance thereof.

RUTAN & TUCKER

By /s/ EDWARD D. SYBESMA, JR.
-------------------------------
Edward D. Sybesma, Jr.
(Counsel for "StarTronix")

PARSONS BEHLE & LATIMER

By /s/ VAL R. ANTCZAK
---------------------------------
Val R. Antczak
(Counsel for "Alta Gold")

<PAGE> 1
EXHIBIT 11

Statement re-computation of per share earnings: Net loss per share
amounts are based on the weighted average number of shares of common stock and
common stock equivalents outstanding during each period.

<PAGE> 1
EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT STATE OF INCORPORATION
------------------------------ ----------------------
Eagle Claw Mining, Inc. Idaho
StarTronix Inc. Delaware
GlobalTelCom, Inc. Georgia
StarTronix TelCom Inc. Delaware
StarTronix On-Line Inc. Delaware
StarTronix Marketing N.A. Inc. Canada

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUNE 30, 1996
<PERIOD-START> JULY 1, 1995
<PERIOD-END> JUNE 30, 1996
<EXCHANGE-RATE> 1.0
<CASH> 2,355
<SECURITIES> 0
<RECEIVABLES> 339,121
<ALLOWANCES> 337,493
<INVENTORY> 84,533
<CURRENT-ASSETS> 578,730
<PP&E> 411,854
<DEPRECIATION> 35,802
<TOTAL-ASSETS> 3,595,387
<CURRENT-LIABILITIES> 1,872,299
<BONDS> 0
0
1,050
<COMMON> 15,475
<OTHER-SE> 1,706,563
<TOTAL-LIABILITY-AND-EQUITY> 3,595,387
<SALES> 97,654
<TOTAL-REVENUES> 97,654
<CGS> 95,417
<TOTAL-COSTS> 95,417
<OTHER-EXPENSES> 5,829,217
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 194,918
<INCOME-PRETAX> (6,021,898)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,021,898)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,021,898)
<EPS-PRIMARY> (.48)
<EPS-DILUTED> (.48)

</TABLE>