Sunncomm Inc · 10SB12G · On 4/18/01

Filed On 4/18/01 2:46pm ET   ·   SEC File 0-31421   ·   Accession Number 1086715-1-100

Registration of Securities of a Small-Business Issuer   ·   Form 10-SB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10SB12G     Registration of Securities of a Small-Business       225±   959K 
                          Issuer                                                 

Document Table of Contents

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U.S. SECURITIES AND EXCHANGE COMMISSION 
WASHINGTON, D.C. 20549

FORM 10-SB

GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS UNDER 
SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934 

SUNNCOMM, INC.
(Name of Small Business Issuer in its charter)

Nevada                               86-0991301         
(State or other jurisdiction of      (I.R.S. Employer Identification No.)       
incorporation or organization)                                                

  668 North 44th Street, Suite 248, Phoenix, Arizona 85008; 602-267-7500
 (Address and telephone number of principal executive offices)

Securities to be registered under Section 12(b) of the Act: None.               

Common stock, $0.001 par value per share
 Securities to be registered under Section 12(g) of the Act:

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TABLE OF CONTENTS                                                               

PART I .......................................................................1 

ITEM 1:  DESCRIPTION OF BUSINESS .............................................1 
  SUNNCOMM HISTORY........................... ...............................1
  DESCRIPTION OF BUSINESS/RESEARCH AND DEVELOPMENT...........................1
  COMPETITION AND THE MARKET.................................................3
    The Problem..............................................................3
    Content Security Technology History......................................3
    Type of Competition and Representative Competitors.......................4
    What Makes Our Product Valuable? ........................................5
  CONTRACTS   ...............................................................5
    Fahrenheit ..............................................................6
    Will-Shown ..............................................................6
PATENTS, TRADEMARKS, LICENSES, FRANCHISES,                                
   CONCESSIONS AND ROYALTY AGREEMENTS........................................6
  EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ...................7
  RESEARCH AND DEVELOPMENT...................................................7
  EMPLOYEES..................................................................7
  AVAILABLE INFORMATION .....................................................7
  REPORTS TO SECURITY HOLDERS ...............................................7

ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION ...........7 

  PLAN OF OPERATION .........................................................7

ITEM 3:  DESCRIPTION OF PROPERTY .............................................8 

ITEM 4:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......8 

ITEM 5:  DIRECTORS AND EXECUTIVE OFFICERS.................................... 9 

ITEM 6:  EXECUTIVE COMPENSATION .............................................11 

  OPTION GRANTS IN LAST FISCAL YEAR ........................................12
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL                            
    YEAR AND FISCAL YEAR-END OPTION VALUES..................................12
  COMPENSATION OF DIRECTORS.................................................12
  EMPLOYMENT AGREEMENT WITH PETER H. JACOBS ................................12
  EMPLOYMENT AGREEMENT WITH JOHN D. AQUILINO ...............................13
  EMPLOYMENT AGREEMENT WITH WILLIAM H. WHITMORE ............................13

ITEM 7:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .....................14 

  ASSIGNMENT AND ASSUMPTION AGREEMENT ......................................14
  CONSULTING AGREEMENT .....................................................14
  MANAGEMENT CONSULTING SERVICES ...........................................14
  CONSULTING AGREEMENT .....................................................15

ITEM 8:  DESCRIPTION OF SECURITIES ..........................................14 

PART II .....................................................................15 

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2ITEM 1:  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS ...........15 

ITEM 2:  LEGAL PROCEEDINGS ..................................................16 

ITEM 3.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ......................17 

ITEM 4:  RECENT SALES OF UNREGISTERED SECURITIES ............................17 

ITEM 5:  INDEMNIFICATION OF DIRECTORS AND OFFICERS ..........................17 

PART F/S:  FINANCIAL STATEMENTS .............................................19 

PART III:  INDEX TO EXHIBITS ................................................20 

SIGNATURE ...................................................................20 

EXHIBIT 3.01 ................................................................21 
EXHIBIT 3.02 ................................................................26 
EXHIBIT 4.01 ................................................................41 
EXHIBIT 4.02 ................................................................45 
EXHIBIT 10.01 ...............................................................50 
EXHIBIT 10.01A ..............................................................51 
EXHIBIT 10.02 ...............................................................53 
EXHIBIT 10.03 ...............................................................56 
EXHIBIT 10.04 ...............................................................57 
EXHIBIT 10.05A ..............................................................72 
EXHIBIT 10.05B ..............................................................79 
EXHIBIT 10.05C .............................................................102 
EXHIBIT 10.06 ..............................................................116 
EXHIBIT 10.07 ..............................................................124 
EXHIBIT 10.08 ..............................................................134 
EXHIBIT 10.09 ..............................................................171 
EXHIBIT 10.10 ..............................................................180 
EXHIBIT 10.11 ..............................................................184 
EXHIBIT 10.12 ..............................................................187 
EXHIBIT 10.13 ..............................................................190 
EXHIBIT 10.14 ..............................................................199 
EXHIBIT 10.15 ..............................................................207 
EXHIBIT 10.16 ..............................................................209 
EXHIBIT 10.17 ..............................................................213 

[CAPTION]                                                                       
PART I
ITEM 1:  DESCRIPTION OF BUSINESS
--------------------------------- 
SunnComm History                                                                

Our predecessor, Compliance Signage, Inc. ("Compliance"), was incorporated in   
Oregon on August 9, 1993. On April 4, 1996, Compliance changed its name to      
Ti-Mail, Inc., and increased the number of authorized shares of common stock to 
50,000,000.                                                                     

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3On November 13, 1998, our Company, Desert Winds Entertainment Corporation, a    
Nevada corporation, was formed in Nevada and subsequently merged with Ti-Mail   
on December 10, 1998. On December 10, 1998, we entered into a "Plan and         
Agreement of Reorganization" with the Whitney Corporation whereby all 6,500,000 
issued and outstanding shares of Whitney common stock were acquired by us in    
exchange for an equal number of shares of its common stock, making Whitney a    
wholly-owned subsidiary of the Company. Michael Paloma, as Chairman, Chief      
Executive Officer, and President, assumed our primary management at that time.  
From December 10, 1998, to April 20, 1999, the mailing and shipping product     
business of Ti-Mail and the entertainment production business of Whitney each   
continued to be operated independently. On March 1, 2000, Mr. Paloma resigned   
as Chairman, Chief Executive Officer and President. On April 20, 1999, we       
divested of all assets and liabilities related to the business and operations   
of Ti-Mail and agreed to sell all of the assets of Ti-Mail to certain employees 
in exchange for their assumption of Ti-Mail's liabilities. As a result of this  
transaction, the Company was no longer involved in the manufacture and sale of  
packaging products for mailing and shipping.                                    

On June 15, 2000, we entered into an Assignment and Assumption Agreement with   
Desert Entertainment, Inc. ("DEI") (a subsidiary in which we had an interest of 
49% of the outstanding shares of common stock) and Michael Paloma, pursuant to  
which the Company transferred certain assets to DEI and DEI assumed, and        
Michael Paloma guaranteed, certain liabilities related to those assets. On June 
19, 2000, we sold all of the outstanding capital stock of DEI owned by us to    
Michael Paloma in exchange for the forfeiture of his right to receive 500,000   
shares of common stock of the Company. As a result of these transactions, we    
divested the business of developing, producing and marketing full-scale films,  
television shows and live casino and theatre shows.                             
Beginning in June, 2000, we changed our focus to become a leading provider of   
content security technology for digital products worldwide.                     

Description of Business/Research and Development                                

We have developed a proprietary technology that inhibits illegal duplication of 
digital music recordings through content security processes. The growth of      
digital music has raised enormous concern from record companies, artists,       
publishers and producers over the loss of revenue from unauthorized             
distribution of prerecorded digital product. We intend to significantly reduce  
the copy-capability of digitally recorded music and programming. The Company's  
process allows record companies to secure their manufactured audio compact      
discs, thus significantly reducing the risk that music offered through this     
medium will be not be illegally duplicated.                                     

On May 23, 2000, we entered into an Assignment Agreement with Equity Earnings   
Corp., d.b.a. Designer Products, an Arizona corporation ("DP"), whereby DP      
assigned to us all its right, title and interest in and to a proprietary        
Internet digital rights management system more particularly described in that   
certain provisional patent application identifiable in the United States Patent 
and Trademark Office ("USPTO") by Serial No. 60/207,201, filed May 25, 2000.    
(the "Provisional Patent"). John D. Aquilino, as the "inventor", later assigned 
all of his rights in this technology to us and we filed a Patent Assignment,    
which was recorded with the Commissioner of the USPTO. See Exhibit10.01 for a   
copy of the Patent Assignment. Pursuant to the Assignment Agreement, DP agreed  
to incur all costs related to developing and delivering to us a working         
prototype product based upon the Provisional Patent (the "Prototype").          

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4DP further agreed to incur all costs related to converting the Provisional      
Patent into a utility patent application and pursuing and obtaining approval of 
said application from the USPTO. Upon the execution of the Assignment           
Agreement, we transferred to DP 2,000,000 restricted shares of the Company's    
common stock and delivered 4,000,000 restricted shares of the Company's common  
stock into escrow. Upon delivery of the Prototype and an assignment from the    
developer of all right, title and interest related thereto, we have agreed to   
deliver to DP from the escrow an additional 2,000,000 shares of the Company's   
restricted common stock. Upon our developing and delivering to market any       
product based upon or derived from the Prototype, Provisional Patent or any     
subsequently approved utility patent based thereon, we shall deliver to DP from 
the escrow an additional 2,000,000 restricted shares of the Company's common    
stock. We shall pay to DP fifty percent (50%) of any and all royalty revenue    
generated from the licensing or other commercial exploitation of any such       
product(s). See Exhibit 10.02.                                                  

Pursuant to an agreement between Mr. Aquilino, an officer and director of the   
Company, and DP, Mr. Aquilino owns a right to receive half of the stock and     
royalty compensation received by DP from the Company pursuant to the Assignment 
Agreement. Mr. Aquilino has assigned his right to receive his one -half         
interest in the royalties and the escrowed stock to the Company. See Exhibit    
10.03 for a copy of the Assignment of Royalty.                                  

Although we believe that future applications may be available for our Internet  
digital rights management system, we believe that more recently developed       
technology has greater potential in the optical media market.                   

In August of 2000, we engaged BTEK Software, Inc. ("BTEK") to develop and       
deliver a technology designed to prohibit the unauthorized duplication of       
optical media. On March 6, 2001, we memorialized our relationship with BTEK in  
that certain Master Development Agreement ("MDA") whereby BTEK completed and    
delivered to us a technology we refer to as "Digital Content Cloaking (tm)      
Technology, Version 1.0 ("DC2(tm)")", together with all right, title and        
interest in and to the technology. The Company intends to market DC2(tm) under  
the tradename "MediaCloQ". The MDA provides that BTEK shall receive an          
aggregate of 1,175,000 shares of restricted common stock of the Company, a      
royalty of one percent (1%) of the net factory sales price on all sales of      
products incorporating MediaCloQ(tm) and a cash payment. See Exhibit 10.04. A   
provisional patent application was filed with the USPTO with respect to         
DC2(tm).                                                                        

MediaCloQ(tm) content security features are not resolvable using any single     
solution, greatly reducing the probability of loss to illegal duplication. We   
intend to charge a royalty to recording companies to incorporate MediaCloQ(tm)  
into their products.                                                            

Presently, MediaCloQ(tm) secures audio compact discs ("CDs") from unauthorized  
duplication. We are seeking to develop proprietary technology applications for  
additional optical media formats, including CD Rom (i.e. software programs on   
compact discs) , DVD (digital virtual disc), DVDA (digital virtual disc audio)  
and VCD (video compact disc). On or about April 17, 2001, pursuant to a license 
agreement between the Company and Fahrenheit Entertainment, Inc.                

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5(see "Contracts" below), Music City Records will commercially release the       
latest CD by country music recording legend Charley Pride incorporating         
MediaCloQ(tm).                                                                  

We have selected Microsoft Windows Media Rights Manager Software Development    
Kit7(r) (the "Microsoft Windows MRM") to couple with MediaCloQ(tm) to protect   
on-line downloads from unauthorized duplication, pursuant to a license          
agreement with Microsoft(r) . See Exhibit 10.05.                                

Competition and the Market

The Problem 

Music publishing is the business of acquiring and developing rights in musical  
compositions. The U.S. Copyright Act confers upon songwriters the exclusive     
legal right to control the public dissemination of their songs and to receive   
compensation for the use of their songs. Generally, the right to receive        
copyright royalties extends for the life of the songwriter plus 50 years        
following his or her death. Income generated by the use of a song is oftentimes 
split between the songwriter and publisher, with the publisher in most          
instances responsible for promoting the use of the song, collecting income on   
behalf of the songwriter and for distributing his or her share.                 

Music publishers earn their revenue from licensing the right to use songs in    
their catalog - a right they have to the exclusion of all others. Every time a  
song is used or performed, the owner of the copyright must grant permission, a  
license must be issued and a payment must be made. The more a song gets         
performed or used the more income is generated for the publisher and            
songwriter. Digital technology brings music to a wider public, affords niche    
artists access to their audiences, makes music widely available, and            
distributes old, new and unusual music at affordable prices.                    

A major problem faced by the music publishing and recording industry is "music  
piracy." Music piracy generally refers to the illegal duplication and           
distribution of video and sound recordings, and includes four specific forms:   

1. Illegally copied recordings are the unauthorized duplication of only the     
sound of legitimate recordings, as opposed to all the packaging, i.e., the      
original art, label, title, sequencing, combination of titles, etc.             

2. Counterfeit recordings are unauthorized recordings of the prerecorded sound  
as well as the unauthorized duplication of original artwork, label, trademark   
and packaging.                                                                  

3. Bootleg recordings (or underground recordings) are the unauthorized          
recordings of a live concert or a musical broadcast on radio or television.     

4. Online piracy is the unauthorized uploading of a copyrighted sound recording 
and dissemination to the public, even if the recording is not resold.           

Content Security Technology History                                             

Before 1986, the government and large companies were the only real users of     
content security technology. In 1986, "Pretty Good Privacy" ("PGP") was         
introduced, a 128-bit public key encryption program.                            

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6PGP is now available both in commercial and free products and is one of the     
most widely used content security programs on the Internet. Industry vendors    
are beginning to adopt elliptic curve cryptography (ECC), which uses complex    
mathematical functions to scramble audio and video content.                     

ECC offers security more difficult to penetrate in a smaller key length, and is 
generally regarded as being faster and requiring less processing power. The ECC 
technology is available free of charge.                                         

Modern content security is achieved with algorithms that use a "key" to encrypt 
and decrypt messages by turning text or other audio and video content into      
digital gibberish and then by restoring it to its original form. The longer the 
"key," the more computing required to "crack" the code. To decipher an          
encrypted message by trial and error, one would need to try every possible key. 
Computer keys are made of "bits" of information, binary units of information    
that can have the value of zero or one. An eight-bit key has 256 (two to the    
eighth power) possible values. A 56-bit key creates 72 quadrillion possible     
combinations. If the key is 128 bits long, or the equivalent of a 16-character  
message on a personal computer, to crack the code by trial and error would be   
4.7 sextillion (4,700,000,000,000,000,000,000) times more difficult than        
deciphering a 56-bit key. Given the current power of computers, a 56-bit key is 
considered penetrable. To penetrate a 128-bit key, one would need access to an  
enormous amount of computing power.                                             

Type of Competition and Representative Competitors                              

The content security industry is characterized by rapid technological change,   
frequent innovations, and evolving operating platforms. To remain competitive,  
we must plan to regularly enhance the functionality of our proprietary          
technology and introduce new programs while reducing our research and           
development costs. Even if successful, alternative technologies may develop,    
which, if they achieve widespread market acceptance, could supplant our         
technology and make it obsolete. Our failure to respond to any of these market  
pressures would adversely affect our business, results of operations and        
financial condition.                                                            

There are a number of companies that are more established, benefit from greater 
market recognition, and have substantially greater financial, development,      
manufacturing and marketing resources than us. Our ability to compete           
successfully in the rapidly evolving area of content security depends on        
factors both within and outside our control, including:                         

* performance and price;                                                        
* features and functionality;                                                   
* adaptability of products to specific applications;                            
* support of product differentiation by our customers;                          
* length of development cycle;                                                  
* support for new communications standards and protocols; and                   
* technical service and support.                                                

Our failure to compete successfully as to any of these or other factors could   
materially and adversely affect us.                                             

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7Security measures either (i) mark copied material as authentic, i.e., digital   
watermarking; (ii) modify the content available by reducing the quality of the  
music or attaching advertising material to tracks; or (iii) prevent altogether  
the unauthorized duplication of copy-written material. Our MediaCloQ(tm)        
proprietary technology adopts this latter strategy of barring duplication.      
Other means of barring duplication include: systems using on-line "musical"     
currency and other micropayment systems, long key encryption, public key        
cryptography systems (e.g., Motorola's CipherNET(r) or the prospective public   
domain Advanced Encryption Standard), hardware-based protection (chips,         
computers, peripherals, secure containers), portable flash memory devices, and  
compression codices. In management's judgment, all of these technologies are    
inferior to our MediaCloQ(tm). They are either too cumbersome, too expensive,   
require additional hardware, or significantly degrade the music quality.        
The best-known competitor of the Company is TTR Technologies, Inc., a publicly  
traded Israeli development stage company that is in the process of developing   
and designing anti-piracy software technologies that purport to provide copy    
protection for music distributed on CDs. The company's proprietary product      
SafeAudio(tm) Toolkit is purported to be designed to prevent unauthorized CDs   
from operating as intended.                                                     

While not a direct competitor, the Secure Digital Music Initiative ("SDMI)"is a 
forum of more than 180 companies and organizations whose goal is to develop a   
voluntary, open framework for playing, storing, and distributing digital music  
in a protected form. Member companies develop security measures in a wide array 
of technological solutions. To the knowledge of management, none of the         
companies within the SDMI consortium have technology which is directly          
competitive with ours.                                                          

What Makes Our Product Valuable?                                                
MediaCloQ(tm) provides content security qualitatively different from other      
technologies. A shrink-wrapped audio compact disc purchased off-the-shelf that  
is manufactured incorporating MediaCloQ(tm) cannot be digitally copied.         
Incorporating MediaCloQ(tm) causes no degradation in sound quality. A recording 
studio simply provides the recording to the mastering facility, while           
requesting the mastering facility to incorporate MediaCloQ(tm) during the       
manufacturing process. The mastering facility can easily update its encoders to 
enable the incorporation of MediaCloQ(tm).                                      

In a simplified scenario, the digital content - a song, for example - is        
created and made ready for duplication in the form of CDs. During the mastering 
process, a glass master containing the digital sound recording is created to    
mass -produce CDs. During the pre-mastering and encoding phase, just prior to   
the creation of the glass master, MediaCloQ(tm) is applied to the glass master, 
which "cloaks" the digitally recorded content from duplication equipment such   
as PC CD-ROM audio CD simulators, CD replicators or other digital duplication   
devices. In addition to cloaking the content, MediaCloQ(tm) adds a standard     
data track containing a MediaCloQ(tm) Enhanced Table of Contents ("TOC") that   
is different from the Redbook TOC as part of the 908 Redbook standard. This     
Enhanced TOC contains recording, track and author data as well as encryption    
data that allows the user to download the Microsoft Windows MRM protected       
versions of the WM8 files associated with the original CD's TOC directly from   
the Company's website for use on the user's PC or portable device. These files  
are protected with the Microsoft Windows MRM solution and can only be played on 
the device for which such files are authorized.                                 

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8In some instances, the digital content rights holder has the option to make     
certain rights available to end-users, such as the ability to transfer the      
digitally distributed file to a portable media player device, such as a Rio(tm) 
MP3(tm) player.                                                                 

Once transferred, the newly created file can then be further restricted to only 
play or delete, thereby remaining secure, even on additional devices. This      
option allows for consumers to use protected content on mobile devices while    
protecting the rights of the digital content rights holders.                    

Because our cloaking process is applied at the glass mastering stage, we        
believe that it provides greater security to the digital content from skilled   
hackers, permits efficient and convenient incorporation into production lines,  
and allows quality assurance prior to mass production.                          
Contracts                                                                       
The Company intends to actively market MediaCloQ(tm) to major and independent   
recording companies on a national and international basis. The Company has      
executed the following contracts.                                               

Fahrenheit                                                                      

On December 1, 2000, we entered into a one-year license agreement with          
Fahrenheit Entertainment, Inc., ("Fahrenheit") an independent record label,     
granting Fahrenheit a royalty-free, nonexclusive, nontransferable worldwide     
license to incorporate MediaCloQ(tm) into its products. In exchange, Fahrenheit 
has agreed to act as a technology partner during the term of the agreement.     
Fahrenheit must ship 25,000 CD units per month. See Exhibit 10.06. On or about  
April 17, 2001, pursuant to this license and in coordination with Fahrenheit,   
Music City Records shall commercially release the latest CD by country music    
recording legend Charley Pride entitled "A Tribute to Jim Reeves", which        
incorporates MediaCloQ(tm). This agreement does not pay any royalties to us.    

Will-Shown                                                                      

On December 5, 2000, we entered into a license agreement with Will-Shown        
Technology Company, Ltd. ("Will-Shown"), granting Will-Shown a nonexclusive,    
nontransferable worldwide license to incorporate MediaCloQ(tm) into its CD      
products. The license is exclusive only as it relates to artists that           
Will-Shown promotes and distributes pursuant to a written exclusive recording   
agreement with such artists. As a condition to Will-Shown's rights arising      
under this license, Will-Shown must pay a $40,000 advanced royalty, and will    
pay a three percent (3%) royalty on the net factory sales price on each unit    
sold incorporating MediaCloQ(tm) , but in no event shall we receive a royalty   
of less than twenty cents ($0.20) for each unit sold. Payment shall be          
calculated on a monthly basis and shall be paid within thirty (30) days from    
the end of each prior month.                                                    

The initial term of the license is seven (7) years with three (3) consecutive   
option periods of two (2) years each, beginning at the end of the initial term. 
Each option is subject to meeting the minimum performance requirements          
described above. See Exhibit 10.07.                                             

Will-Shown has not yet paid the advanced royalty of $40,000, and the Company    
and Will-Shown have each mutually agreed to defer the effective date of the     
license agreement so we may focus our efforts on the domestic market.           

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9Although we intend to enter into additional contracts to distribute our         
products, there is no assurance that we will be successful in consummating any  
additional agreements.                                                          

Patents, Trademarks, Licenses, Franchises, Concessions and Royalty Agreements   

"Digital Content Cloaking(tm)", "DC2(tm)", "MediaCloQ(tm)" and "SunnComm(tm) "  
are trademarks of SunnComm, Inc. in the United States and other countries.      
Otherwise, all trademarks and tradenames referred to in this Form 10-SB are the 
property of their respective owners.                                            

We expect to rely on a combination of copyright, trademark, patent and trade    
secret laws, and restrictions on disclosure to protect our intellectual         
property rights. Although we attempt to protect our intellectual property       
rights, we may be unable to prevent the misappropriation of our intellectual    
property, particularly in foreign countries where the laws may not protect the  
Company's proprietary rights as fully as in the United States.                  

In addition, other persons or companies may allege that our products infringe   
upon their proprietary rights. Any assertion that our products infringe upon    
their proprietary rights would force us to defend ourselves or our customers,   
manufacturers or suppliers against alleged infringement of intellectual         
property rights. We could incur substantial costs to prosecute or defend this   
litigation. If we were found to have infringed upon another person's            
proprietary rights and were unable to develop non-infringing technology or      
license the infringed technology on acceptable terms and on a timely basis, we  
could be forced to stop using the infringed technology and our business,        
results of operations and financial condition would be materially adversely     
affected.                                                                       

Effect of Existing or Probable Governmental Regulations                         

Federal patent, trademark and copyright laws protect our technology and         
preserve much of the net present value in the Company. If the Federal           
government changes the effect or import of the current intellectual property    
regime, in response to content security developments or otherwise, we could be  
materially adversely affected. The costs and effects of compliance with         
environmental laws are minimal.                                                 

Research and Development                                                        

While we intend to market a product for which extensive research and            
development costs have been expended, in 1999 those costs had been borne by the 
developers with whom we have contracted. In 2000, however, we incurred $127,500 
in research and development expenses.                                           

Employees                                                                       

We anticipate the establishment of a technical and support department that we   
expect will grow to five (5) employees. The establishment of the sales and      
marketing departments will initially employ three (3) people. General and       
administrative operations are expected to employ approximately ten (10)         
in-house personnel. We currently employ eight (8) and expect to employ fifteen  
(15) to twenty (20) people within twelve (12) months. We currently contract     
with three (3) independent contractors.                                         

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10Available Information                                                           

The public may read and copy any materials we file with the Securities and      
Exchange Commission (the "SEC") at the SEC's Public Reference Room at 450 Fifth 
Street, NW, Washington, DC 20549. The public may obtain information on the      
operation of the Public Reference Room by calling the SEC at 1-800- SEC-0330.   
If we elect to file electronically, the SEC maintains an Internet site that     
contains reports, proxy and information statements, and other information       
regarding issuers that file electronically with the SEC. The address of that    
site is <http://www.sec.gov>. Our Internet address is                           
<http://www.sunncomm.com>. Information contained on our website is not part of  
this Form 10-SB or any other securities disclosure.                             

Reports to Security Holders                                                     

The SEC's proxy rules and regulations require us to send an annual report to    
security holders, which we will issue in accordance with those rules.           

 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 -----------------------------------------------------------------

Plan of Operation                                                               

Until we enter into a distribution contract which provides royalty payments of  
a sufficient amount to support our operating costs, we will continue to rely on 
the sale of debentures to finance our operations. Although we are actively      
seeking record companies and other distributors of digital content to sell      
products with our technology incorporated, we have not consummated any          
agreement providing any royalties. We are uncertain as to the time required to  
educate the market as to the viability and availability of our products. We     
anticipate that to meet our payroll obligations, we will need approximately     
$35,000 per month for the year ended March 31, 2002. There is no assurance that 
this estimate may not increase particularly if we need to allocate a greater    
amount to ongoing research and development costs to upgrade our technology.     

Most of the proceeds we receive will pay salaries of employees, which we        
anticipate to increase from eight (8) to approximately fifteen (15) or twenty   
(20) and to independent contractors for research and development costs. We      
believe that we will not need to purchase any equipment as we anticipate that   
our revenues will come from the licensing of our technology and we do not       
anticipate upgrading our computer hardware during the coming year.              
Our anticipated revenues will be based on the sale of products by our customers 
to consumers, and will be affected by the seasonal buying trends typically      
found in the consumer-entertainment retail industry. For example, revenues, if  
realized, are likely to be higher during the Christmas buying season, but lower 
in the quarter immediately following.                                           

In fiscal 2000 (ending September 30), we raised $455,000 from the sale of       
convertible debentures and $87,700 from the sale of unregistered common stock,  
all of which was raised after March 12, 2000. From October 1, 2000, through     
March 31, 2001, we raised an additional $719,492 from the sale of convertible   
debentures and $243,900 from the sale of unregistered common stock.             

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11We expect to use the proceeds of financing activities to complete the research  
and development, beta testing, and rollout of our proprietary content security  
technology for CD Rom, DVD, DVDA, VCD and other digital media.                  

 ITEM 3: DESCRIPTION OF PROPERTY
  --------------------------------

We currently own no real property and do not invest in real property. Our       
principal place of business is leased pursuant to a long-term, non-cancelable   
seventy-two (72) month operating lease for office space in Phoenix, Arizona,    
which commenced on July 1, 2000. Future minimum lease rentals aggregate         
$813,853 through September 30, 2005. The lease provides for one five-year lease 
renewal at market rates. The following is a summary of the minimum lease        
rentals payable for each of the next five (5) years as of the end of the fiscal 
year.                                                                           

Year             Rent   
----             ----   
2001          $136,147  
2002          $187,548  
2003          $197,709  
2004          $209,289  
2005          $ 83,160  
------------------------  
For a total of $813,853 

See Exhibit 10.08 for more information.                                         

  ITEM 4: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  ----------------------------------------------------------------------

The following table sets forth certain information regarding the beneficial     
ownership of the Company's common stock as of March 31, 2000, by:               

* all Directors;                                                                

* each person who is known by the Company to be the beneficial owner of more    
than five percent (5%) of the outstanding common stock;                         

* each executive officer named in the Summary Compensation Table below; and     

* all Directors and executive officers as a group.                              

The number of shares beneficially owned by each Director or executive officer   
is determined under the SEC rules, and the information is not necessarily       
indicative of beneficial ownership for any other purpose. Under the SEC rules,  
beneficial ownership includes any shares as to which the individual has the     
sole or shared voting power or investment power. In addition, beneficial        
ownership includes any shares that the individual has the right to acquire      
within sixty (60) days of March 31, 2000, through the exercise of any stock     
option or other right. Unless otherwise indicated, each person listed below has 
sole investment and voting power (or shares such powers with his or her         
spouse).                                                                        

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12
                                                        [Enlarge/Download Table]
                                                                                                        
In certain instances, the number of shares listed includes, in addition to shares owned directly, shares
held by the spouse or children of the person, or by a trust or estate of which the person is a trustee  
or an executor or in which the person may have a beneficial interest.                                   

                                                    Number of Shares of Common Stock                    
                                                          Beneficially Owned                            

                                                              Vested                                    
Name and Address of Beneficial Owner             Shares      Options(1)    Total    Percent(2)          
------------------------------------             --------------------------------------------           
Peter H. Jacobs                                                                                         
668 North 44th Street, Suite 248                                                                        
Phoenix, Arizona 85008                           5,666,666   4,000,000   9,666,666    20.47%            

John D. Aquilino                                                                                        
668 North 44th Street, Suite 248                                                                        
Phoenix, Arizona 85008                           4,066,666   2,000,000   6,066,666    13.41%            

Stephen F. Burg                                                                                         
668 North 44th Street, Suite 248                                                                        
Phoenix, Arizona 85008                           2,466,666   1,500,000   3,966,666    8.87 %            

William H. Whitmore                                                                                     
668 North 44th Street, Suite 248                                                                        
Phoenix, Arizona 85008                              25,000     700,000     725,000     1.65%            
------------------------------------             --------------------------------------------           
All Directors and Executive                                                                             
 Officers as a group                            12,224,998   8,200,000  20,424,998    39.71%            

Michael Paloma(3)                                2,380,000           0   2,380,000     5.50%            

(1) Including 2,000,000 options issued to Mr. Jacobs under his Employment Agreement described below. The
    balance of options were issued pursuant to Incentive Stock Option Agreements described below.       
(2) Assuming that all of the options listed had been exercised.                                         
(3) Mr. Paloma was a director of the Company until March 2000.                                          

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13
                                                        [Enlarge/Download Table]
                                                                                                   


                                ITEM 5: DIRECTORS AND EXECUTIVE OFFICERS                           
                                                                                       Other       
                                                                                    Directorships  
                                                                                       Held In     
                                                                                      Reporting    
Name       Age  Position           Term of office; periods of service                Companies     
----       ---  --------           ----------------------------------              -------------   
Peter H.        Director,          As an officer, Mr. Jacobs has entered                           
Jacobs     52   President and      an Employment Agreement for 5 years,                            
                Chief Executive    beginning June 1, 2000.  As a director,                         
                Officer            began service on March 8, 2000, and was                         
                                   elected to another term at the annual                           
                                   shareholder meeting held on                                     
                                   November 7, 2000.                                               
John D.                                                                                            
Aquilino   35   Chairman, Chief    As an officer, Mr. Aquilino has entered an                      
                  Technology       Employment Agreement for 2 years, beginning                     
                   Officer         June 1, 2000.  As a director, began service on                  
                                   June 9, 2000, and was elected to another term                   
                                   at the annual shareholder meeting held on                       
                                   November 7, 2000.                                               
Stephen                                                                                            
F. Burg    63    Director,         As a director, began service on June 9, 2000,        Xechem     
                 Corporate         and was elected to another term at the annual    Pharmaceuticals
                 Secretary         shareholder meeting held on November 7, 2000.        (ZKEM)     
                 and  Treasurer                                                        Wolfstone   
                                                                                      Corporation  
                                                                                        (WSCO)     
William H.                                                                                         
Whitmore   41    Vice President    As an officer, Mr. Whitmore has entered an                      
                                   Employment Agreement for 2 years, beginning                     
                                   January 26, 2001.                                               

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14
Peter H. Jacobs, age 52, is a Director and is the President and Chief Executive 
Officer of the Company. After serving in the Army during the Vietnam Era, Mr.   
Jacobs studied math and political science at the University of Oregon. Mr.      
Jacobs has over twenty (20) years of executive level telecommunications and     
technology experience, with over twelve (12) years of experience, from 1986 to  
September 1998, as the President of a nationwide public telecommunications      
company, Fone America, Inc. At Fone America he was responsible for the          
conception, development, and "roll-out" of important telecommunications         
products, including the introduction of the prepaid calling card in the United  
States, national "flat-charging" of long distance phone calls, and the          
successful "roll-out" of thousands of advanced vending machines nationwide in   
an extremely short period of time. From 1998 to February, 2000, he became the   
principle consultant to, and significant shareholder in, Sunrise                
Communications, LLC, an Oregon limited liability corporation. Mr. Jacobs has    
owned and managed several high technology firms, including StellarVision        
International, which pioneered satellite-fed, pay-per-day movies in hotels      
without the need of set-top converters. In March 2000, he joined SunnComm. He   
has owned and marketed low power television stations in San Diego, among other  
cities. Mr. Jacobs has authored and published a book on satellite television    
for non-technical readers, entitled "Everything You Wanted to Know About        
Satellite Television," and earlier in his career, was an on-air personality for 
WHBI-FM, a local New York area radio station. He helped finance his college     
education by producing live concerts in his own production company. He resides  
in Fair Oaks, California.                                                       

John D. Aquilino, age 35, is a Director, Chairman, and the Chief Technology     
Officer. He has spent ten (10) years performing in major venues throughout the  
U.S. and abroad with his musical group, ICON, and subsequently was involved in  
the business of the music industry, A&R (artist and repertoire), and            
production. Mr. Aquilino's previous experience includes artist production and   
development for Capital Records, EMI Records, Atlantic Records and Mega Force   
Records, in his capacity as President of Scorpio Entertainment, an Arizona sole 
proprietorship, from 1990 to January 2000. In addition, Mr. Aquilino has worked 
with such artists as Frank Sinatra, Gladys Knight, Stevie Wonder, Billy Squire, 
and Quiet Riot, among others. He resides in Mesa, Arizona.                      

Stephen F. Burg, age 63, is a Director and is the Secretary of the Company. He  
holds a Bachelor's degree in business from Boston University. After twenty (20) 
years of senior management within a public corporate environment (Evans         
Products Company NYSE), he formed S.B. Corporate Consulting, Inc., in 1986. Mr. 
Burg's company offers corporate growth strategies for public and private        
companies, and provides services to clients in restructuring an operating base; 
guidance in how to prepare for raising of equity financing through public       
investment; and assisting in identifying and acquiring additional assets or     
other companies or products. Among the clients SB Corporate Consulting, Inc.,   
has represented are Xechem International, Inc. (ZKEM), a development stage      
biopharmaceutical company that is traded on the OTC-BB as ZKEM, based in New    
Brunswick, NJ (Mr. Burg is an active board member for the past five (5) years). 
At Wolfstone Corporation (WSCO), Mr. Burg assisted in corporate development,    
and now serves on the board of directors. He resides in Fairfield, California.  
William H. Whitmore, age 41, is Vice President of Marketing and Communications. 
Mr. Whitmore attended Northern Arizona University where he studied business     
administration and computer science.                                            

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15He previously served as Executive Vice President for Ekid Network, Inc., a      
media content company for children. While in this position, Mr. Whitmore        
managed all aspects of administration, technical development and marketing for  
the company, which produced educational animated software that enabled children 
to safely access the Internet. Concurrently, he was the representative for the  
investment group that funded the company and numerous other projects. Mr.       
Whitmore managed an extensive portfolio that included restaurants, real estate  
and one-stop Internet ventures. Prior to joining Ekid Network, Mr. Whitmore was 
the Vice President of Operations for TCGB, a manufacturer and distributor of    
unique products for the children's beverage market. In this role, he worked     
closely with the production and marketing team managing all aspects of product  
development, purchasing and procurement, shipping and receiving, logistics,     
customer service and administration.                                            

  ITEM 6: EXECUTIVE COMPENSATION

The following table sets forth certain compensation paid or accrued by the      
Company to certain employees.                                                   

  Summary Compensation Table
  --------------------------

                                    Annual            Restricted Stock
Name and Principal Position    Year   Salary ($)        Award (1)         
---------------------------    ----   ----------        ----------------  
Peter H. Jacobs, CEO         2000    125,000            $702,000      
John D. Aquilino, CTO        2000     75,000            $299,000      
Stephen  F. Burg, Sec.       2000    104,000            $234,000      
---------------------------    ----   ----------        ----------------  
(1) On May 25, 2000, a disinterested majority of the board approved a           
resolution allocating to Mr. Jacobs, Mr. Aquilino and Mr. Burg 5,400,000,       
2,300,000 and 1,800,000 shares, respectively, of the Company's common stock as  
compensation for putting together a qualified operating team for the Company.   
On that date the closing price of the Company's stock was $0.17, the value of   
which has been discounted approximately 20% to $0.13, as this stock is          
restricted.                                                                     

                                                        [Enlarge/Download Table]
                                                                                               
                        Option Grants in Last Fiscal Year                                      
                               ---------------------------------                               
                                       Individual Grants                                       

                     Number of               Percent of Total                                  
                     Securities              Options/SARs                                      
                     underlying              Granted to                                        
                     Options/ SARs           Employees to      Exercise or Base                
                     Granted                 Fiscal            Price                 Expiration
                     (1)(b)                  Year(c)           ($/.Sh)(d)              Date(c) 
-----------------------------------------------------------------------------------------------
Peter H. Jacobs    2,000,000(1)               25.81              $0.20             June 1, 2005
Peter H. Jacobs    2,000,000(2)               25.81              $0.20        November 28, 2010
John D. Aquilino   2,000,000(3)               25.81              $0.20        November 28, 2010
Stephen F. Burg    1,500,000(4)               19.35              $0.20        November 28, 2010

(1) Mr. Jacobs received these options pursuant to the terms of his Employment Agreement (see   
 Exhibit 10.09).                                                                               

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16(2) Mr. Jacobs received these options pursuant to the terms of his Incentive Stock Option      
    Agreement (see Exhibit 10.10).                                                             
(3) Mr. Aquilino received these options pursuant to the terms of his Incentive Stock Option    
    Agreement (see Exhibit 10.11).                                                             
(4) Mr. Burg received these options pursuant to the terms of his Incentive Stock Option        
 Agreement (see Exhibit 10.12).                                                                


Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option

                                                        [Enlarge/Download Table]
                                                                                               
                                        Number of Unexercised      Value of Unexercised In-the 
                                        Options at                 Money Options               
            Shares         Value        Fiscal Year End            at Fiscal Quarter Ended     
            Acquired on    Realized     Exercisable/               December 31, 2000           
Name        Exercise(#)    ($)          Unexercisable                                          
-----------------------------------------------------------------------------------------------
Peter H.                                                                                       
Jacobs        n/a          n/a           4,000,000 / 0                $400,000 / 0             

John D.                                                                                        
Aquilino      n/a          n/a           2,000,000 / 0                $200,000 / 0             

Stephen F.                                                                                     
Burg          n/a          n/a           1,500,000 / 0                $150,000 / 0             

(1) The share price on December 29, 2000, was $0.30.                                           

Compensation of Directors                                                       

Each Director holds office until the next annual meeting of shareholders, or    
until their successors are elected and qualified, whichever is later. Outside   
Directors are compensated for expenses incurred in the performance of the       
Company's business at the rate of $1,000 per month.                             

Employment Agreement with Peter H. Jacobs                                       

The Company's employment agreement with Peter H. Jacobs requires him to act as  
its Chief Executive Officer and President from June 1, 2000, and continuing for 
a period of five (5) years, unless automatically renewed or earlier terminated. 
His initial annual base salary is $125,000, subject to annual upward-only       
adjustment, and includes the grant of an incentive bonus and stock options.     
Pursuant to this agreement, he has received options to acquire up to 2,000,000  
shares of the common stock of the Company at a price of $0.20 each, exercisable 
until the end of the term of the employment agreement. Other benefits include   
health, medical and life insurance, living accommodations for a period of one   
(1) year, weekly travel expenses between Sacramento and Phoenix, an automobile, 
ordinary and necessary business expenses, a retirement or pension plan, if and  
when implemented by the Company, and twelve (12) days paid vacation during the  
first year under the Company's vacation policy.1 The Company may end Mr.        
Jacobs' employment for "cause," in which case any unexercised stock options     
shall automatically expire and his salary shall terminate. The Company may also 
terminate Mr. Jacobs' employment at any time, without cause, as in the case of  
a change of control of the Company, in which case the Company shall pay a       
separation bonus payment in an amount equal to 2.99 times his annual base       

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17salary at the time of termination and his salary shall continue to be due until 
the end of the term of the agreement. If, at the end of the initial term, Mr.   
Jacobs' employment is not renewed by the Company, he shall be entitled to       
receive a separation bonus in an amount equal to 2.99 times his annual base     
salary at the time of such termination. Mr. Jacobs has entered into a covenant  
not to compete with the Company, which is coterminous with the Employment       
Agreement. All of Mr. Jacobs' inventions or creations conceived while the       
Company employs Mr. Jacobs will belong to the Company. See Exhibit 10.09.       

Employment Agreement with John D. Aquilino                                      

The Company's employment agreement with John D. Aquilino requires him to act as 
its Chairman and Chief Technology Officer from June 1, 2000, and continuing for 
a period of two (2) years, unless automatically renewed or earlier terminated.  
His initial annual base salary is $75,000, subject to annual upward-only        
adjustment, complimented by an incentive bonus and stock options. Other         
benefits include health, medical and life insurance, business-related travel    
expenses, ordinary and necessary business expenses, a retirement or pension     
plan, and twelve (12) days paid vacation during the first year under the        
Company's vacation policy.2 The Company may end Mr. Aquilino's employment only  
for cause, in which case his salary shall terminate. Mr. Aquilino has entered   
into a covenant not to compete with the Company, which is coterminous with the  
Employment Agreement. All of Mr. Aquilino's inventions or creations conceived   
while the Company employs Mr. Aquilino will belong to the Company. See Exhibit  
10.13.                                                                          

Employment Agreement with William H. Whitmore                                   

The Company's employment agreement with William H. Whitmore requires him to act 
as its Vice President of Marketing and Communications from January 26, 2001,    
and continuing for a period of two (2) years, unless automatically renewed or   
earlier terminated. His initial annual base salary is $78,000, he received      
25,000 shares of common stock as a signing bonus, subject to annual upward-only 
adjustment, complimented by an incentive bonus and stock options. Other         
benefits include health, medical and life insurance, business-related travel    
expenses, ordinary and necessary business expenses, a retirement or pension     
plan, and three (3) weeks paid vacation during each of the first two (2) years  
of the Term. The Company may end Mr. Whitmore's employment only for cause, in   
which case his salary shall terminate. Mr. Whitmore has entered into a covenant 
not to compete with the Company, which is coterminous with the Employment       
Agreement. All of Mr. Whitmore's inventions or creations conceived while the    
Company employs Mr. Whitmore shall belong to the Company. See Exhibit 10.14.    

  ITEM 7: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Assignment and Assumption Agreement                                             

On June 14, 2000, we entered into an Assignment and Assumption Agreement with   
Desert Entertainment, Inc. an Arizona corporation ("DEI"), and Michael Paloma   
pursuant to which we transferred certain assets to DEI and DEI assumed, and     
Michael Paloma guaranteed, certain liabilities related to those assets. On June 
19, 2000, we sold all of the outstanding capital stock of DEI owned by us to    
Michael Paloma in exchange for 500,000 shares of common stock of the Company.   
Mr. Paloma is a former officer and director of the Company. The board approved  
the consideration as fair to the Company.                                       

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18See Exhibit 10.15 for a copy of the Assignment and Assumption Agreement.        

Consulting Agreement                                                            

On March 17, 2000, we entered into a Consulting Agreement with S.B. Corporate   
Consulting, Inc., a Nevada corporation ("SB"), wholly owned by Stephen F. Burg, 
a director of the Company, pursuant to which SB agreed to provide corporate     
counseling services in exchange for $2,000 per week for the duration of the     
consulting relationship. Additionally, SB received a $30,000 bonus for services 
provided through June 30, 2000. A disinterested majority of the board approved  
the consideration as fair to the Company. See Exhibit 10.16 for a copy of the   
Consulting Agreement.                                                           

Management Consulting Services                                                  

During 2000, we issued 2,000,000 shares of the Company's common stock to Planet 
10 Partners, Inc., a Nevada corporation, for management consulting services     
valued at $350,000. Mr. Jacobs, Mr. Aquilino and Mr. Burg each own one-third of 
Planet 10 Partners. The board of directors believed that this transaction was   
fair to the Company in light of the services rendered, particularly as it       
involved no payment of cash.                                                    

Consulting Agreement                                                            

On August 18, 2000, we entered into a Consulting Agreement with Kenneth W.      
Fagan, whereby Mr. Fagan agreed to act as Special Advisor to the board of       
directors and a corporate consultant. The term of the agreement is one (1)      
year. We paid Mr. Fagan an initial payment of $2,500 upon the execution of the  
agreement. We also agreed to pay Mr. Fagan $2,000 per month during the term,    
along with 250,000 restricted shares of the Company's common stock upon the     
execution of the agreement. Mr. Fagan has a right to earn up to 750,000 options 
at an exercise price of .22as follows: 34% to be issued upon the signing of     
three (3) licensing agreements with major software vendors ($25,000000 + in     
revenues) delivered by Mr. Fagan, and 66% to be issued upon the signing of a    
licensing agreement with a large independent software vendor (such as Oracle,   
Microsoft, etc.) delivered by Mr. Fagan. See Exhibit 10.17 for a copy of the    
Consulting Agreement.                                                           

 ITEM 8: DESCRIPTION OF SECURITIES

The authorized capital stock of the Company consists of 100,000,000 common      
shares, par value $0.001, 43,235,097 of which were outstanding as of March 31,  
2001, and held of record by approximately 2000 shareholders. The following      
summary of certain provisions of the common shares does not purport to be       
complete and is subject to, and qualified in its entirety by, the provisions of 
the Company's Articles of Incorporation, as amended, and Bylaws, each of which  
is attached as Exhibit 3.01 and Exhibit 3.02, respectively, as well as by the   
provisions of applicable law.                                                   

As disclosed in Part II, Item 4, below, we issued convertible debentures to     
various investors. The debentures bear interest at five percent (5%) per annum. 
The conversion feature of the debt is automatic upon the effectiveness of any   
registration statement to be filed by the Company. See Exhibits 4.01 and 4.02   
for more information.                                                           

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19In addition, some of the debenture holders received "A" and "B" warrants which  
confer upon them the right to buy a share of common stock at the opening bid    
price and $2 above the opening bid price, respectively, of our first            
underwritten public offering following the warrant issue date, and may be       
exercised at any time after the first day of the seventh month and nineteenth   
month, respectively, following the issue date. We have the right to redeem the  
warrants for $15 and $20 each, respectively, at any time. See Exhibits 4.03 and 
4.04 for more information.                                                      

Our Articles of Incorporation, as amended, authorize the issuance of up to one  
hundred million common shares. Holders of common shares are entitled to receive 
ratably such dividends, if any, as may be declared by our board of directors    
out of funds legally available therefor. Upon the liquidation, dissolution or   
winding up of the Company, after payment of all debts and other liabilities of  
the Company, the holders of common shares are thereafter entitled to receive    
ratably the remaining net assets of the Company.                                

Holders of common shares have no preemptive subscription, redemption or         
conversion rights. The common shares are, when issued, fully paid and           
non-assessable.                                                                 

The Transfer Agent for the shares is First American Stock Transfer, 1717 East   
Bell Road, Suite 2, Phoenix, Arizona 85022, 602-485-1346, facsimile             
602-788-0423.                                                                   

 PART II

  ITEM 1: MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Our common stock is currently traded on the OTC Pink Sheets(r) under the symbol 
SUNX, and, as of March 31, 2001, had approximately 2000 shareholders. The Pink  
Sheets is a centralized quotation service that collects and publishes market    
maker quotes for OTC securities in real time. The quotations listed below       
reflect inter-dealer prices without mark-up, markdown or commission and may not 
represent actual transactions. As of March 30,2001, the closing price of the    
common stock was $0.47 per share.                                               

We have not declared cash dividends on any class of common equity for the last  
two fiscal years or in any subsequent period for which financial information is 
required. Because we are developing the capacity to generate income and do not  
currently expect to generate income within the near future, there is no         
assurance that we will pay dividends in the future.                             

Due to limited trading, the following prices may not reflect actual trades      
(selling price) during the applicable periods.                                  

Quarter Ended     High     Low
-------------     ----     ---
  March 99         1.125   0.375
  June 99          0.875   0.563
Sept. 99         N/A     N/A
December 99      N/A     N/A
  March 00         1.875   0.500
  June 00          0.440   0.150
  Sept. 00         0.500   0.170

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20  December 00      0.535   0.175
  March 01         0.740   0.220

  ITEM 2:  LEGAL PROCEEDINGS

We are currently a party to two lawsuits. Matthew Bardasian et al v. Desert     
Winds Entertainment et al, CV-N-00-0199-DWH (VPC), in the United States         
District Court for the District of Nevada, was filed on April 14, 2000 (the     
"Bardasian suit"). American Equities Group v. Desert Winds et al, case no.      
00-CV-952, in the United States District Court for the Eastern District of      
California, was filed on May 2, 2000 (the "AEG suit").                          

The Bardasian suit alleges that the Company has failed to repay loans in the    
aggregate amount of $1.8 million and that the previous management of the        
Company violated Federal securities laws by misrepresenting the economic status 
of the Company, use of proceeds, and by refusing to authorize the issuance of   
shares that plaintiffs claim they were owed by the Company. Plaintiffs          
requested that the Company be placed in receivership, and requested             
compensatory and punitive damages in an unknown amount. Should the Plaintiffs   
prevail, the damages a court may order us to pay could far exceed the capital   
previously raised by the Company and most likely curtail future capital raises. 
The court could place the Company into receivership. We have filed a            
counterclaim alleging that Bardasian personally, and through a corporation or   
corporations he owned and controlled, caused shares of the Company stock to be  
issued that were not authorized or approved by the Company. The Counterclaim    
seeks (i) actual, compensatory and punitive damages in an amount to be proven   
at trial (with damages trebled pursuant to the Nevada RICO statutes); (ii)      
requesting the court to order Bardasian to indemnify and hold the Company       
harmless from any claims brought by reputed shareholders of the Company to whom 
Bardasian sold unauthorized share certificates; and for (iii) attorneys' fees   
and costs. We are committed to vigorously defending the Company.                

The AEG suit alleges that the Company, as the successor of Ti-Mail, is          
responsible for Ti-Mail's alleged failure to perform under an accounts          
receivable sales agreement, requesting compensatory damages of $275,099.95. On  
October 27, 2000, Ti-Mail filed an amended counter-claim, alleging breach of    
contract and violations of the California usury laws. We believe that, in the   
event that the plaintiff is successful in making its claim, we will be able to  
collect a significant portion or all of the judgment through indemnification    
from other parties for breaches of certain representations regarding the        
subject of the suit. However, if the parties from which we would seek           
indemnification became judgment proof or the amount we must pay in damages      
prior to obtaining a successful judgment against potential third party payors   
exceeds amounts raised by the Company, then we would be forced raise additional 
funds, which may have a material adverse effect on the Company. No trial date   
has been scheduled.                                                             

Additionally, there is a pending SEC formal investigation, HO-7499, styled "In  
the Matter of Desert Winds Entertainment, Inc." [sic]. The SEC has made no      
findings nor has it established a timeline for resolving issues. We understand  
that the SEC investigation is focused on the actions of prior management in     
connection with events that occurred between January 1, 1999, and March 20,     

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212000. If it is ultimately determined that the Company violated federal          
securities laws, we may incur substantial fines or penalties or become subject  
to lawsuits by shareholders. There is no assurance that the SEC will not levy   
substantial fines against the Company and certain former officers and           
directors. There is no assurance that the investigation will be limited to      
actions taken by the Company and its prior officers and directors between       
January 1, 1999, and March 20, 2000. Should the Company incur substantial fines 
or penalties or face litigation from shareholders, then it may be forced into   
insolvency.                                                                     

In the future, we may be subject to lawsuits occurring in the regular course of 
business. Most of these lawsuits would likely involve claims for money damages. 
We carry insurance to protect ourselves against such claims, subject to any     
applicable deductibles, but the insurance may not cover any action brought by   
the SEC. We can give no assurances that future lawsuits will not have a         
material adverse effect on the Company's financial condition or results of      
operations.                                                                     

 ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

There have been no disagreements with accountants reportable hereunder.         

 ITEM 4: RECENT SALES OF UNREGISTERED SECURITIES

For the period beginning April 1, 1998 and ending October 5, 1998, we issued    
1,771,970 shares of our common stock to four (4) persons. For the period        
beginning December 31, 1998 and ending February 7, 2000, we issued 15,085,129   
shares to sixty-seven (67) persons. Of the shares issued between December 31,   
1998 and February 7, 2000, 3,787,500 shares were issued to the then serving     
Chief Executive Officer as a bonus. Management believes that shares issued      
between April 1998 and February 2000, were either issued pursuant to Section    
4(2) of the Securities Act or Rule 504 of Regulation D.                         

From October 2000 through March 2001, we issued approximately 1,351,455 shares  
of our common stock for consulting, technology development, compensation,       
investor and public relations services for an approximate value of $650,000. In 
addition, we issued 500,000 shares of our common stock in conversion of a debt  
from discontinued operations of $112,500. Management believes these shares were 
issued pursuant to Section 4(2) of the Securities Act.                          

From March 12, 2000 through March 31, 2001, we issued approximately $1,117,492  
of convertible debentures to one hundred sixty-nine (169) investors. The        
debentures bear interest at five percent (5%) per annum. The debentures will    
automatically convert into approximately 7,844,650 shares of our common stock   
upon the effectiveness of a registration statement. The conversion feature of   
the debt is automatic upon the effectiveness of any registration statement to   
be filed by the Company. See Exhibits 4.01 and 4.02 for more information. If    
the registration statement does not become effective, the debentures will       
mature one year from the date of issuance. In addition, some of the debenture   
holders received "A" and "B" warrants which confers upon them the right to buy  
a share of common stock at the opening bid price and $2 above the opening bid   
price, respectively, of our first underwritten public offering following the    
issued date, and may be exercised at any time after the first day of the        
seventh (7th) month and nineteenth (19th) month, respectively, following the    

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22issue date. We have the right to redeem the warrants for $15 and $20 each,      
respectively, at any time. See Exhibits 4.03 and 4.04 for more information. The 
debentures were issued pursuant to 4(2) of the Securities Act of 1933, as       
amended.                                                                        

From March 12, 2000 through March 31, 2001, we issued approximately 3,885,000   
shares of our common stock to four (4) investors for an approximate value of    
$331,600. Management believes these shares were issued pursuant to Section 4(2) 
of the Securities Act.                                                          

Beginning in June 2000 and ending in January 2001, we issued a total of         
9,300,000 options to officers and employees at exercise prices ranging from     
$.10 to $1.00. The options were issued pursuant to Section 4(2) or Rule 701 of  
the Securities Act.                                                             

 ITEM 5: INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our Articles of Incorporation, as amended, provide to the fullest extent        
permitted by Nevada law, a director or officer of the Company shall not be      
personally liable to the Company or its shareholders for damages for breach of  
such Director's or officer's fiduciary duty. The effect of this provision of    
our Articles of Incorporation, as amended, is to eliminate the right of the     
Company and its shareholders (through shareholders' derivative suits on behalf  
of the Company) to recover damages against a director or officer for breach of  
the fiduciary duty of care as a director or officer (including breaches         
resulting from negligent or grossly negligent behavior), except under certain   
situations defined by statute. We believe that the indemnification provisions   
in its Articles of Incorporation, as amended, are necessary to attract and      
retain qualified persons as directors and officers.                             

Insofar as indemnification for liabilities arising under the Act may be         
permitted to directors, officers and controlling persons of the Company         
pursuant to the foregoing provisions, or otherwise, we have been advised that   
in the opinion of the Securities and Exchange Commission such indemnification   
is against public policy as expressed in the Act and is, therefore,             
unenforceable. In the event that a claim for indemnification against such       
liabilities (other than the payment by the Company of expenses incurred or paid 
by a director, officer or controlling person of the Company in the successful   
defense of any action, suit or proceeding) is asserted by such director,        
officer or controlling person in connection with the securities being           
registered, the registrant will, unless in the opinion of its counsel the       
matter has been settled by controlling precedent, submit to a court of          
appropriate jurisdiction the question whether such indemnification by it is     
against public policy as expressed in the Act and will be governed by the final 
adjudication of such issue.                                                     

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                                                                [Download Table]
                                                                                  
                                      PART F/S: FINANCIAL STATEMENTS              

                                       INDEX TO FINANCIAL STATEMENTS              

                                                                      Page        
                                                                      ----        

Independent Auditors' Report                                          F-2         

Financial Statements:                                                             

Balance sheets at September 30, 2000                                              
and (Unaudited) 1999 and (Unaudited) December 31, 2000                F-3         

Statements of operations for the years ended  September 30, 2000 and              
 (Unaudited) 1999, May 1, 2000 (commencement of development stage)                
 through September 30, 2000 and (Unaudited) three  months ended                   
 December 31, 2000                                                    F-4         

Statements of changes in stockholders' equity for the years ended                 
 September 30, 2000 and (Unaudited) 1999, May 1, 2000 (commencement               
 of development stage) through September 30, 2000 and (Unaudited)                 
three  months ended December 31, 2000                                 F-5         

Statements of cash flows for the years ended  September 30, 2000                  
 and (Unaudited) 1999, May 1, 2000  (commencement of development                  
 stage) through September 30, 2000, and (Unaudited) three months                  
 ended December 31, 2000                                              F-6         

     Notes to financial statements                                    F-17 to F-18
F-1                                                                               

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[CAPTION]                                                                       
  INDEPENDENT AUDITORS' REPORT

Board of Directors                                                              
SunnComm, Inc.                                                                  

We have audited the balance sheet of SunnComm, Inc. (a development stage        
company) as of September 30, 2000 and the related statements of operations,     
changes in stockholders' equity and cash flows for the year then ended, and the 
period May 1, 2000, date of commencement of development stage, through          
September 30, 2000. These financial statements are the responsibility of the    
Company's management. Our responsibility is to express an opinion on the        
financial statements based on our audit.                                        

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 financial position of SunnComm, Inc. as of September 
30, 2000, and the results of its operations and its cash flows for the year     
then ended in conformity with generally accepted accounting principles.         

The accompanying financial statements have been prepared assuming SunnComm,     
Inc. will continue as a going concern. As discussed in Note 2 to the financial  
statements, the Company has suffered recurring losses from operations and has a 
net capital deficiency. These factors 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 financial statements do not include any       
adjustments that might result from the outcome of this uncertainty.             

The fiscal year ending September 30, 1999, the three months ended December 31,  
2000 and the period May 1, 2000, date of commencement of development stage, to  
December 31, 2000 financial statements are unaudited. We did not audit or       
review those financial statements and, accordingly, expressed no opinion or     
other form of assurance on them.                                                

                                               WISS & COMPANY, LLP
/s/                                                                             
------------------------------------------                                      
Livingston, New Jersey                                                  
December 15, 2000 (except for Note 8 and 9 for                          
which the date is March 31, 2001)                                       

F-2                                                                             

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                                                        [Enlarge/Download Table]
                                                                                            
                                 SUNNCOMM, INC.                                             
                         (A DEVELOPMENT STAGE COMPANY)                                      
                                 BALANCE SHEETS                                             

                                                  December 31,  September 30,  September 30,
                                                    2000           2000            1999     
                                                  -----------   -------------  -------------
ASSETS                                                                                      
(Unaudited)                                                                                 

(Unaudited)                                                                                 
CURRENT ASSETS:                                                                             
Cash                                              $   8,502    $     37,746     $       -   
Prepaid consulting services                          76,041         135,415             -   
Deferred offering costs                              10,417          16,667             -   
Other                                                 4,714           4,714                 
Net current assets of discontinued operations             -               -        22,266   
Total Current Assets                                 99,674         194,542        22,266   
                                                  ---------         -------        ------   
EQUIPMENT, FURNITURE AND FIXTURES, LESS                                                     
ACCUMULATED DEPRECIATION                             35,744          30,115             -   
OTHER ASSETS:                                                                               
Other assets                                          4,544           4,544             -   
Net assets of discontinued operations                     -               -         33,581  
                                                   ---------         -------        ------  
                                                  $ 139,962    $    229,201     $   55,847  
LIABILITIES AND STOCKHOLDERS' EQUITY               =========        ========        ======  

CURRENT LIABILITIES:                                                                        
Debentures payable                                $ 685,642    $    395,400     $        -  
Accounts payable                                     72,164          32,892              -  
Accrued payroll and payroll taxes                    57,514          59,339              -  
Accrued interest                                     14,724           6,800              -  
Accrued expenses                                      6,658           6,657              -  
Net current liabilities of discontinued operations   84,400         196,900        215,309  
                                                  ---------         -------        -------- 
Total Current Liabilities                           921,102         697,988        215,309  
COMMITMENTS AND CONTINGENCIES                                                               

STOCKHOLDERS' EQUITY:                                                                       
Common stock $.001 par value:                                                               
Authorized 100,000,000 shares, issued 41,299,951                                            
 at December 31, 2000, 40,623,642 at                                                        
  September 30, 2000 and 13,740,775                                                         
  at September 30, 1999                              41,299          40,623         13,740  
Additional paid-in-capital                       10,116,616       9,723,806      1,854,291  
Subscription receivable                             (80,000)        (80,000)             -  
Deficit accumulated during development stage     (3,652,297)     (2,946,458)             -  
Accumulated deficit                              (7,206,758)     (7,206,758)    (2,027,493) 
                                                  ---------         -------        ------   
Total Stockholders' Equity                         (781,140)       (468,787)      (159,462) 
                                                  ---------         -------        -------  
                                               $    139,962    $    229,201     $   55,847  
                                                  =========         =======        =======  

                 See accompanying notes to financial statements.                            
F-3                                                                                         


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                                                        [Enlarge/Download Table]

                                             SUNNCOMM, INC.                                           
                                      (A DEVELOPMENT STAGE COMPANY)                                   
                                        STATEMENTS OF OPERATIONS                                      
                                                                                                      

                                                                                     May 1, 2001      
                                      Three Months                                  (Commencement of  
                                      Ended           Year End       Year End        Development Sage)
                                      December 31     September 30,  September 30,   to December 31,  
                                      2000            2000           1999            2000             
                                      ------------    -------------  -------------   ---------------- 
                                       (Unaudited)                    (Unaudited)      (Unaudited)    

NET REVENUES                                                                                          
                                       $       -       $        -     $     -          $        -     
OPERATING EXPENSES:                                                                                   
General and administrative               627,817        2,732,346           -           3,360,163     
Research and development                  70,098          127,500                         197,598     
Loss on impairment of investment               -           80,000           -              80,000     
                                      ------------    -------------  -------------   ---------------- 
LOSS FROM OPERATIONS                    (697,915)      (2,939,846)          -          (3,637,761)    
INTEREST EXPENSE                           7,924            6,612           -              14,536     
                                      ------------    -------------  -------------   ---------------- 
LOSS BEFORE DISCONTINUED OPERATIONS     (705,839)      (2,946,458)          -          (3,652,297)    
DISCONTINUED OPERATIONS:                                                                              
Loss from operations of discontinued                                                                  
 business, net                                 -       (4,536,926)   (717,991)                  -     
Gain on disposal of Ti-Mail, net               -                -     169,846                   -     
Loss on disposal of Desert Winds                                                                      
 Entertainment, net                            -         (642,339)          -                   -     
                                      ------------    -------------  -------------   ---------------- 
NET LOSS                             $  (705,839)     $(8,125,723)  $(548,145)       $ (3,652,297)    
                                      ============    ============= ==============   ================ 
WEIGHTED AVERAGE COMMON                                                                               
 SHARES OUTSTANDING                   32,530,662       26,309,307  11,038,766                         
                                      ============    ============= ==============                    

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BASIC AND DILUTED LOSS                                                                                
 PER COMMON SHARE:                                                                                    
    Loss from operations                 $  (.02)       $    (.11)   $                          -     
    Loss from discontinued operations          -             (.20)       (.05)                        
                                      ============    ============= ==============                    

BASIC AND DILUTED LOSS PER COMMON SHARE  $  (.02)       $    (.31)   $   (.05)                        
                                      ============    ============= ==============                    

                              See accompanying notes to financial statements.                         
F-4                                                                                                   


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                                                        [Enlarge/Download Table]

                                             SUNNCOMM, INC.                                            
                                      (A DEVELOPMENT STAGE COMPANY)                                    
                              STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY                            

                                                                                                       

                                                                                           Deficit     
                                                                                           Accumulated 
                                                                                           through     
                                                                                           Development 
                                                                                           Stage       
                                                                                           May 1, 2000 
                                    Common Stock       Additional   Accum-    Sub-        (Commencement
                                                       Paid-in      ulated    scription    of          
                                  Shares   Par Value   Capital      Deficit   Receivable   Development 
                                  ------   ---------   ---------    -------   ----------   Stage)      
                                                                                           ------------
BALANCE, SEPTEMBER 30,                                                                                 
 1998 (UNAUDITED)                977,580   $ 48,879    $ 646,133  $(1,479,348) $     -      $          

YEAR ENDED SEPTEMBER                                                                                   
 30, 1999 (UNAUDITED):                                                                                 
Reverse merger with                                                                                    
 the Whitney Corporation       6,500,000    (41,402)      41,402            -        -                 
Issuance of common stock                                                                               
 for compensation              4,288,000      4,288      152,232            -        -              -  
Conversion of debt to equity   1,000,000      1,000      999,000            -        -              -  
Issuance of common stock                                                                               
 for services                    975,195        975       15,524            -        -              -  
Loss from discontinued operations      -          -            -     (717,991)       -              -  
Gain on disposal of Ti-Mail            -          -            -      169,846        -              -  
                                  ------   ---------   ---------    ---------  -----------  ---------  

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29BALANCE, SEPTEMBER 30, 1999                                                                            
 (UNAUDITED)                  13,740,775     13,740    1,854,291   (2,027,493)       -              -  

YEAR ENDED SEPTEMBER                                                                                   
 30, 2000:                                                                                             

Issuances of common                                                                                    
stock for cash                 4,828,549      4,829    1,191,850             -       -              -  
Issuances of common                                                                                    
stock for services             4,827,000      4,827    3,202,989             -       -              -  
Issuance of common                                                                                     
stock through                                                                                          
 subscription receivable         500,000        500       79,500             - (80,000)             -  
Issuances of common                                                                                    
 stock for compensation          637,450        637      467,046             -       -              -  
Conversion of debt to equity     879,868        880      268,768             -       -              -  
Issuance of common stock                                                                               
 for investment                  160,000        160       79,840             -       -              -  
Loss from discontinued                                                                                 
 operations                           -          -            -    (4,536,926)       -              -  
Loss on disposal of Desert Winds      -          -            -      (642,339        -              -  
                                  ------   ---------   ---------    -------   -------------  --------- 
BALANCE, AT MAY 1, 2000                                                                                
 BEFORE COMMENCEMENT                                                                                   
 OF DEVELOPMENT STAGE         25,573,642     25,573    7,144,284   (7,206,758) (80,000)             -  

Issuances of common                                                                                    
 stock for services                                                                                    
 valued at $.175                                                                                       
 per share                     2,700,000      2,700      469,800             -       -              -  
Issuances of common                                                                                    
stock for services                                                                                     
 valued at $.25 per share      1,050,000      1,050      261,450             -       -              -  
Issuances of common                                                                                    
 stock for compensation                                                                                
 valued at $.17 per share      7,700,000      7,700    1,301,300             -       -              -  

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30Issuances of common                                                                                    
 stock for services                                                                                    
 valued at $.17 per share      1,800,000      1,800      304,200             -       -              -  
Issuances of common stock                                                                              
 for compensation                                                                                      
 valued at $.25 per share         22,000         22        5,478             -       -              -  
Issuance of common stock                                                                               
 for services                                                                                          
 valued at $.20 per share         50,000         50        9,950             -       -              -  
Issuance of common stock                                                                               
for services                                                                                           
 valued at $.295 per share        53,000         53       15,582             -        -             -  
Issuances of common stock                                                                              
 for services                                                                                          
 valued at $.30 per share        175,000        175       52,325             -        -             -  
Issuance of common stock                                                                               
 for technology development                                                                            
 valued at historical cost     2,000,000      2,000       28,000             -        -             -  
Issuance of options to                                                                                 
 purchase common stock               -           -        60,000             -        -             -  
Issuance of options to                                                                                 
purchase common stock                                                                                  
for services                         -           -        71,437             -        -             -  
Cancellation of shares                                                                                 
of common stock in consideration                                                                       
 of the sale of Desert                                                                                 
 Entertainment, Inc.            (500,000)      (500)           -             -        -             -  
Net loss                             -           -             -             -        -    (2,946,458) 
                                  ------   ---------   ---------    -------      ----------  --------- 
BALANCE, AT                                                                                            
SEPTEMBER 30, 2000            40,623,642     40,623     9,723,806   (7,206,758) (80,000)   (2,946,458) 
THREE MONTHS ENDED                                                                                     
 DECEMBER 31, 2000                                                                                     
 (UNAUDITED):                                                                                          
Issuances of common                                                                                    
 stock for services                                                                                    
 valued at $.33 per share        15,000          15         4,935             -        -             - 

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31Issuances of common                                                                                    
 stock for services                                                                                    
 valued at $.25 per share        33,333          33         8,300             -        -            -  
Issuances of common                                                                                    
 stock for services                                                                                    
 valued at $.20 per share        63,676          64        12,671             -        -            -  
Issuances of common                                                                                    
 stock for services                                                                                    
 valued at $.41 per share        55,000          55        22,495            -        -             -  
Issuances of common                                                                                    
 stock for compensation                                                                                
 valued at $.26 per share             -           -             -            -        -             -  
    Issuances of common                                                                                
 stock for compensation                                                                                
 valued at $.26 per share         9,300           9         2,409            -        -             -  
    Issuance of options to                                                                             
 purchase common stock issued                                                                          
      to employees and                                                                                 
 directors at a discounted                                                                             
 issuance price                       -           -        230,000           -        -             -  
Conversion of debt to equity    500,000         500        112,000           -        -             -  
Net loss                              -           -              -           -        -      (705,839) 
                                  ------   ---------   ---------    -------   -------------  --------- 
BALANCE, AT DECEMBER 31, 2000                                                                          
 (UNAUDITED)                  41,299,951   $ 41,299     0,116,616  (7,206,758) (80,000)  $(3,652,297)  
                             =========== ===========   =========== ============ ======== ============= 

                              See accompanying notes to financial statements.                          
F-5                                                                                                    


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                                                        [Enlarge/Download Table]

                                             SUNNCOMM, INC.                                           
                                      (A DEVELOPMENT STAGE COMPANY)                                   
                                        STATEMENTS OF CASH FLOWS                                      
                                                                                                      
                                                                                  May 1, 2000         
                                    Three Months                                  Commencement        
                                    Ended          Year Ended      Year End       of Development Stage
                                    December 31,   September 30,   September 30,  to December 31,     
                                        2000          2000            1999             2000           
                                    ------------   -------------   -------------  --------------------
                                    (Unaudited)                     (Unaudited)     (Unaudited)       

CASH FLOWS FROM                                                                                       
 OPERATING ACTIVITIES:                                                                                
Net loss                           $  (705,839)    $(8,125,723)    $ (548,145)     $  (3,652,297)     

Adjustments to reconcile                                                                              
 net loss to net cash flows                                                                           
 from operating activities:                                                                           
   Loss on discontinued operations           -       4,536,926        717,991                  -      
Loss/(Gain) on disposal of                                                                            
 discontinued operations                     -         642,339       (169,846)                 -      
Issuance of common stock for services   50,986         983,719              -          1,034,705      
Issuance of common stock for                                                                          
 compensation                                -       1,314,500              -          1,314,500      
Issuance of options for services             -          71,437              -             71,437      
Issuance of options for compensation   230,000               -              -            230,000      
Impairment loss on investment                -          80,000              -             80,000      
Issuances of common stock for                                                                         
 technology development costs                -          30,000              -             30,000      
Depreciation and amortization            7,423          10,771              -             18,194      

Changes in operating assets                                                                           
 and liabilities:                            -               -              -                  -      
Prepaid expenses and other                                                                            
 current assets                         59,374          (4,714)             -             54,660      

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Other assets                                 -           (5,044)            -            (5,044)      
Accounts payable and accrued expenses   45,372          105,688             -           151,060       
                                    ------------   -------------   -------------  --------------------
Net cash flows from continuing                                                                        
 operating activities                 (312,684)        (360,101)            -          (672,785)      
Cash flows from discontinued                                                                          
operations or prior to                                                                                
commencement of development stage            -          (22,266)       16,600                 -       
                                    ------------   -------------   -------------  --------------------
Net cash flows from operating                                                                         
activities                            (312,684)        (382,367)       16,600          (672,785)      
                                    ------------   -------------   -------------  --------------------

CASH FLOWS FROM INVESTING ACTIVITIES         -                -                                       
Purchase of equipment, furniture                                                                      
 and fixtures                           (6,802)         (32,553)            -           (39,355)      
                                    ------------   -------------   -------------  --------------------

CASH FLOWS FROM FINANCING ACTIVITIES:                                                                 
Proceeds from issuances of options           -           60,000             -            60,000       
Proceeds from issuances of debentures  290,242          370,400             -           660,642       
                                    ------------   -------------   -------------  --------------------
Net cash flows from financing                                                                         
 activities                            290,242          430,400             -           720,642       
                                    ------------   -------------   -------------  --------------------

NET CHANGE IN CASH                     (29,244)          15,480        16,600             8,502       

CASH, BEGINNING OF PERIOD               37,746           22,266         5,666                 -       
                                    ------------   -------------   -------------  --------------------

CASH, END OF PERIOD                    $ 8,502         $ 37,746      $ 22,266           $ 8,502       
                                    ============   =============   =============  ====================

SUPPLEMENTAL CASH FLOW INFORMATION:                                                                   
Interest paid                          $     -         $      -      $      -           $     -       
                                    ============   =============   =============  ====================

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34Income taxes paid                      $     -         $      -      $      -           $     -       
                                    ============   =============   =============  ====================
Businesses and technology acquired                                                                    
 Fair value of assets acquired                                                                        
 through issuances of stock            $     -           30,000      $      -           $ 30,000      
                                    ============   =============   =============  ====================

NONCASH FINANCING ACTIVITIES:                                                                         
Issuance of common stock for                                                                          
 prepaid consulting services           $     -         $135,415      $      -                         
   Issuance costs on debentures              -           25,000                                       
Cancellation of common shares                -              500             -                         
Conversion of debt from discontinued                                                                  
 operations to equity                  112,500                -             -                         
                                    ============   =============   =============  ====================
                                      $112,500         $160,915     $       -                         
                                    ============   =============   =============  ====================

                              See accompanying notes to financial statements.                         


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35F-6                                                                             

NOTE 1  - NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING          
POLICIES:                                                                       

    Nature of the Business - SunnComm, Inc. ("the Company"), is in the process
of developing a digital content cloaking technology that will protect digital   
content publishers' and authors' intellectual property from unauthorized        
duplication of digital content delivered on physical media.  The Company        
intends to distribute the software to digital entertainment content producers   
and manufacturers worldwide.                                                    

 The Company was originally incorporated in August 1993 and was formerly
named Compliance Signage, Inc.  In April 1996, Compliance Signage changed its   
name to Ti-Mail, Inc.  In November 1998, Desert Winds Entertainment             
Corporation, a Nevada Corporation was formed in Nevada and subsequently merged  
with Ti-Mail in December 1998.  In December 1998, the Company entered into a    
"Plan and Agreement of Reorganization" with the Whitney Corporation whereby all 
6,500,000 issued and outstanding shares of Whitney common stock were acquired   
by the Company in exchange for an equal number of shares of its common stock,   
making Whitney a wholly-owned subsidiary of the Company.  From December 1998 to 
April 1999, the mailing and shipping product of the business and the            
entertainment production business of Whitney each continued to be operated      
independently.  In April 1999, the Company discontinued its mailing and         
shipping segment.  From April 1999 to May 2000, the Company operated solely as  
an entertainment business before disposing of that business segment in June     
2000.                                                                           

   The Company commenced the development stage in May 2000, and subsequently
changed its name to SunnComm, Inc. in June 2000.  The operations have consisted 
primarily of financial planning, raising capital and researching and developing 
digital content cloaking technology.  The Company has not produced revenues and 
has accumulated a deficit since commencement of the development stage.  The     
Company has financed the development of its digital content cloaking technology 
principally through the issuances of convertible debentures and issuances of    
shares of restricted common stock under Section 4(2) of the Securities Exchange 
Act.                                                                            

  Estimates and Uncertainties - The preparation of financial statements in
conformity 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 and the reported amounts of revenues and expenses      
during the reporting period.  Actual results, as determined at a later date,    
could differ from those estimates.                                              

   Financial Instruments - Financial instruments include cash, other assets,
debentures payable, notes and accounts payable and accrued expenses.  The       
amounts reported for financial instruments are considered to be reasonable      
approximations of their fair values based on market information available to    
management.  The use of different market assumptions and/or estimation          
methodologies could have a material effect on the estimated fair value amounts. 

Income Taxes - Deferred income taxes arise from temporary differences 
between financial and tax reporting, principally from net operating loss        
carryforwards.                                                                  

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36Deferred tax assets are measured using enacted tax rates in effect for the      
years in which those temporary differences are expected to be recovered or      
settled.                                                                        

   Equipment, Furniture and Fixtures - Equipment, furniture and fixtures are
recorded at cost and are depreciated primarily using the straight-line method   
over their estimated useful lives of 3 to 7 years.                              

 Earnings Per Share - Statement of Financial Accounting Standards (SFAS)
No. 128 "Earnings Per Share" requires the disclosure of both diluted and basic  
earnings per share.  Basic earnings per share is based upon the weighted        
average of all common shares outstanding.  The computation of diluted earnings  
per share does not assume the conversion, exercise or contingent issuance of    
securities that would have an antidilutive effect on earnings per share.        

   Concentration of Credit Risk - The Company maintains its cash balances in
financial institutions that are insured by the Federal Deposit Insurance        
Corporation up to $100,000 each.                                                

Stock Options - The Company accounts for stock option grants using the
intrinsic value based method prescribed by APB Opinion No. 25.  Since the       
exercise price equaled or exceeded the estimated fair value of the underlying   
shares at the date of grant, no compensation was recognized in 2000 and 1999.   

   Had compensation cost been based upon the fair value of the option on the
date of grant, as prescribed by SFAS No. 123, the pro forma amounts of the      
Company's net loss and net loss per share for the three months ended December   
31, 2000 and for the years ended September 30, 2000 and 1999 would have been as 
follows:                                                                        

   Three months ended   Year Ended            Year Ended
           December 31, 2000    September 30, 2000    September 30, 1999
           ------------------   ------------------    ------------------
Net Loss                                                                        
- as reported   $   (705,839)       $  (8,125,723)        $   (548,145)       
Net Loss                                                                        
- pro forma       (2,085,771)          (8,454,209)            (548,145)       

Basic and diluted                                                               
loss per share -                                                              
as reported           $  .02)       $        (.31)              $ (.05)       
Basic and diluted                                                               
loss per share -                                                              
as reported             (.06)                (.32)                (.05)       

 The fair value of options granted in 2000 were estimated at the date of
grant using a Black-Scholes option pricing model with the following             
weighted-average assumptions, respectively: risk-free interest rates of 6.0%,   
dividend yield of 0.0%, volatility factors of the expected market price of the  
Company's common stock of 252.0% and a weighted-average expected life of the    
options of 3 years.                                                             

The Black-Scholes option valuation model was developed for use in     
estimating the fair value of traded options which have no vesting restrictions  
and are fully transferable.                                                     

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37In addition, option valuation models require the input of highly subjective     
assumptions including the expected stock price volatility.  Because the         
Company's employee stock options have characteristics significantly different   
from those of normal publicly traded options, and because changes in the        
subjective input assumptions can materially affect the fair value estimate, in  
management's opinion, the existing models do not necessarily provide a reliable 
single measure of the fair value of its employee stock options.                 

  Recent Pronouncements - In June 2000 and June 1998, the FASB issued SFAS
No. 138 and No. 133, "Accounting for Derivative Instruments and Hedging         
Activities."  This statement establishes accounting and reporting standards for 
derivative instruments, including certain derivative instruments embedded in    
other contracts, and for hedging activities. The adoption of these statements   
is not expected to have a material effect on the Company's financial            
statements.                                                                     

NOTE 2  -      BASIS OF PRESENTATION AND MANAGEMENT'S ACTIONS TO OVERCOME       
OPERATING AND LIQUIDITY PROBLEMS:                             

The accompanying 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  
reported substantial losses since inception.  The Company's viability as a      
going concern is dependent upon its ability to achieve profitable operations    
through increased sales, obtaining additional financing or receiving additional 
capital.                                                                        

 As discussed in Note 1, the Company is in the development stage and has
not realized revenues since commencement of the development stage.  The         
Company's development of the digital content cloaking technology is at an early 
stage and the time and money required to develop the commercial value and       
marketability of the Company's proposed products cannot be estimated.  The      
Company expects research and development activities to continue and require     
significant cash expenditures for an indefinite period in the future.  All of   
these factors raise substantial doubt about the ability of the Company to       
continue as a going concern.                                                    

Management believes that actions it has undertaken to develop the     
technology will eventually provide it with the opportunity to generate the      
additional revenues needed to realize profitable operations and/or obtain the   
necessary financing to meet operational obligations.                            

NOTE 3  - EQUIPMENT, FURNITURE AND FIXTURES:                                    

Equipment, furniture and fixtures are summarized as follows:          

             December 31,        September 30,
          2000                2000
             ------------        -------------
Machinery and equipment        $  39,955           $  27,938                    
Furniture and fixtures             4,615               4,615                    
             ------------        -------------
              44,570              32,553

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38Less:  Accumulated                                                              
depreciation                     8,826                2,438                   
          $  35,744            $  30,115
             ============        =============

NOTE 4  - DEBENTURES:                                                           

During the fiscal year ending September 30, 2000, the Company issued  
convertible debentures totaling $479,800, of which $454,800 was received in     
cash and $25,000 represented issuance costs.  Approximately $85,000 of the      
proceeds from debentures was received and utilized before commencement of the   
development stage company.  The debentures bear interest at 5% per annum.  The  
debentures will automatically convert into 4,672,869 shares of SunnComm, Inc.   
common stock upon the effectiveness of a Registration Statement (Form SB-2).    
If the registration statement does not become effective, the debentures will    
mature one year from the date of issuance.                                      

Certain debentures were issued with detachable "A" warrants totaling  
1,665,000 and "B" warrants totaling 1,665,000.  Each "A" warrant provide the    
debenture holder the right to buy a share of common stock at the opening bid    
price and each "B" warrant at $2 above the opening bid price of the Company's   
first underwritten public offering following the issued date.  The "A" warrants 
may be exercised at any time after the first day of the seventh month following 
the issue date and before the last day of the eighteenth month.  The "B"        
warrants may be exercised at any time after the first day of the nineteenth     
month following the issue date and before the last day of the thirtieth month   
following the issue date.  The Company has the right to redeem any of the "A"   
and "B" warrants at $15 and $20, respectively, per share of common stock.  The  
warrants are valued at nil based on the exercise of warrants are contingent     
upon the Company achieving an uncertain event.                                  

At September 30, 2000, 1,665,000 of "A" and "B" warrants, respectively, were    
outstanding.                                                                    

NOTE 5  - INCOME TAXES:                                                         

The Company has a net operating loss carryforward of approximately    
$2,947,000 which can be used to offset future taxable income through September  
2020.  Deferred tax assets of approximately $1,200,000 at September 30, 2000,   
representing the tax benefit of the loss carryforwards have been offset by 100% 
valuation allowances.  A valuation allowance is provided when it is more likely 
than not that some portion of the deferred tax asset will not be realized.  The 
Company has determined, based on the Company's most recent loss, that a full    
valuation allowance is needed at September 30, 2000.                            

 The Company's previous net operating losses that were incurred from its
inception through April 30, 2000 (the pre-development stage) are not deductible 
for income tax purposes.  The Company did not meet the continuity of business   
requirements of Section 382 (c) of the Internal Revenue Code.                   

NOTE 6  - DISCONTINUED OPERATIONS:                                              

In May 2000, the Company decided to exit the entertainment business.  

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39In June 2000, the assets of the discontinued entertainment operation were sold  
to a former officer for consideration of the assignment of outstanding and      
contingent liabilities. In connection with the discontinuance of the            
entertainment business, the Company incurred a one-time charge of $642,339 net  
of income tax benefits, related to the disposition. In addition, in April 1999, 
the Company exited the packaging business and sold all of the corresponding     
assets to certain former employees in exchange for the assumption of            
outstanding and contingent liabilities. In connection with the disposition of   
the packaging business, the Company incurred a one-time gain of $169,846, net   
of tax benefits, related to the disposition. The disposition of the             
entertainment business in the fiscal year ending September 30, 2000 and the     
disposition of the packaging business in the fiscal year ending September 30,   
1999 represent the disposal of a business segment under Accounting Principles   
Board ("APB") Opinion No. 30. Accordingly, results of these operations have     
been classified as discontinued, and the prior period has been restated.        

Loss from discontinued operations are as follows:                               

                              Fiscal Year Ending
                         September 30,
                              ------------------
                            2000            1999
                            ----            ----
                                           (Unaudited)
Pretax (loss) from                                                              
discontinued operations               $(4,536,926)     $  (717,991)           
Pretax (loss) on disposal of                                                    
entertainment business segment           (642,339)               -            
Pretax gain on disposal of                                                      
packaging business segment                      -          169,846            
Income taxes                                     -                -             
Net loss from discontinued                                                      
operations                            $(5,179,265)     $  (548,145)           
                           ============     ============

Assets and liabilities of the discontinued operations were as follows:          

                           September 30,
                           -------------
                           2000           1999
                           ----           ----
                                           (Unaudited)

Current assets                             $   -       $   22,266               
Equipment, furniture and fixtures, net         -           33,581               
Current liabilities                     (196,900)        (215,309)              
Net (liabilities) discontinued                                                  
operations                          $  (196,900)      $ (159,462)             
                           ============     ============
NOTE 7  - STOCK OPTION PLAN:                                                    

    The Company has a stock option plan whereby the Company will reserve up to
15,000,000 shares of its common stock for the purpose of granting options to    
purchase such shares (the "Options") pursuant to the Plan.  Options granted     
under the plan may be either non-statutory stock options ("NSO") or incentive   

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40stock options ("ISO") pursuant to section 422 of the Internal Revenue Code.     
Options may be granted to either employees, directors or consultants, as        
determined by the Board of Directors or by a committee appointed by them.       
Options shall be deemed to be NSO Options unless the applicable option          
agreement provides that the Options evidenced by such agreement are ISO         
Options.  The Board shall determine the exercise price, vesting requirements,   
exercise period, conditions of exercise and all other terms of Options granted  
under this Plan.                                                                

No Option, or any right or interest in any Option, may be transferred,
whether voluntarily or involuntarily, other than by death of an Option holder,  
unless such transfer is approved by the Board.                                  

 Except as may otherwise be provided in an Option Agreement or expressly
authorized by the Board in writing, in the event that the Employee, Director or 
Consultant relationship between the Option Holder and the Company without cause 
while the terminated Option Holder holds any unexercised Options, all such      
Options that were not exercisable at the time of termination shall be deemed to 
have expired on the date of termination and all such Options that were          
exercisable at the time of termination may be exercised by the Option Holder    
for a period of thirty (30) days from the date of termination provided that the 
exercisable options would not have expired earlier.  Except as may be provided  
for, in the event that the Employee, Director or Consultant relationship        
between the Option Holder and the Company is terminated with cause, all such    
Options held by the Option Holder, whether exercisable or not, shall be deemed  
to have expired on the date of termination.                                     

Outstanding Options are as follows:                                   

       Shares      Exercise Price     Expiration
Exercise Date        Issuable    Per Share          Date                    
-------------        --------    --------------     -----------             

June 2000         2,000,000       $  .20           June 2005            
September 2000      250,000       $ 1.00           September 2003       
September 2000      600,000       $  .10           May 2001             
November 2000     5,750,000       $  .24           November 2010        
Total Options                                                           
Outstanding at                                                        
December 31, 2000  8,600,000       $  .10-1.00                            
=========                           

Options under the Stock Option Plan are summarized as follows:        

                                        Weighted
                           Shares      Average
                               Under Option   Exercise Price
                               ------------   --------------

Options outstanding at October 1, 1999           -         $    -               
Options granted                          2,850,000              .25             
Options expired/withdrawn                        -              -               
Options exercised                                -              -               

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41Options outstanding at                                                          
September 30, 2000                      2,850,000              .25            
Options granted                          5,750,000              .20             
Options expired/withdrawn                        -                -             
Options exercised                                -                -             
Options outstanding at                                                          
December 31, 2000                       8,600,000              .22            
Option price per share                 $.10 - 1.00               -              
Options exercisable-                                                            
Number of shares                    2,850,000         $    .25        

The following table summarizes option data as of December 31, 2000:   

                                                        [Enlarge/Download Table]
                                                                                      

                                   Weighted-                                          
                                   Average        Weighted-                  Weighted-
                                   Remaining      Average                    Average  
Range of              Number       Contractual    Exercise    Number         Exercise 
   Exercise Prices    Outstanding     Life        Price     Exercisable      Price    
------------------    -----------  -----------    ---------   -----------    ---------

$ .10 to .20        8,350,000      7.94         $  .19     2,600,000       $  .18     
$ 1.00                 250,000      2.75         $ 1.00       250,000       $ 1.00    
                       ---------                              ---------               
                       8,600,000                           2,850,000                  


NOTE 8  - COMMITMENTS AND CONTINGENCIES:                                        

SEC Investigation of discontinued operations:                         

In February 2000, the SEC initiated a formal investigation, HO 7499 "In the     
Matter of Desert Winds Entertainment Corporation (#6)" to determine whether     
there had been violations of the securities laws with respect to the offer,     
sale, and/or issuance of Desert Winds Entertainment stock during the period     
from January 1999 to March 2000. The specific nature and status of the          
investigation are unknown as SEC policy prohibits disclosure of such            
information during the course of an inquiry. If it is ultimately determined     
that the Company violated federal securities laws, the Company may incur        
substantial fines or penalties or become subject to lawsuits by shareholders.   
There is no assurance that the investigation will be limited to actions taken   
by the Company and certain former officers and directors.  Also, there is no    
assurance that the investigation will be limited to such actions taken by the   
Company and its officers and directors between January 1999 and March 2000.     
Should the Company incur substantial fines or penalties or face litigation from 
shareholders, it may be forced into insolvency.                                 

Litigation from discontinued operations:                              

 In May 2000, an action was filed against the Desert Winds Entertainment
Corporation in the United States District Court for the Eastern District of     
California.  The plaintiff seeks recovery of $275,000 loaned to Ti-Mail in or   
before April 1998, plus interest to the date of recovery.                       

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42
Desert Winds Entertainment is named as a defendant because of its merger with   
Ti-Mail in December 1998.  The action is currently in the discovery phase and   
no outcome on the resolution can yet be determined.  Management believes that   
the Company has strong equitable and legal defenses against liability and       
intends to assert them.  However, an unfavorable resolution in this matter      
could materially affect the Company's future operations or cash flows and may   
force the Company to raise additional funds.                                    

   In April 2000, an action was filed against the Desert Winds Entertainment
Corporation in the United States District Court for the District of Nevada.     
The plaintiff alleges that Desert Winds Entertainment failed to repay various   
loans made by him to the Company in amounts exceeding $1,800,000 and that the   
previous management of the Company violated Federal securities laws by          
misrepresenting the economic status of the Company, use of proceeds, and by     
refusing to authorize the transfer of shares that the plaintiff claims were     
issued by the Company. Plaintiffs requested that the Company be placed in       
receivership, and requested compensatory and punitive damages in an unknown     
amount.  Should the plaintiff prevail, the damages a court may order the        
Company to pay could far exceed the capital previously raised by the Company    
and most likely curtail future capital raises. The Court could place the        
Company into receivership. The Company has filed a counterclaim alleging that   
the plaintiff personally, and through a corporation he owned and controlled,    
caused shares of Company stock to be issued that were not authorized or         
approved by the Company. The Counterclaim seeks actual, compensatory and        
punitive damages in an amount to be proven at trial. The Company also requests  
that the Court to order the plaintiff to indemnify and hold the Company         
harmless from any claims brought by reputed shareholders of the Company and to  
whom the plaintiff sold unauthorized share certificates. Furthermore, the       
Company seeks reimbursement for attorney fees and costs. Management is          
committed to vigorously defending the Company.  No outcome of resolution can    
yet be determined.  However, an unfavorable resolution of this matter could     
materially affect the Company's future operations or cash flows.                

Liabilities from Discontinued Operations:                             

    Liabilities, either real or contingent, that were assumed by other parties
in connection with the disposition of former businesses can become the          
responsibility of the Company for repayment.  The Company's cash flows and      
results of operations in particular quarterly or annual periods could be        
adversely affected if any such actions occur.                                   

Leases - In October 2000, the Company entered into a new lease agreement that   
commences in March 2001 and expires in March 2005.  The following is a schedule 
of future minimum rental payments required for all non-cancellable operating    
leases:                                                                         
 Year Ending September 30,
 -------------------------

2001    $136,147      $134,450    $    1,697            
2002     187,548       185,724         1,824            
2003     197,709       194,733         2,976            
2004     209,286       209,286             -            
2005      83,160        83,160             -            
-------       -------         -----   
$813,850      $807,353    $    6,497    

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43Rent expense for operating leases for the year ended September 30, 2000 was     
$18,712.                                                                        

Employment Agreements - Two of the Company's officers have employment 
agreements. One of the officers' agreements has a five year term effective June 
1, 2000 and stipulates that a minimum annual base salary of $125,000 will be    
payable over the term. This agreement shall automatically renew for an          
additional three-year period unless either party gives written notice of        
non-renewal at least 30 days prior to the expiration date. If at the end of the 
initial term, the employment contract is not renewed by the Company, the        
officer is entitled to 2.99 times his annual salary at the time of termination. 
The other officer's agreement has a two-year term effective June 1, 2000 with a 
minimum annual base salary of $75,000. This agreement shall automatically renew 
for an additional two-year period unless either party gives written notice of   
non-renewal at least 30 days prior to the expiration date. Officers' salaries   
totaled approximately $65,000 for the fiscal year ending September 30, 2000.    

Consulting Agreements - In August 2000, the Company entered into an   
agreement with a management consultant that expires in August 2001. The         
consultant will provide direct assistance in strategy development and partner   
negotiations to help bring SunnComm's products to market in the audio, video,   
publishing and software industries and help sign on at least three major        
software vendors to licensing deals. The consultant will also advise management 
on product development strategies, business relationships and hiring practices. 
In consideration for the services provided, the Company agreed to pay the       
consultant $2,500 upon execution of the agreement and $2,000 per month          
beginning September 1, 2000 during the term of this agreement. In addition, the 
Company issued 250,000 shares of common stock to the consultant as a signing    
bonus upon the execution of the agreement. The Company recorded a prepaid       
expense of $62,500 upon issuance. At September 30, 2000, the Company had a      
remaining prepaid balance of $52,082. The Company also agreed to issue 750,000  
stock options at an exercise price of $.22. The Company will issue 495,000 of   
these stock options upon the consultant's signing of the Company's first major  
licensing agreement with a large Independent Software Vendor (a company having  
revenues in excess of $25,000,000 per year). The Company will issue the         
remaining 255,000 stock options upon the signing of the third such licensing    
agreement. At September 30, 2000, the Company had not issued any stock options  
to the consultant.                                                              

  In June 2000, the Company entered into an agreement that expires in June
2001 with a public relations and communications services firm. The Company      
issued 500,000 shares in exchange for the use of their services over the life   
of the agreement. The Company recorded a prepaid expense of $87,500 at the      
commencement date. At September 30, 2000, the Company had a remaining prepaid   
balance of $58,333.                                                             

In May 2000, the Company entered into an agreement that expires in    
November 2000 with a firm that provides private placement and broker/investor   
relations. The Company issued 300,000 shares in exchange for the use of their   
services over the life of the agreement. The Company recorded a prepaid expense 
of $75,000 at the commencement date. At September 30, 2000, the Company had a   
remaining prepaid balance of $25,000. In addition, the agreement states that    
for every $50,000 raised by the firm, the Company will pay a flat rate of       
$10,000. At September 30, 2000, there have been no funds raised by this firm.   

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44NOTE 8 -  RELATED PARTY TRANSACTIONS:                                           

  Technology Development Agreement - During 2000, the Company entered into
an assignment agreement whereby the Company was granted 100% of the rights,     
title and interest to a proprietary Internet digital rights management system.  
Upon execution of this agreement, the Company issued 2,000,000 shares of its    
common stock to two parties. One of the parties is an Officer and Director of   
the Company who controlled the joint interest in the acquired technology. The   
other party is a company named Designer Products Corporation. The transaction   
was recorded at the historical cost basis of $30,000 for the development costs  
of the technology incurred. The technology costs were development costs as the  
technology had still not reached technological feasibility and were recorded as 
purchased research and development and expensed in the period incurred.         

 The Company also agreed to deliver 4,000,000 shares of its common stock
into escrow. Upon delivery of the Prototype and assignment from the developer   
of all right, title and interest of the technology, the Company will release    
2,000,000 shares from escrow and issue the shares equally to both parties noted 
above. In addition, upon the development or delivery to market any product      
based upon prototype, provisional patent or any subsequent utility patent, the  
Company will release the remaining 2,000,000 shares equally to both parties. At 
September 30, 2000, the Company had not issued any of the 4,000,000 shares held 
in escrow.                                                                      

According to the terms of the agreement, the Company shall pay fifty  
percent (50%) to both parties, who will share equally, of any and all royalty   
revenue generated from the licensing or other commercial exploitation of any    
such products. Moreover, the Company agrees not to assign the technology to any 
third party for five years unless written authorization to initiate such an     
assignment is given. In addition, the Company agrees that should the Company    
become insolvent through bankruptcy or cease to function as a corporate entity, 
then the Company agrees that the technology shall automatically revert to the   
former owners and that the Company shall execute any and all documents,         
instruments and assignment necessary to perfect the reversion.                  

In March 2001, an Officer and Director of the Company assigned his  
rights, title and interest to receive 2,000,000 shares of common stock that was 
held in escrow and twenty-five (25%) of royalties derived from future revenues  
earned from the licensing of the Internet digital rights management system to   
the Company.                                                                    

 Formation and Sale of Desert Entertainment, Inc. - In 2000, the Company
along with a previous officer formed Desert Entertainment, Inc. and held a 49%  
interest in this entity. In June 2000, the Company sold their 49% interest to   
the previous officer for the consideration of the cancellation of 500,000       
shares of the former officer's common stock holdings.                           

   Consulting Fees - During 2000, the Company issued 2,000,000 shares of its
common stock to Planet 10 Partners for management consulting services valued at 
$350,000. The officers of the Company are also shareholders of Planet 10        
Partners.                                                                       

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  During 2000, the Company paid $52,000 for management consulting services
to S.B. Corporate Consulting. An officer of the Company is also a shareholder   
of S.B. Corporate Consulting.                                                   

NOTE 9 -  SUBSEQUENT EVENTS:                                                    

Issuances of common stock:                                            

From October 2000 through March 2001, the Company issued approximately
1,351,455 shares of its Common Stock for consulting, technology development,    
compensation, investor and public relations services for an approximate value   
of $650,000. In addition, the Company issued 500,000 shares of its common stock 
in conversion of a debt from discontinued operations of $112,500. Furthermore,  
the Company issued 760,000 shares of its common stock for cash totaling         
approximately $164,000.                                                         

Issuances of options:                                                 

 In November 2000, the Company issued 5,750,000 options to employees and
directors to purchase 5,750,000 shares of its Common Stock. The options are     
exercisable starting January 1, 2001 at $.20 per share and expire in November   
2010. The fair market value of the Company's stock at the grant date was $.24   
per share. An expense of $230,000 was recorded on the Company's books to        
recognize the difference between the exercise price per share and the fair      
market value per share at the date of grant.                                    

Issuances of convertible debentures:                                  

From October 2000 through March 2001, the Company issued approximately
$719,000 of convertible debentures. The debentures bear interest at 5% per      
annum. The debentures will automatically convert into 3,171,781 shares of       
SunnComm, Inc. Common Stock upon the effectiveness of the Registration          
Statement (Form 10-SB). If the registration statement does not become           
effective, the debentures will mature one year from the date of issuance.       
Certain debentures were issued with detachable warrants totaling 125,000. Each  
warrant provides the debenture holder the right to buy a share of common stock  
at $2 and may be exercised at any time after the first day of the sixth month   
following the registration date and before the last day of the thirty-sixth     
month following the registration date.                                          

Employment agreement:                                                 

   In January 2001, the Company entered into a two-year employment agreement
with its Vice-President of Marketing and Communications. The agreement          
stipulates that the employee shall be paid no less than $78,000 per annum and   
receive 25,000 shares of the Company's common stock on or before March 31,      
2001. The employment agreement automatically renews for an additional two-year  
period unless either party gives the other written notice of non-renewal at     
least 30 days prior to the expiration of the Term or Renewal Term.              

In addition the Company issued 700,000 options to this employee. The  
options are exercisable beginning April 1, 2001 at the rate of one-eighth (1/8) 
of the 700,000 shares each 90 days thereafter. The options are exercisable at   
$.20 per share and expire in April 2010.                                        

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Technology Development Agreement:                                     

  In March 2001, the Company entered into an agreement for the development
of their digital cloaking technology. The agreement stipulates that the Company 
shall pay the developer $869,000 and issue 1,175,000 shares of its restricted   
common stock upon achievement of certain milestones. Additionally, the Company  
agrees to pay the developer one percent of the net factory sales price on all   
sales of products incorporating the digital content cloaking technology. As of  
March 15, 2001, the Company has paid $237,500 of the purchase price and issued  
a note totaling $147,500 that bears interest at 8% per annum and is due May 30, 
2001. The remaining payments are due, without interest, as follows:             

Year ending September 30,                               
-------------------------                               
2001           $150,000                                 
2002            334,000                                 
--------                  
$484,000                  
========                  

SUNNCOMM, INC.
(A Development Stage Company) 

FINANCIAL REPORT
SEPTEMBER 30, 2000

 PART III: INDEX TO EXHIBITS
 ---------------------------
Exhibit No.                     Description                                     
-----------                     -----------                                     
3.01           Articles of Incorporation of the Company, as amended             

3.02           Current Bylaws of the Company                                    

4.01           Form of Convertible Debentures issued through June 27, 2000      

4.02           Form of Convertible Debentures issued after June 27, 2000        

4.03           Form of "A" Warrant                                              

4.04           Form of "B" Warrant                                              

10.01          Provisional Patent Assignment                                    

10.02          DP Assignment Agreement                                          

10.03          Aquilino Royalty Assignment                                      

10.04          BTEK Master Development Agreement                                

10.05          MS License agreement                                             

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10.06          Fahrenheit License agreement                                     

10.07          Will-Shown License agreement                                     

10.08          Commercial Lease, as amended                                     

10.09          Jacobs Employment Agreement                                      

10.10          Jacobs Incentive Stock Option Agreement                          

10.11          Aquilino Incentive Stock Option Agreement                        

10.12          Burg Incentive Stock Option Agreement                            

10.13          Aquilino Employment Agreement                                    

10.14          Whitmore Employment Agreement                                    

10.15          DEI Assignment and Assumption Agreement                          

10.16          Consulting Agreement                                             

10.17          Fagan Consulting Agreement                                       

 SIGNATURE
 ---------
In accordance with Section 12 of the Securities Exchange Act of 1934, the       
registrant caused this registration statement to be signed on its behalf by the 
undersigned, thereunto duly authorized.                                         

Dated this __ day of April, 2001.                                               

SUNNCOMM, INC., a Nevada corporation                                  

By:  /s/ Peter H. Jacobs                                              
------------------------------------------                  
Peter H. Jacobs, CEO, President & Director                  

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50
[CAPTION]                                                                       
EXHIBIT 3.01                                                                    

  Articles of Incorporation of the Company, as amended
FILED                                                                           
Articles of Incorporation Filing fees:                                          
In The Office Of The                                                            
(PURSUANT TO NRS 78)   Receipt #:                                               
Secretary Of State Of The                                                       
STATE OF NEVADA                                                                 
STATE OF NEVADA                                                                 
Secretary of State                                                              
November 12, 1998                                                               
No C26466-98                                                                    
DEAN HELLER, SECRETARY OF STATE                                                 

(For filing office use)                                                         
(For filing office use)                                                         

IMPORTANT: Read instructions on reverse side before completing this form.       
TYPE OR PRINT (BLACK INK ONLY)                                                  

1.   NAME OF CORPORATION: DESERT WINDS ENTERTAINMENT CORPORATION                

2.   RESIDENT AGENT: (designated resident agent and his STREET ADDRESS in       
Nevada where process may be served)                                             

Name of Resident Agent: George Ritter                                           

Street Address: 316 California Ave #1109 Reno NV 89509                          

Street No Street Name City State Zip                                            

3.   SHARES: (number of shares the corporation is authorized to issue) Numberof 
shares with par value 50,000,000 Par Value .001 Number of shares without par    
value 0                                                                         

4.   GOVERNING BOARD: shall be styled as (check one): X Directors Trustees The  
FIRST BOARD OF DIRECTORS shall consist of 2 members and the names and addresses 
are as follows (attach additional pages if necessary):                          

CINDY D. CLIFF      1234 MEADOWLARK DR.                                         
VACAVILLE, CA 95687                     

WILLIAM S. CLIFF    1234 MEADOWLARK DR.                                         
VACAVILLE, CA 95687                     

5.   PURPOSE (optional-see reverse side): The purpose of the corporation shall  
be:                                                                             

6.   OTHER MATTERS: This form includes the minimal statutory requirements to    
Incorporate under NRS 78. You may attach additional information in pursuant to  
RS 78.037 or any other information you deem appropriate.                        

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51If any of the additional information is contradictory to this form it cannot be 
filed and will be returned to you for correction. Number of pages attached.     

7.   SIGNATURES OF INCORPORATORS: The names and addresses of each of the        
Incorporators signing the articles: (Signatures may be ) (Attach additional     
pages if there are more than two for corporation)                               

CINDY D. CLIFF                                                                  
Name (print)                                                                    

1234 MEADOWLARK DR, VACAVILLE, CA 95687                                         
Address                                                                         

S/S Cindy D. Cliff                                                              
Signature                                                                       

State of California                                                             
County of Salano                                                                

This instrument was acknowledged before me on November 11, 1998, Cindy D. Cliff 
Name of Person as incorporator as incorporator                                  

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47 of DESERT WINDSENTERTAINMENT CORP of (name of party on behalf of whom instrument was executed) 

S/S Judith M. Rex                                                               
Notary Public Signature                                                         
(affix notary stamp or seal) (affix notary stamp or seal)                       

8.   CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF                                

1.   GEORGE RITTER hereby accept appointment as Resident Agent for the above    
named corporation.                                                              

S/S George Ritter                                                               
Signature of Resident Agent                                                     
11-12-98                                                                        
Date                                                                            

CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT                                           

State of California                                                             
ss.                                                                             
County of Salano                                                                

On 11-9-98 , before me, S/S Judith M. Rex Date Name and title of                
officerpersonally appeared S/S Cindy Cliff Name(s) of Signer(s)                 

SEAL                      X  personally known to me                             
                      proved to me on the basis of satisfactory evidence
JUDITH REX                                                                      
Commission #1180396          to be the person(s)whose name(s) is                
Notary Public-California     subscribed to the within instrument and            
Salano County                acknowledged to me that she executed               
My Comm. Expires May 4, 2002 the same in her authorized capacity(ies),          
             and that by her signature(s) on the

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                                         instrument the person(s) acted,
executed                                         the Instrument.                
                                              WITNESS my hand and official
seal.                                                                           

S/S Judith M. Rex                                                               

Signature of Notary Public                                                      

Though the information below is not required by law, it may prove valuable to   
persons relying on the document and could prevent fraudulent removal and        
reattachment of this form to another document.                                  

Description of Attached Document                                                
Title or Type of Document:                                                      

Document Date: Number of Pages:                                                 

Signer(s) Other Than Named Above:                                               

Capacity(ies) Claimed by Signer                                                 
Signer's Name: Cindy Cliff                                                      

Individual                                                                      
X  Corporate Officer - Title(s): Director                                       
Partner -- Limited -- General                                                   
Attorney in Fact                                                                
Trustee                                                                         
Guardian or Conservator                                                         
Other:                                                                          

Signer Is Representing: Desert Winds Entertainment Corporation                  

[CAPTION]                                                                       

CERTIFICATE OF AMENDMENT                                                        
TO THE                                                                          
ARTICLES OF INCORPORATION                                                       
OF                                                                              
DESERT WINDS ENTERTAINMENT CORPORATION                                          

Pursuant to the provisions of Title 7, Chapter 78 of the Nevada Revised         
Statutes, the undersigned officers do hereby certify:                           

FIRST: The name of the corporation is Desert Winds Entertainment Corporation    
(the "Corporation").                                                            

SECOND: The following sets forth the amendment to the following article"        

1.   Name: The name of the corporation is SunnComm, Inc.                        

THIRD: The amendment was adopted and approved by the board of directors and     
shareholders on July 6, 2000. The number of shares outstanding at the time of   
such adoption was _30,806,781_ and the number of shares entitled to             
voterthereon was _30,806,781_.                                                  

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The number of shares voted for the amendment were _15,980,250__. The number of  
votes for the amendment were sufficient for approval.                           

Dated July 6, 2000                                                              

DESERT WINDS ENTERTAINMENT                                                      
CORPORATION, a Nevada corporation                                               

By: /s/ Peter H. Jacob                                                          
------------------------------                                          
Peter H. Jacobs, its President                                          

By: /s/ Stephen Burg                                                            
---------------------------                                             
Stephen Burg, its Secretary                                             

STATE OF ARIZONA         )                                                      
) ss.                         
County of Maricopa       )                                                      

On July 6, 2000, personally appeared before me, a Notary Public, for the State  
and County aforesaid, Peter Jacobs and Stephen Burg, President and Secretary of 
Desert Winds Entertainment Corporation, respectively, who acknowledged that     
they executed the above instrument.                                             

/s/ Lynn A. Marzonie                                                            
--------------------                                                            
Notary Public                                                               

Amendment to ARTICLES OF INCORPORATION                                          
OF SunnCOmm, Inc.                                                               
Pursuant to the provisions of Title 7, Chapter 78 of the Nevada Revised         
Statutes, the undersigned officers do hereby certify:                           

FIRST: The name of the corporation is SunnComm, Inc. (the "Corporation").       
SECOND: The following sets forth the amendment to the following article:        
3. SHARES: This corporation is authorized to issue shares of Common Stock,      
$0.001 par value per share; and the total number of shares which the            
corporation is authorized to issue is 100,000,000. The Board of Directors is    
authorized, subject to limitations prescribed by law, to provide for the        
issuance of the shares of Preferred Stock in series, and by filing a            
certificate pursuant to the applicable law of the State of Nevada, to establish 
from time to time the number of shares to be included in each such series, and  
to fix the designation, powers, preferences and rights of the shares of each    
such series and the qualifications, limitations or restrictions thereof.        
Dividends on outstanding shares of Preferred Stock shall be paid or declared    
and set apart for payment before any dividends shall be paid or declared and    
set apart for payment on the common shares with respect to the same dividend    
period.                                                                         

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If upon any voluntary or involuntary liquidation, dissolution or winding up of  
the corporation, the assets available for distribution to holders of shares of  
Preferred Stock of all series shall be insufficient to pay such holders the     
full preferential amount to which they are entitled, then such assets shall be  
distributed ratably among the shares of all series of Preferred Stock in        
accordance with the respective preferential amounts (including unpaid           
cumulative dividends, if any) payable with respect thereto.                     

THIRD: The amendment was approved by the board of directors and shareholders on 
November 7, 2000. The number of shares outstanding at the time of such adoption 
was 39,465,020 and the number of shares entitled to vote thereon was            
39,465,020. The number of shares voted for the amendment were 21,311,111. The   
number of votes for the amendment were sufficient for approval.                 
Dated March 22, 2001.                                                           

SUNNCOMM, INC., a Nevada corporation                                            

By: /s/ Peter H. Jacobs                                                         
----------------------------                                                  
Peter H. Jacobs, its President                                                  

By: /s/ Stephen Burg                                                            
----------------------------                                                    
Stephen Burg, its Secretary                                                     

STATE OF ARIZONA    )                                                           
ss.                 )                                                           
County of Maricopa  )                                                           

On March 22, 2001, personally appeared before me, a Notary Public, for the      
State and County aforesaid, Peter Jacobs and Stephen Burg, President and        
Secretary of SunnComm, Inc. respectively, who acknowledged that they executed   
the above instrument.                                                           

/s/                                                                             
-----------------------                                                   
Notary Public                                                           

[CAPTION]                                                                       
EXHIBIT 3.02                                                                    

By-Laws                                                                         
of the                                                                          
Desert Winds Entertainment Corporation                                          

Contents                                                                        

Article I Shareholders                                                          

Section 1. Place of Meetings                                                    
Section 2. Annual Meetings                                                      
Section 3. Special Meetings                                                     
Section 4. Shareholder Powers                                                   

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Section 5.  Notice of Meetings                                                  
Section 6.  Consent to Shareholder Meetings                                     
Section 7.  Voting Shareholder List                                             
Section 8.  Quorum                                                              
Section 9.  Voting Rights                                                       
Section 10  Proxies                                                             

Article II Directors                                                            

Section 1.  Powers                                                              
Section 2   Number and Qualifications                                           
Section 3.  Election and Tenure of Office                                       
Section 4   Vacancies                                                           
Section 5.  Place of Meetings                                                   
Section 6.  Regular Meetings                                                    
Section 7.  Special Meetings - Notices                                          
Section 8   Waiver of Notice                                                    
Section 9   Directors acting Without a Meeting                                  
By Unanimous Written Consent                            
Section 10  Notice of Adjournment                                               
Section 11. Quorum                                                              
Section 12  Removal of Directors                                                
Section 13  Resignation                                                         
Section 14  Compensation                                                        
Section 15. Presumption of Assent                                               

Article III Officers                                                            

Section 1   Officers                                                            
Section 2   Election                                                            
Section 3   Subordinate Officers, Etc.                                          
Section 4.  Removal and Resignation                                             
Section 5.  Vacancies                                                           
Section 6.  Chairman of The Board                                               
Section 7.  President                                                           
Section 8.  Executive Vice Presidents and Vice Presidents                       
Section 9.  Secretary and Acting Secretaries                                    
Section 10. Treasurer and other Financial positions                             

Article IV Executive and Other Committees                                       

Section 1 Committees, Consultants and Advisors                                  

Article V Corporate Records, Reports and Documents                              

Section I. Records                                                              
Section 2. Inspection of Books and Records                                      
Section 3. Certification and Inspection of By-laws                              
Section 4. Checking Accounts, Checks, Drafts,                                   
Section 5 Contracts, Etc., -- How Executed                                      
Section 6. Annual Report                                                        

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Article VI Certificates and Transfer of Shares                                  

Section 1. Certificates for Shares                                              
Section 2. Transfer on the Books                                                
Section 3. Lost or Destroyed Certificates                                       
Section 4' Transfer Agents and Registrars                                       
Section 5. Closing Stock Transfer Books                                         

Article VII Corporate Seal                                                      

Section 1. Corporate Seal                                                       

Article VIII Amendments to By-Laws                                              

Section 1. By Shareholders                                                      
Section 2. Powers of Directors                                                  
Section 3. Record of Amendment                                                  

ARTICLE I 
Shareholders

Section 1, Place of Meeting.                                                    

Meetings of shareholders, including annual, or special may beheld at the office 
of the Corporation in the State of Nevada, or at such other places as may be    
more timely appropriate, or at such locations as may be elected by the Board of 
Directors for reasons specific to the business of the Corporation.              

Section 2 Annual Meetings.                                                      

a) The annual meetings of shareholders shall be held on the final Thursday of   
each October in each year, if not a legal holiday. If a legal holiday, then the 
meeting shall be held on the next succeeding business day, at 1:30 PM., time    
local to the chosen geographical area (Example: Pacific Time; Mountain Time; or 
Eastern 'lime.). However, the Board of Directors may elect to set the annual    
shareholders' meeting on a weekend day, if this is deemed appropriate in        
anygiven instance, The actual date and hoar of any respective annual            
shareholders' meeting maybe adjusted if. deemed appropriate by the Board of     
Directors. The adjusted date should not exceed sixty (60) days prior to, or     
subsequent to, the regular date as reflected in these By-Laws.                  

b) At such day and hour as the shareholders' annual meeting shall be held,      
there shall be an election of the members of the Board. of Directors of the     
Corporation, by plurality vote. Reports shall be heard; proposals shall be      
heard, and voted upon if appropriate, and general affairs of the Corporation    
shall be considered. Such other business as may properly be brought before the  
meeting and requiring such, shall be transacted.                                

Section 3. Special Meetings.                                                    

Special meetings of the shareholders, for any purpose or purposes whatsoever,   
may be called by the President, or by the Board of Directors, or by any two or  
more members thereof, or by one or more shareholders holding not less than one  
fifth (1/5) of the voting power of the Corporation.                             

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Section 4. Shareholder Powers                                                   

Shareholders having by ownership or proxy at least fifty one (51%) percent of   
the voting power, upon calling and holding a special meeting, or at an annual   
meeting, of the shareholders may, without an open statement of reason, dismiss  
the entire Board of Directors, or dismiss certain members of the Board of       
Directors, including the Chairman, without an open statement of reason. A       
quorum of shareholders undertaking such action, need only state in the Minutes  
of the Special Meeting, that the action was taken in the best interests of the  
shareholders. Notice of such action must be given to tile respective members of 
the Board, or to all members of the Board or to the Chairman, in writing.       
Aquorum of shareholders, having substantial management and working knowledge of 
the business of the corporation, may with stated, good and reasonable reason,   
issue a formal request to the Board to dismiss any officer, consultant or other 
employee, if for the good of the shareholders. A majority vote of shareholders  
cannot break a contracted individual serving the corporation, but can issue     
instructions to the Board to, not renew a respective contract, if for the best  
interests of the shareholders..                                                 

Section 5, Notice of Meetings.                                                  

a) Notices of meetings, annual or special, shall be given in writing to the     
shareholders entitled to vote. Notice shall be prepared accompanied by a proxy  
form, and mailed by the Corporation's stock transfer agency. In lieu of this    
procedure, Notice maybe given, being signed by the corporate secretary; the     
assistant secretary; the president; or a vice president.                        

b) Notices of meetings shall be sent to the shareholder's address as reflected  
on the books of' the corporation's stock transfer agent or registrar, and shall 
be postmarked not less than twenty (20) days nor more than sixty (60) days,     
prior to a scheduled meeting.                                                   

c) Notice of any meeting of shareholders shall specify the place, the day, and  
the hour of the meeting, and the general nature of points to be covered, as     
well as noting the most important issues to be covered. In cases of special     
meetings, the specific nature of the business to be transacted and voted upon   
shall be made clearly evident.                                                  

d) In event of the unusual need for an affirmative vote by shareholders, in     
order for the corporation to proceed with a transaction for such as would be    
voted by the Board of Directors to be a benefit to the corporation, but wherein 
the allowable time factor precludes a formal notification to shareholders in    
general, then communication to such a group of shareholders as hold over fifty  
percent (50+%) of the control, voting shares of the corporation, by means of    
phone or facsimile shall be acceptable. Signatures expressing an affirmative    
vote, or veto, of over fifty percent of the voting shares of the corporation,   
received by means of facsimile, directed to the Chief Executive Officer of the  
corporation or to the Chairman of the Board, shall be acceptable, and shall be  
enforceable as a bona fide vote of the shareholders, empowering the management  
of the corporation to immediately proceed with the respective transaction; and  
shall be presented by the Corporate Secretary For automatic ratification at the 
next formally scheduled annual or special meeting of the corporation's          
shareholders.                                                                   

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In a case such as this described, hard copy with original signatures, of all    
such facsimiles sent by shareholders voting in excess of the required 50+%,     
shall be immediately mailed by the said shareholders to the Corporate           
Secretary, for the corporation's legal records.                                 

e) When a meeting is adjourned (a Recess) for an uncertain period, of thirty    
days or more, notice of the adjourned (in effect, postponed) meeting shall be   
given as in case of an original meeting. Otherwise, upon an adjournment for a   
specific period of hours or days when at such hour or day, the business of the  
meeting is scheduled to be completed, it shall not be necessary to give any     
notice of the continuance or of the business to be transacted, other than by    
announcement the meeting at which such adjournment is taken.                    

Section 6. Consent To Shareholder's Meeting.                                    

The transactions of any meeting of shareholders, however called and noticed,    
shall be valid as though had at a meeting duly held after regular call and      
notice, if a quorum be present either in person or by proxy. Before or after    
such meeting, all shareholders entitled to vote and not present in person, nor  
having executed a proxy for said meeting, shall sign a written waiver of        
noticeor a consent of the holding of such meeting, or the minutes of said       
meeting shall be approved at the next regular or special meeting of the         
shareholders, when at such time the transaction(s) conducted at the subject     
meeting shall be ratified. All waivers, consents and approvals by shareholders  
shall be maintained by filing a copy of same with the records of the            
corporation along with a copy of the minutes of any meeting. The originals      
shall be maintained in separate portfolio or binders, in conjunction with and   
in close proximity to the Books of Record of original Minutes of the            
Shareholder Meetings (Two sets of these documents need to be maintained for     
legal purposes, in event of the destruction of one set.)                        

Section 7. Voting.                                                              

The agent or officer having charge of the stock transfer books of the           
corporation shall make, at least twenty days before each meeting of             
stockholders, a complete list of the stockholders entitled to vote at such      
meeting, or any adjournment thereof; arranged in alphabetical order, with       
address of and number of shares held by each, which list, for a period of       
twenty days prior to such meeting shall be kept on file at the principal office 
of the corporation and shall be subject to inspection by any stockholder at any 
time during usual business hours. Such list shall also be produced and kept     
open at the time and place of the meeting and shall be subject to the           
inspection of any stockholder during the whole time of the meeting. A stock     
transfer book comprised of copies of 'proof of transfer pages' received by the  
corporation from time to time direct from the transfer and registrar agent, or  
a transfer book maintained by the corporation, if corporation acts as its own   
stock transfer agent, with said corporate stock records Certified by the        
Secretary and President, shall be prima facie evidence as to who are the        
stockholders entitled to vote and to examine such stock transfer books.         

Section 8. Quorum.                                                              

a) That "majority" of the shares entitled to vote, shall equate to a quorum,    
and shall be at least fifty one (51%) percent of the issued voting shares of    
the corporation.                                                                

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The holders of a majority of the shares entitled to vote thereat, present in    
person, or represented by proxy, shall be requisite and 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.                                                                  

b) If such majority shall not be present or represented by any meeting of the   
shareholders, the shareholders entitled to vote thereat, present in pen on, or  
by proxy4 shall have 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 the meeting as   
originally notified.                                                            

Section 9. Voting Rights.                                                       

a) The Company may have one (1) class of common shares, or two (2) classes of   
common shares: A-Common Stock and B-Common Stock; and Preferred Stock, one (1)  
class or Class A and Class B. If two classes of Preferred shares, then each     
share of Class B Preferred Stock shall represent one thousand (1000) votes, and 
shall be non-transferable, except by vote of a majority of duly authorized and  
issued Class B Preferred shareholders.                                          

b) Only such persons whose names and shares entitled to vote stand on the stock 
records of the corporation on the day of any meeting of the shareholders, or on 
such other day prior to any meeting of the shareholders, as may be determined   
by the Board of Directors, as the date for determination of shareholders of     
record4 shall be entitled to vote at such meeting. Each Common Share shall be   
entitled to one vote. Each share of Class-B Preferred Stock shall be entitled   
to 1,000 votes. Class A-Preferred has no voting rights Cumulated voting shall   
not be allowed.                                                                 

Section l0 Proxies.                                                             

At all meetings of stockholders, a stockholder may vote by proxy executed in    
writing by the stockholder or by his duly authorized attorney in fact. Proxies  
must be filed before or at the time of any shareholders meeting. Proxies are to 
be filed with the secretary of the corporation, or another entity, such as the  
corporate registrar, if these types of services are provided.                   

ARTICLE 11
Directors 

Section 1. Powers.                                                              

Subject to the limitation of the Articles of Incorporation; of the By-laws, and 
the law of the State of Domicile of the corporation, all corporate powers shall 
be exercised by, or under the authority of the Board of Directors; and the      
business affairs of this corporation shall be exercised under authority of the  
Board of Directors, subject to all action as authorized or approved, by the     
majority vote of the shareholders.                                              

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Section 2. Number and Qualification.                                            

The authorized number of directors of the corporation shall be no less than two 
(2) but any additional number of directors may be elected according to the      
discretion and vote of the shareholders entitled to exercise the majority of    
the voting power of the corporation. The corporation shall have an even number  
of directors, and a Chairman. By majority vote of the shareholders, a Board of  
Directors may be replaced by a Board of Trustees.                               

Section 3. Election and Tenure of Office.                                       

The Directors shall be elected by ballot at the annual meeting of the           
shareholders, and shall generally serve for one year or until their successors  
have been elected and have qualified. Their term of office shall begin          
immediately following an election. Exception: Chairman of The Board, or any     
other director being under specific contract with the corporation creating a    
circumstance legal but contrary to the general rule, or in event of an unusual  
circumstance, whereby the Board or some member of the Board would be dismissed  
prior to the end of a twelve month period..                                     

Section 4 Vacancies                                                             

a) Vacancies in the Board of Directors may be filed by a majority vote of the   
remaining directors, even though less than a quorum, or by a sole remaining     
director, and each director elected shall hold office until his successor is    
elected at an annual meeting of shareholders or at a special meeting called for 
that purpose Exception: Any director elected by the Board of Directors to fill  
a vacancy, may be relieved of their directorship and a replacement elected by   
the Board of Directors.                                                         

b) The shareholders may at any time elect a director to fill any vacancy not    
filled by the directors, and may elect additional directors at a meeting        
whereby shareholder's voting authorizes an increase in the number of directors. 

e) A vacancy or vacancies shall be deemed to exist in case of the death,        
resignation or removal of any director, or if the shareholders shall increase   
the authorized number of directors, but shall fail at said meeting at whichsuch 
increase is authorized, or at an adjournment thereof, to elect the additional   
director(s) provided for.                                                       

d) If the Board of Directors accept the resignation tendered by a director, to  
take effect at a future time, the Board or the shareholders, shall have the     
power to elect a successor to take office when the said resignation shall       
become effective.                                                               

e) No affirmative vote for reduction in number of directors shall have the      
effect to removal of any director prior to expiration of his term of office.    

Section 5. Place of Meetings.                                                   

Meetings of the Board of Directors shall be held at the Executive Offices of    
the corporation or elsewhere, or at any location designated for that purpose    
from time to time, by resolution of the Board of Directors or written consent   
of all members of the Board4 given before or after the meeting and filed with   
the Secretary of the corporation.                                               

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A control shareholder or holder of proxies for at least 51% of the voting       
shares may attend any meeting of the Board of Directors, and may express        
opinions, but may not vote.                                                     

Section 6. Other Regular Meetings.                                              

Regular meetings of the Board of Directors shall be held at such time as shall  
be fixed by resolution of' the Board and under no circumstances less than once  
a year.                                                                         

Section 7 Special Meetings - Notices.                                           

a) Special meetings of the Board of Directors for any purpose or purposes shall 
be called at any time by the President, or if he is absent or unable or         
refusesto act, by the Executive Vice President, or by any Vice President, or    
any two directors.                                                              

b) Written notice of the time and place of special meetings shall be delivered  
personally to the directors or sent to each director by letter, facsimile or by 
telegram or other type of express mail, charges paid, addressed to him at the   
address as it is shown upon the records of the corporation, or to another       
company office in which any respective director operates, or if it is not shown 
on such records as are readily ascertainable, then at the place in which the    
meetings of the directors are regularly held. In event such notice is mailed by 
any class, telegraphed, or sent by facsimile, it shall be done so in a time     
frame which under normal circumstances would assure delivery of the notice at   
least 24 hours prior to such meetings. Such means of notification as provided   
above shall be due, legal, and personal notice to any director.                 

Section 8. Waiver of Notice.                                                    

When all of the directors arc present at any director's meeting, however called 
or noticed, and sign a written consent thereto on the records of such meeting,  
or if a majority of the directors are present, and if those present sign a      
waiver of notice in writing, whether prior to or after the holding of such      
meeting, and thereafter said waiver shall be filed with the secretary of the    
corporation, the transactions thereof arc as valid as if had at a meeting       
regularly called and noticed. In event only a majority of the directors are     
present, but the majority number of directors present is that which shall be    
required to carry a vote, had the total number of directors of the corporation  
been present, and those present vote unanimously for or against any proposition 
of the corporation's business, the transactions thereof are as valid as if had  
at a meeting regularly called and noticed, and attended by the total of the     
corporation's board members, since the attendance of all of the corporation's   
board members would not alter the outcome of the vote as carried.               

Section 9. Directors Acting in a Quorum Only Without a Meeting By Written       
Consent.                                                              

Any action required or permitted to be taken by the Board of Directors, may be  
taken without a physical meeting, and shall carry the same force and effect as  
if done by the required majority number of board members, as if had at a        
meeting regularly called, noticed and attended by the same majority of board    
members or by the total number of board members.                                

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Any document or certificate relating to an action so taken by written consent,  
shall state thereon that the carrying vote was taken by written consent of the  
required majority of the Board of Directors of the corporation, in lien of a    
physical meeting called and noticed, and that the By-Laws of the corporation    
authorize the directors to so act, when deemed necessary for the best benefit   
of the corporation.                                                             

Section 10. 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.   

Section 11. Quorum.                                                             

a) That 'majority' of directors necessary to constitute a quorum, or to carry a 
vote, either at a meeting with only a quorum in attendance, or with the total   
of the Board of Directors in attendance, shall be one half of the number of     
directors, plus at least one (+1). In event all the directors are in attendance 
at any meeting of the board, then, one half of the number of directors plus one 
additional member shall be required to carry an affirmative vote or veto on any 
transaction In event one half of the directors vote affirmative and one half    
vote against any transaction or proposed proposition placed before the board,   
then, the Chairman must be the additional 'one' (1) and shall cast the deciding 
vote for or against that as was proposed. '[he heretofore stated requirements   
shall also be requirements for directors acting as a quorum without a meeting.  

b) A 'majority' of the number of directors as duly installed, according to the  
Articles or By-Laws shall be necessary to constitute a quorum for the           
transaction of the corporation's business, and any action requiring a quorum of 
the directors to be present at any meeting.                                     

Section 12. Removal of Directors.                                               

Any and all of the directors may be removed for cause by vote of the            
shareholders or by action of the board. Directors may be removed without cause  
only by the shareholders.                                                       

Section 13. Resignation.                                                        

A director may resign at any time by giving written notice to the board, the    
president or the secretary of the corporation. Unless otherwise specified in    
the notice, the resignation shall take effect upon receipt thereof by the board 
or such officer, and the acceptance of the resignation shall not be required to 
render the resignation effective.                                               

Section 14. Compensation                                                        

No compensation shall be paid to directors as such, for their services, except  
by resolution of the board, a fixed sum and expenses for actual attendance at   
each regular or special meeting of the board may be authorized. Nothing herein  
contained shall be construed to preclude any director serving the corporation   
in any other capacity and receiving compensation therefore.                     

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Section 15. Presumption of Assent                                               

A director of the corporation who is present at a meeting of the directors at   
which action on any corporate matter is taken who does not vote shall be        
presumed to assent to the action taken unless his dissent shall be entered in   
the minutes of the meeting, or unless he shall file his written dissent to such 
action with the person acting as the secretary of the meeting before the        
adjournment or immediately after the adjournment of' the meeting. Such right of 
silent dissent' call be ruled against, at the beginning of any such meeting,    
arbitrarily by the Secretary of the corporation, or by the acting secretary of  
the meeting, or by the acting secretary of the meeting at the direct request of 
any one director or all directors. Such right to dissent shall not apply to a   
director who initially voted in favor of such action or transaction.            

ARTICLE III 
Officers

Section 1. Officers.                                                            

The officers of the corporation shall be a President; a Secretary; a Treasurer; 
'and at the discretion of the Board', an Executive Vice President; one or more  
Executive Vice Presidents of various corporate divisions or departments; one or 
more Vice Presidents; one or more Assistant Secretaries; one or more Assistant  
Treasurers; and such other officers as may be appointed in accordance with      
provisions of Section 3 of this Article. One person may hold mote than one      
office excepting those offices of President and Secretary.                      

Section 2. Elections                                                            

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 or   
such officer(s) who may hold a contract, executed to retain such officer(s) for 
a designated period of time, shall be chosen annually by the Board of           
Directors, and each shall hold his office until he shall resign or shall be     
removed or advanced.                                                            

Section 3. Subordinate Offices                                                  

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 in the By-Laws or as the 
Board of Directors may from time to time determine.                             

Section 4. Removal and Resignation.                                             

a) Any officer may be removed. Either with or without cause, by a majority of   
the directors at the time in office, at any regular or special meeting of the   
board. or. except in case of an officer hosen by the Board of Directors, by any 
Officer upon whom such power of removal may be conferred by the Board of'       
Directors, according to his or her appropriate executive position.              

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b) Any officer may resign at any time by giving written notice to the Board of  
Directors or to the Secretary of the corporation. Any such resignation shall    
take effect at the date of receipt of such notice or at any later time          
specified therein; and, unless otherwise specified therein, the acceptance of   
such resignation shall not be necessary to make it effective.                   

Section 5. Vacancies.                                                           

A vacancy in any office because of death, resignation, removal,                 
disqualification or any other cause shall be filled in the manner prescribed in 
the By-Laws for regular appointments to such office.                            

Section 6 Chairman of the Board                                                 

The Chairman of the Board of Directors shall preside over and assist the Board  
of Directors in the formulation of policies to be pursued by the executive      
management of the 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 or represented at shareholders meeting and           
proceedings thereof.                                                            

Section 7 President                                                             

The President shall be the chief executive and administrative officer of the    
corporation. He shall preside at all meetings of the shareholders. He shall see 
that all orders and resolutions of the Board of Directors are carried into      
effect and in general shall perform all duties as may from time to time be      
assigned to him by the Board of Directors and shall have general charge of the  
business of the corporation. He shall from time to time obtain information      
concerning the affairs and business of the corporation and shall promptly lay   
such information before the Board of Directors, or he shall communicate to the  
Board of Directors as may in his judgment, affect the performance of their      
official duties. He may sign, alone if authorized, or with the Secretary or any 
other proper officer of the corporation, any deeds, mortgages, notes bonds,     
contracts, powers of attorney or other instruments, including certificates for  
shares of capital stock of the corporation, which the Board of Directors has    
authorized to be executed. He may employ all agents and shall perform all other 
duties as may from time to time be delegated to him by the Chairman of the      
Board of Directors.                                                             

Section 8 Vice President                                                        

The Vice President shall perform such duties and possess such powers as from    
time to time may be assigned to them by the President. In the absence of the    
President or in the event of his inability or refusal to act, the First         
Executive Vice President of corporate administration shall perform the duties   
of the President and, when so performing, shall have all the powers of and be   
subject to all the restrictions upon the President.                             

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 and directors and Shareholders, with the time and place of         
holding, whether regular of special, and if special, how authorized,            

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the notice thereof given, the names of those present or represented at          
shareholders meeting and proceedings thereof.                                   

Section 10. Treasurer.                                                          

a) The Treasurer shall keep and maintain, or cause to be kept and maintained.,  
adequate and correct accounts of the properties and business transactions of    
the corporation, including accounts of its assets, liabilities, receipts,       
disbursements, gains, losses, capital, surplus and shares. Any surplus,         
including earned surplus, paid-in-surplus and surplus arising from a reduction  
of stated capital, shall be classified according to source and shown in a       
separate account. The books of accounts shall at all reasonable times be open   
to inspection by any director.                                                  

b) The Treasurer 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 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 transactions as   
Treasurer 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.                                              

Article IV
Executive and other (.7ornmittccs 
and Consultants of Special Authorization

Section 1. Committees.                                                          

a) The Board of Directors may appoint an executive committee, and such other    
committees as may be necessary from time to time, consisting of such number of  
its members and with such powers as it may designate, consistent with the       
Articles of Incorporation and By-Laws. Such committees shall hold office or be  
eliminated at the pleasure of the board- The President may appoint such other   
committees as he may deem to be required from time to time.                     

b) The Board of Directors may contract with special consultants to the board or 
special assistants to the board or president, or special business consultants   
with certain designated powers. A "Business Consultant Advisor to The Board",   
may be authorized, in the best interests of the shareholders, to negotiate and  
formalize transactions as an authorized signature", with such transactions      
having received an affirmative vote by the Board of Directors, prior to such    
formalization.                                                                  

Article V 
Corporate Records, Reports and Documents

Section 1 - Records.                                                            

The corporation shall maintain adequate and correct accounts, books and records 
of its business and properties. All such books, records and accounts shall be   
kept at its principal Executive Offices. In event of various business           
operations divisions, all Original books and records shall be maintained in     
those Division Offices, with computer, or other transmission to the corporate   
headquarters and to the corporate Office of Records and Accounting, of all      

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appropriate documents and financial records.                                    

Section 2. Inspection of Books and Records.                                     

All books and records of the corporation shall be open to inspection of the     
directors from time to time and during reasonable working hours.                

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 open to inspection by the            
shareholders of the company, by appointment.                                    

Section 4. Checks, Drafts, Etc.                                                 

All checks, drafts or other orders for payment of money, notes or other         
evidences of indebtedness, issued in the name 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 resolution of the Board of Directors.  

Section 5. Contracts, 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 engagement,   
or to pledge it's credit, or to render it liable for any purpose or to any      
amount.                                                                         

Section 6. Annual Report.                                                       

The Board of Directors shall cause an annual report or statement to be sent to  
the shareholders of this corporation not later than 120 days after the close of 
the fiscal or calendar year.                                                    

Article VI
Certificates and Transfer of Shares 
Section 1. Certificates of Shares.                                              

a) 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; the par value, if any, or a statement   
that such shares are without par value; 'a statement of the rights, privileges, 
preferences and restrictions, if any; a statement as to the redemption or       
conversion, if any; a statement of liens or restrictions upon transfer or       
voting4 if any; if the share be assessable or, if assessments are collectable   
by personal action, a plain statement of such facts.                            

b) Every certificate for shares must be signed by the President or a Vice       
President and the Secretary or an Assistant Secretary or must be authenticated  
by facsimile of a signature of' the President and Secretary or by a facsimile   
of a signature countersigned by a transfer agent or transfer clerk and must be  

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registered by an incorporated bank or trust company, or duly licensed stock     
transfer and registrar company, either domestic or foreign, as registrar of     
transfers.                                                                      

Section 2. Transfer of 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 duty of the    
corporation or its licensed transfer agent, to issue a new certificate to the   
person entitled thereto, cancel the old certificate and to maintain a record of 
the transaction in a designated office of the corporation.                      

Exception: In event the directors of the corporation or its transfer            
agent-registrar, should determine there is reason to suspect any respective     
certificate of being invalid or fraudulent, said certificate, along with any    
other documentation, pertinent to such certificate, shall be placed with        
competent legal counsel for investigation and verification, prior to giving     
authorization to "transfer".                                                    

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 as the Board of Directors or stock 
transfer entity may require, give the corporation a bond of indemnity, in form  
and with one or more sureties satisfactory to the board an at least double the  
value of the stock represented by said certificate, whereupon a new certificate 
may be issued of the same tenor and for the same number of shares as the one    
alleged to be lost or destroyed.                                                

Section 4. Transfer agent 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 or a. licensed stock transfer and registrar 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.                                        

The Board of Directors shall request of its transfer agent and registrar        
according to any law of the state of its domicile, the close of the transfer    
books for a period not exceeding thirty days or such period as being in         
accordance with any existing law, preceding any annual meeting, of the          
shareholders, or the day appointed for payment of' a dividend.                  

Article VII 
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 of its incorporation, and the state of    
its domicile.                                                                   

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Article VIII
Amendments to By-Laws 

Section 1. By Shareholder.                                                      

New By-Laws may be adopted or these By-Laws may be repealed or amended at their 
annual meeting, or any other meeting of the shareholders called for that        
purpose, by a vote of shareholders entitled to exercise a majority of the       
voting power of the corporation, or by written assent of such shareholders.     

Section 2. Powers of Directors.                                                 

Directors may not amend or repeal any of these By -Laws without assent of the   
majority vote of the shareholders.                                              

Section 3. Record of Amendments.                                                

The corporation shall keep an accurate succession in bound form, of all By-laws 
as repealed, and amended, and accurate to date.                                 

I, do hereby certify that the foregoing is a complete and accurate copy of the  
current By-Laws of the Desert Winds Entertainment Corporation.                  

___\s\_Michael Paloma_______                                                    
Michael Paloma, President                                                       

[CAPTION]                                                                       
Exhibit 4.01                                                                    

Form of Convertible Debentures issued prior to June 27, 2000          

NEITHER THIS DEBENTURE NOR THE SECURITIES ISSUABLE HEREUNDER HAVE BEEN          
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANYOTHER FEDERAL OR STATE        
SECURITIES LAWS, AND THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED,         
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT AS EXPRESSLY PROVIDED FOR HEREIN.  
WITHOUT LIMITING THE FOREGOING, NEITHER THIS DEBENTURE NOR THE STOCK ISSUABLE   
HEREUNDER MAY BE TRANSFERRED FOR A PERIOD OF TWELVE (12) MONTHS AFTER THE DATE  
OF THIS DEBENTURE OR THE ISSUANCE OF STOCK HEREUNDER UNLESS PERMITTED BY THE    
TERMS OF THIS DEBENTURE AND APPLICABLE LAW.                                     

SunnComm, Inc.

CONVERTIBLE DEBENTURE DUE ON [MONTH] ___, 2001

[Month] __, 2000 (the "Issue Date") US $____________                            

FOR VALUE RECEIVED, SunnComm, Inc., a Nevada corporation (the "Company")        
promises to pay to the order of ____________, an individual (the "Holder") on   
[Month] ___, 2001 (the "'Maturity Date"), the principal sum of ____________     
Dollars ($____________), as hereinafter provided.                               

1. Payment and Interest. The indebtedness outstanding under this Debenture      
shall bear interest of five percent (5%) per annum. Unless the conversion       

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rights provided under Section 4 or the redemption rights under Section 5 are    
exercised pursuant to this Debenture, the principal and accrued interest shall  
be due on the Maturity Date. Payment is to be made at the office of the Holder  
as reflected in the records of the Company or at such other place as the Holder 
of this Debenture shall have notified the Company in writing. Nothing herein    
contained, nor any transaction relating thereto, shall be construed or so       
operate as to require the Company to pay interest at a greater rate than the    
maximum allowed by the applicable law relating to this Debenture. Should any    
interest or other charges, charged, paid or payable by the Company in           
connection with this Debenture, or any other compensation, payment or earning   
of interest, be in excess of the maximum allowed by the applicable law as       
aforesaid, then any and all such excess shall be, and the same hereby is,       
waived by the Holder, and any and all such excess paid shall be automatically   
credited against and in reduction of the principal due under this Debenture.    

2. Liquidation Rights. In the event of any voluntary or involuntary             
liquidation, dissolution or winding up of the Company, this Debenture shall be  
entitled to a claim in liquidation before participation by the holders of any   
debt subordinate hereto or of any capital stock of the Company. The amount of   
the claim in liquidation shall equal the amount to which the Holder of this     
Debenture would be entitled in the case of payment, whether or not this         
Debenture is eligible for payment at the time of liquidation. A liquidation,    
dissolution, or winding up of the Company, for purposes of this Section 2 ,     
shall not include any consolidation, reorganization, or merger of the Company   
with or into any other association or corporation, or any acquisition of all or 
substantially all of the assets and liabilities of the Company by any other     
association or corporation, whether or not of a different form or subject to    
the laws or a different jurisdiction, provided the same are not in violation of 
any of the terms of this Debenture or the agreements contemplated therein.      

3. Legal Tender. All payments of principal and interest hereunder shall be in   
coin or currency of the United States or America which on the respective dates  
of payment thereof constitutes legal tender for the payment of public and       
private debt.                                                                   

4. Conversion of Debenture.                                                     

(a) Conversion Following Registration. Upon the effectiveness of the            
Registration Statement described below in Section 9, this Debenture shall be    
automatically converted into (1) ____________ fully paid and nonassessable      
shares of common stock of the Company ("Common Stock").                         

(b) Mechanics of Conversion. Upon conversion, all obligations of the Company to 
pay principal and interest hereunder shall be extinguished. Upon conversion,    
the Holder of this Debenture shall surrender the Debenture during regular       
business hours at the office of the Company. As promptly as practicable after   
the surrender of the Debenture as aforesaid, the Company shall deliver or cause 
to be delivered to the Holder a certificate or certificates for the number of   
fully paid and nonassessable shares of common stock issuable upon conversion of 
this Debenture. Such conversion shall be deemed to have been effected           
immediately prior to the close of business on the effective date of the         
Registration Statement, the Debenture shall be canceled and rendered null and   

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void, (the "Date Of Conversion"), and at such time the rights of the Holder     
shall cease and the Holder shall be deemed to have become the holder of record  
of the shares and warrants issuable hereunder.                                  

(c) Adjustments. If the Company shall effect any capital reorganization or any  
reclassification of the capital stock of the Company or in case of the          
consolidation or merger or exchange of the company with or into another         
corporation or the conveyance of all or substantially all of the assets of the  
Company to another corporation, the Holder of this Debenture shall be entitled  
to receive upon the conversion of the Debenture, that type and number of        
securities to which a holder of the number of shares of common stock into which 
this Debenture is convertible immediately prior to such event would have been   
entitled upon such reorganization, reclassification, consolidation, merger or   
conveyance; and, in any such case, appropriate adjustment, as determined by the 
Board of Directors, shall be made in the application of the provisions herein   
set forth with respect to the rights and interests thereafter of the holder of  
this Debenture, to the end that the provisions set forth herein shall           
thereafter be applicable, as nearly as reasonably may be, in relation to any    
shares of stock or other property thereafter deliverable upon the conversion of 
the Debenture. If the Company shall at any time subdivide its outstanding       
shares of Common Stock into a greater number of shares or pay a dividend in     
shares of common stock to the outstanding common stock, or combine the          
outstanding shares of common stock into a smaller number of shares, the         
conversion rate for this Debenture in effect immediately prior to such          
subdivision, dividend or combination shall be adjusted proportionately          
simultaneously with such event.                                                 

5. Right to Redeem. At any time prior to the Maturity Date, the Company shall   
have the right to pre-pay this Debenture by paying the full amount of principal 
and the full amount of interest accrued as of the date of redemption. Upon      
redemption, the Company shall have no further obligations under this Debenture. 

6. Reservation of Shares. The Company covenants and agrees that, during the     
period within which conversion rights represented by this Debenture may be      
exercised, the Company will at all times have authorized and reserved, solely   
for the purpose of such possible conversion, free from preemptive rights, out   
of its authorized but unissued shares, a sufficient number of shares of its     
common stock to provide for the exercise in full of the conversion rights       
represented by this Debenture. In accordance with and subject to applicable     
laws and regulations, the Company shall from time to time increase its number   
of authorized shares of common stock so as to maintain a number of such shares  
sufficient to permit the conversion of common stock if necessary to ensure such 
conversion.                                                                     

7. Registration and Transfer of this Debenture. No right or interest in this    
Debenture may be transferred except to a successor by inheritance or in testate 
succession, and such successor shall, as a condition of succession, accept by   
written instrument reasonably acceptable to the Company each of the terms and   
conditions that govern this Debenture. Without limiting the foregoing, neither  
this Debenture nor the stock issuable hereunder may be transferred for a period 
of twelve (12) months after the date of this Debenture or the issuance of stock 
hereunder unless permitted by the terms of this Debenture and applicable law.   

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8. Lost Documents. Upon receipt by the Company of evidence satisfactory to it   
of the loss, theft, destruction or mutilation of this Debenture or any          
Debentures exchanged for it, and (in case of loss, theft or destruction) of     
indemnity satisfactory to it, and upon reimbursement to the Company of all      
reasonable expenses incidental thereto, and upon surrender and cancellation of  
such Debenture, if mutilated, the Company will make and deliver in lieu of such 
Debenture a new Debenture of the same series and of like tenor and unpaid       
principal amount.                                                               

9. Registration Rights.                                                         

(a) The Company shall use reasonable best efforts to, within three (3) months   
from receipt thereof, include the shares of common stock issuable upon          
conversion of this Debenture in the next registration statement ("Registration  
Statement") filed with the Securities and Exchange Commission by the Company    
under the Securities Act, and have such Registration Statement declare          
effective no later than the first anniversary from the date hereof so that upon 
issuance the shares issuable hereunder will be freely tradable, provided that   
the Holder shall furnish to the Company all appropriate information in          
connection therewith as the Company may reasonably request.                     

(b) The Company shall (1) bear the costs, expenses and fees incurred in         
connection with any such registration, excluding any broker fees, selling       
commissions and out of pocket costs and expenses of the Holder; (2) supply      
prospectuses and other documents as the Holder may reasonably request; (3) use  
its reasonable best efforts to register and qualify the shares issuable         
hereunder for sale in such states as the Holder designates; (4) do any and all  
other acts and things that may be necessary or desirable to enable Holder to    
consummate the public sale or other disposition of the shares issuable          
hereunder; and (5) enter into cross-indemnification arrangements with the       
Holder with respect to matters arising from such Registration Statement and     
public offering.                                                                

10. Definitions. The term Holder means the Holder and each subsequent holder of 
this Debenture; and any consent, waiver or agreement in writing by the then     
Holder with respect to any matter or thing in connection with this Debenture,   
whether altering any provision hereof or otherwise, shall bind all subsequent   
holders of this Debenture.                                                      

11. Miscellaneous.                                                              

(a) Transfer. No right or interest in this Debenture is transferable except as  
provided in Section 7 . Upon automatic conversion, the shares issued upon       
cancellation of the Debenture will be fully tradable.                           

(b) Notices. Any notice or communication to be given pursuant to this Debenture 
shall be in writing and shall be delivered in person or by certified mail,      
return receipt requested, in the United States mail, postage prepaid. Notices   
to the Company shall be addressed to the Company's principal office. Notices to 
the Holder shall be addressed to the Holder's address as reflected in the       
records of the Company. Notices shall be effective upon delivery in person, or, 
if mailed, at midnight on the fifth business day after mailing.                 

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(c) Issue Tax. The issuance of certificates for shares of Common Stock upon the 
exercise of this Debenture shall be made without charge to the Holder for any   
issuance tax in respect thereof, provided that the Company shall not be         
required to pay any tax that may be payable in respect of any transfer involved 
in the issuance and delivery of any certificate in a name other than that of    
the Holder of the Debenture exercised.                                          

(d) No Shareholder Rights. This Debenture shall not entitle the Holder to any   
voting rights or other rights as a shareholder of the Company.                  

(e) Current Information. The Company shall cause copies of all financial        
statements and reports, proxy statements and other documents that are provided  
to its shareholders to be sent by first class mail, postage prepaid, on the     
date of mailing to such shareholders, to the Holder at the address reflected in 
the records of the Company.                                                     

(f) Governing Law. This Debenture shall be governed by and construed in         
accordance with the laws of the State of Arizona.                               

(g) Successors. The covenants, agreements and provisions of this Debenture      
shall bind the parties hereto and their respective successors and permitted     
assigns.                                                                        

(h) Integrated Agreement; Modification. This Debenture is a complete statement  
of the agreement of the parties with respect to the subject matter hereof and   
may be modified only by written instrument executed by the parties.             

IN WITNESS WHEREOF, the Company has executed this Debenture as of the Issue     
Date.                                                                           

ATTEST:                                                                         

  SunnComm, Inc., a Nevada corporation

By: \s\__Stephen F. Burg___________  By: ____\s\___Peter H. Jacobs______      
By: Stephen F. Burg, Secretary            By: Peter H. Jacobs, President      

[CAPTION]                                                                       
Exhibit 4.02                                                                    

Form of Convertible Debenture Issued after June 27, 2000                        

NEITHER THIS DEBENTURE NOR THE SECURITIES ISSUABLE HEREUNDER HAVE BEEN          
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY OTHER FEDERAL OR STATE       
SECURITIES LAWS, AND THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED,         
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT AS EXPRESSLY PROVIDED FOR HEREIN.  
WITHOUT LIMITING THE FOREGOING, NEITHER THIS DEBENTURE NOR THE STOCK ISSUABLE   
HEREUNDER MAY BE TRANSFERRED FOR A PERIOD OF TWELVE (12) MONTHS AFTER THE DATE  
OF THIS DEBENTURE OR THE ISSUANCE OF STOCK HEREUNDER UNLESS PERMITTED BY THE    
TERMS OF THIS DEBENTURE AND APPLICABLE LAW. SUNNCOMM, INC. CONVERTIBLE          
DEBENTURE DUE ON [MONTH] ___, 2001                                              

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[Month] ___, 2000 (the "Issue Date")    US $____________                        

FOR VALUE RECEIVED, SunnComm, Inc., a Nevada corporation (the "Company")        
promises to pay to the order of ____________, an individual (the "Holder") on   
[Month] ___, 2001 (the "'Maturity Date"), the principal sum of ____________     
Dollars ($____________), as hereinafter provided.                               

1.   Payment and Interest. The indebtedness outstanding under this Debenture    
shall bear interest of five percent (5%) per annum. Unless the conversion       
rights provided under Section 4 or the redemption rights under Section 5 are    
exercised pursuant to this Debenture, the principal and accrued interest shall  
be due on the Maturity Date. Payment is to be made at the office of the Holder  
as reflected in the records of the Company or at such other place as the Holder 
of this Debenture shall have notified the Company in writing. Nothing herein    
contained, nor any transaction relating thereto, shall be construed or so       
operate as to require the Company to pay interest at a greater rate than the    
maximum allowed by the applicable law relating to this Debenture. Should any    
interest or other charges, charged, paid or payable by the Company in           
connection with this Debenture, or any other compensation, payment or earning   
of interest, be in excess of the maximum allowed by the applicable law as       
aforesaid, then any and all such excess shall be, and the same hereby is,       
waived by the Holder, and any and all such excess paid shall be automatically   
credited against and in reduction of the principal due under this Debenture.    

2.   Liquidation Rights. In the event of any voluntary or involuntary           
liquidation, dissolution or winding up of the Company, this Debenture shall be  
entitled to a claim in liquidation before participation by the holders of any   
debt subordinate hereto or of any capital stock of the Company. The amount of   
the claim in liquidation shall equal the amount to which the Holder of this     
Debenture would be entitled in the case of payment, whether or not this         
Debenture is eligible for payment at the time of liquidation. A liquidation,    
dissolution, or winding up of the Company, for purposes of this Section 2,      
shall not include any consolidation, reorganization, or merger of the Company   
with or into any other association or corporation, or any acquisition of all or 
substantially all of the assets and liabilities of the Company by any other     
association or corporation, whether or not of a different form or subject to    
the laws or a different jurisdiction, provided the same are not in violation of 
any of the terms of this Debenture or the agreements contemplated therein.      

3.   Legal Tender. All payments of principal and interest hereunder shall be in 
coin or currency of the United States or America which on the respective dates  
of payment thereof constitutes legal tender for the payment of public and       
private debt.                                                                   

4.   Conversion of Debenture.                                                   
(a)  Conversion Following Registration. Upon the effectiveness of the           
Registration Statement described below in Section 9, this Debenture shall be    
automatically converted into (1) ____________ fully paid and nonassessable      
shares of common stock of the Company ("Common Stock"); (2) ____________ "A"    
Warrants, described below in Section 10(a); and (3) ____________ "B" Warrants,  
described below in Section 10(b).                                               
(b)  Mechanics of Conversion. Upon conversion, all obligations of the Company   
to pay principal and interest hereunder shall be extinguished. Upon conversion, 
the Holder of this Debenture shall surrender the Debenture during regular       
business hours at the office of the Company.                                    

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As promptly as practicable after the surrender of the Debenture as aforesaid,   
the Company shall deliver or cause to be delivered to the Holder a certificate  
or certificates for the number of fully paid and nonassessable shares of common 
stock issuable upon conversion of this Debenture. Such conversion shall be      
deemed to have been effected immediately prior to the close of business on the  
effective date of the Registration Statement, the Debenture shall be canceled   
and rendered null and void, (the "Date Of Conversion"), and at such time the    
rights of the Holder shall cease and the Holder shall be deemed to have become  
the holder of record of the shares and warrants issuable hereunder.             

(c)  Adjustments. If the Company shall effect any capital reorganization or any 
reclassification of the capital stock of the Company or in case of the          
consolidation or merger or exchange of the company with or into another         
corporation or the conveyance of all or substantially all of the assets of the  
Company to another corporation, the Holder of this Debenture shall be entitled  
to receive upon the conversion of the Debenture, that type and number of        
securities to which a holder of the number of shares of common stock into which 
this Debenture is convertible immediately prior to such event would have been   
entitled upon such reorganization, reclassification, consolidation, merger or   
conveyance; and, in any such case, appropriate adjustment, as determined by the 
Board of Directors, shall be made in the application of the provisions herein   
set forth with respect to the rights and interests thereafter of the holder of  
this Debenture, to the end that the provisions set forth herein shall           
thereafter be applicable, as nearly as reasonably may be, in relation to any    
shares of stock or other property thereafter deliverable upon the conversion of 
the Debenture. If the Company shall at any time subdivide its outstanding       
shares of Common Stock into a greater number of shares or pay a dividend in     
shares of common stock to the outstanding common stock, or combine the          
outstanding shares of common stock into a smaller number of shares, the         
conversion rate for this Debenture in effect immediately prior to such          
subdivision, dividend or combination shall be adjusted proportionately          
simultaneously with such event.                                                 

5.   Right to Redeem. At any time prior to the Maturity Date, the Company shall 
have the right to pre-pay this Debenture by paying the full amount of principal 
and the full amount of interest accrued as of the date of redemption. Upon      
redemption, the Company shall have no further obligations under this Debenture. 

6.   Reservation of Shares. The Company covenants and agrees that, during the   
period within which conversion rights represented by this Debenture may be      
exercised, the Company will at all times have authorized and reserved, solely   
for the purpose of such possible conversion, free from preemptive rights, out   
of its authorized but unissued shares, a sufficient number of shares of its     
common stock to provide for the exercise in full of the conversion rights       
represented by this Debenture. In accordance with and subject to applicable     
laws and regulations, the Company shall from time to time increase its number   
of authorized shares of common stock so as to maintain a number of such shares  
sufficient to permit the conversion of common stock if necessary to ensure such 
conversion.                                                                     

7.   Registration and Transfer of this Debenture. No right or interest in this  
Debenture may be transferred except to a successor by inheritance or intestate  
succession, and such successor shall, as a condition of succession, accept by   
written instrument reasonably acceptable to the Company each of the terms and   
conditions that govern this Debenture.                                          

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Without limiting the foregoing, neither this Debenture nor the stock issuable   
hereunder may be transferred for a period of twelve (12) months after the date  
of this Debenture or the issuance of stock hereunder unless permitted by the    
terms of this Debenture and applicable law.                                     

8.   Lost Documents. Upon receipt by the Company of evidence satisfactory to it 
of the loss, theft, destruction or mutilation of this Debenture or any          
Debentures exchanged for it, and (in case of loss, theft or destruction) of     
indemnity satisfactory to it, and upon reimbursement to the Company of all      
reasonable expenses incidental thereto, and upon surrender and cancellation of  
such Debenture, if mutilated, the Company will make and deliver in lieu of such 
Debenture a new Debenture of the same series and of like tenor and unpaid       
principal amount.                                                               

9.   Registration Rights.                                                       
(a)  The Company shall use reasonable best efforts to, within three (3) months  
from receipt thereof, include the shares of common stock issuable upon          
conversion of this Debenture in the next registration statement ("Registration  
Statement") filed with the Securities and Exchange Commission by the Company    
under the Securities Act, and have such Registration Statement declare          
effective no later than the first anniversary from the date hereof so that upon 
issuance the shares issuable hereunder will be freely tradable, provided that   
the Holder shall furnish to the Company all appropriate information in          
connection therewith as the Company may reasonably request.                     

(b)  The Company shall (1) bear the costs, expenses and fees incurred in        
connection with any such registration, excluding any broker fees, selling       
commissions and out of pocket costs and expenses of the Holder; (2) supply      
prospectuses and other documents as the Holder may reasonably request; (3) use  
its reasonable best efforts to register and qualify the shares issuable         
hereunder for sale in such states as the Holder designates; (4) do any and all  
other acts and things that may be necessary or desirable to enable Holder to    
consummate the public sale or other disposition of the shares issuable          
hereunder; and (5) enter into cross-indemnification arrangements with the       
Holder with respect to matters arising from such Registration Statement and     
public offering.                                                                

10.  Definitions. The term Holder means the Holder and each subsequent holder   
of this Debenture; and any consent, waiver or agreement in writing by the then  
Holder with respect to any matter or thing in connection with this Debenture,   
whether altering any provision hereof or otherwise, shall bind all subsequent   
holders of this Debenture.                                                      

(a)  "A" Warrant. An "A" Warrant confers on the Holder the right (but not the   
obligation) to buy a share of Common Stock at the opening bid price of the      
Company's or successor company's Common Stock in the first underwritten public  
offering following the Issue Date (the "Opening Price"), and may be exercised   
at any time after the first day of the seventh month following the Issue Date,  
and before the last day of the eighteenth month following the Issue Date. The   
Company shall have the right to redeem any "A" Warrant for $15.00 per share of  
Common Stock into which the "A" Warrant is convertible at any time.             

(b)  "B" Warrant. A "B" Warrant confers on the Holder the right (but not the    
obligation) to buy a share of Common Stock at the Opening Price plus $2, and    

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may be exercised at any time after the first day of the nineteenth month        
following the Issue Date, and before the last day of the thirtieth month        
following the Issue Date. The Company shall have the right to redeem any "B"    
Warrant for $20.00 per share of Common Stock into which the "B" Warrant is      
convertible at any time.                                                        

11.  Miscellaneous.                                                             
(a)  Transfer. No right or interest in this Debenture is transferable except as 
provided in Section 7. Upon automatic conversion, the shares issued upon        
cancellation of the Debenture will be fully tradable.                           

(b)  Notices. Any notice or communication to be given pursuant to this          
Debenture shall be in writing and shall be delivered in person or by certified  
mail, return receipt requested, in the United States mail, postage prepaid.     
Notices to the Company shall be addressed to the Company's principal office.    
Notices to the Holder shall be addressed to the Holder's address as reflected   
in the records of the Company. Notices shall be effective upon delivery in      
person, or, if mailed, at midnight on the fifth business day after mailing.     
(c)  Issue Tax. The issuance of certificates for shares of Common Stock upon    
the exercise of this Debenture shall be made without charge to the Holder for   
any issuance tax in respect thereof, provided that the Company shall not be     
required to pay any tax that may be payable in respect of any transfer involved 
in the issuance and delivery of any certificate in a name other than that of    
the Holder of the Debenture exercised.                                          

(d)  No Shareholder Rights. This Debenture shall not entitle the Holder to any  
voting rights or other rights as a shareholder of the Company.                  
(e)  Current Information. The Company shall cause copies of all financial       
statements and reports, proxy statements and other documents that are provided  
to its shareholders to be sent by first class mail, postage prepaid, on the     
date of mailing to such shareholders, to the Holder at the address reflected in 
the records of the Company.                                                     

(f)  Governing Law. This Debenture shall be governed by and construed in        
accordance with the laws of the State of Arizona.                               
(g)  Successors. The covenants, agreements and provisions of this Debenture     
shall bind the parties hereto and their respective successors and permitted     
assigns.                                                                        

(h)  Integrated Agreement; Modification. This Debenture is a complete statement 
of the agreement of the parties with respect to the subject matter hereof and   
may be modified only by written instrument executed by the parties.             
IN WITNESS WHEREOF, the Company has executed this Debenture as of the Issue     
Date.                                                                           

ATTEST:        SUNNCOMM, INC., a Nevada corporation                             

By:       By:                                                                   
_________________, Secretary            Name:  , President                

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[CAPTION]                                                                       
Exhibit 10.01 

Assignment

Inventor: John D. Aquilino                                                      

Title:    Copy Control System and Method                                        

WHEREAS, I, John D. Aquilino of Mesa, Arizona have invented certain new and     
useful improvements as described in a U.S. provisional patent application       
entitled Copy Control System and Method and being identifiable in the United    
States Patent and Trademark Office by Serial No. 60/207,201, filed May 25,      
2000; and                                                                       

WHEREAS, SunnComm, Inc. having offices at 668 North 44th Street, Phoenix,       
Arizona 85008 ("Assignee") is desirous of acquiring the entire right, title and 
interest in and to the invention, the application, and any and all Letters      
Patent or similar legal protection, foreign or domestic, to be obtained         
therefor;                                                                       

NOW, THEREFORE, in consideration of the sum of ten dollars ($10.00) and other   
good and valuable consideration, the receipt and adequacy of which is hereby    
acknowledged, I hereby transfer to Assignee, its successors and assigns, the    
entire right, title and interest in and to the invention throughout the world,  
the above-identified application, all corresponding domestic and foreign        
applications, all Letters Patent or similar legal protection issuing thereon,   
and all rights and benefits under any applicable treaty or convention; and I    
authorize the Commissioner of Patents and Trademarks of the United States or    
foreign equivalent thereof to issue the Letters Patent or similar legal         
protection to the Assignee.                                                     

I authorize the Assignee, its successors and assigns, or anyone it may properly 
designate, to apply for Letters Patent or similar legal protection, in its own  
name if desired, in any and all foreign countries.                              

I represent to the Assignee, its successors and assigns, that I have not and    
shall not execute any writing or do any act whatsoever conflicting with this    
Assignment. I, my executors or administrators, will at any time upon request,   
without additional consideration, but at the expense of the Assignee, its       
successors and assigns, execute such additional writings and do such additional 
acts as the Assignee, its successors and assigns, may deem desirable to perfect 
its enjoyment of this grant, and render all assistance in making application    
for and obtaining, maintaining, and enforcing the Letters Patent or similar     
legal protection on the invention in any and all countries.                     

______________________________                                                  
John D. Aquilino                                                                
______________________________                                                  
Date                                                        
STATE OF ______________  )                                                      
) ss.                         
County of ______________ )                                                      

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SUBSCRIBED AND SWORN TO before me a Notary Public, this ____ day of             
_______________________, 2001.                                                  

                       Notary Public
                                          (SEAL)

[CAPTION]                                                                       
Exhibit 10.01A                                                                  

CONSENT TO PATENT ASSIGNMENT                                                    

Equity Earnings Corp., doing business as Designer Products, being the exclusive 
marketing agent for John Aquilino with respect, inter alia, to an invention     
described in an application for Provisional Patent with the United States       
Patent and Trademark Office, Serial Number 60/207,201 relating to a "COPY       
CONTROL SYSTEM AND METHOD", hereby consents to the assignment of all rights,    
title, and interest in, and to, that invention, all know-how represented by     
that invention, and any past, present, or future rights of patent with respect  
to the invention to SunnComm, Inc.                                              

EQUITY EARNINGS CORP., doing business as Designer Products                      

By:  /s/   David Kreitzer                                                       
--------------------                                                  
David Kreitzer                                                        
Its:  Treasurer                                                       

STATE OF ARIZONA    )                                                           
)ss.                                    
County of Maricopa  )                                                           

The foregoing instrument was acknowledged before me this 27th day of February,  
2001, by David Kreitzer, Treasurer of Equity Earnings Corp., an Arizona         
corporation on behalf of Equity Earnings Corp.                                  

Notary Public                                                                   

My Commission Expires:                                                          

[CAPTION]                                                                       
Exhibit 10.02                                                                   

Assignment Agreement among the Company, Equity Earnings Corp. d.b.a   
Designer Products, and John D. Aquilino                                         

ASSIGNMENT AGREEMENT
between Designer Products 
and SunnComm, Inc.

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This Assignment Agreement (this "Agreement") is made between SunnComm, Inc., a  
corporation, with offices at 668 North 44th Street Suite 220 Phoenix, Arizona   
85008 (hereinafter referred to as "SunnComm"), and Equity Earnings, Corp.       
d.b.a. Designer Products, an Arizona Corporation, with offices at 6245 N.       
24th Parkway, Suite 215, Phoenix, AZ 85016, USA and John D. Aquilino            
(hereinafter collectively referred to as "DP") WHEREAS, DP represents that it   
exclusively owns all right, title and interest and to the new product invention 
relating to a "Data Copy Protection System and Method, docket# 35624-A14"       
(hereinafter also referred to as the "Property") by for which application for   
Letters of Patent of the United States have been drafted, and filed with the US 
Patent Office, of which invention and application and all rights in and thereto 
DP represent sole ownership in.                                                 

WHEREAS, DP represents that it has the sole right and authority to assign the   
herein-contained right under the Patents (as hereinafter defined) covering the  
certain invention relating to the Property and any reissues and extensions of   
the scope hereinafter granted WHEREAS, SunnComm is desirous of acquiring from   
DP all right, title and interest in the Property embodying the invention        
covered by said application for Letters Patent of the United States, for resale 
and sublicensing Worldwide;                                                     

WHEREAS, DP is willing to convey, sell, and transfer to SunnComm all right,     
title and interest in and to the Property upon the terms and conditions         
hereinafter recited;                                                            

NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants, 
terms, conditions, and agreements, hereinafter expressed, and other good and    
valuable consideration, the receipt and sufficiency for which is acknowledged,  
the parties agree as follows:                                                   

DEFINITIONS. As used in this Agreement:                                         

A. The word "Patent" shall mean and include:                                    

i. The application for United States Letters written by the Law Firm of Parsons 
& Goltry docket #35624-A14 regarding a "Data Copy Protection System and Method  
docket# 35624-A14" which has been files with the US Patent and Trademark        
Office.                                                                         

ii. Any reissues and extensions thereof;                                        

iii. Any continuation-in-part United States patent application (including       
divisions, continuations-in-whole or in-part, and (substitutes thereof or       
therefor) based in part on the above application which DP shall wish to file    
(of which DP shall promptly notify SunnComm) and which SunnComm shall thereupon 
elect to have added to the Patents (of which SunnComm shall promptly notify     
DP), any patent which shall issue on any such application, any reissues and     
extensions thereof.                                                             

B. The phrase "Valid Claim" shall mean:                                         

i. in the case of an application for letters patent (during the time such       
patent is pending as an application), a claim or part which shall not have been 

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81finally rejected by an unappealed or unappealable decision of the Patent Office 
of the country in which such application is filed; and                          

ii. in the case of and issued and unexpired Letters Patent, a claim or part     
which shall not have been held invalid in an unappealed or unappealable         
decision of a court of competent jurisdiction.                                  

1. ASSIGNMENT. In accordance with this Agreement, DP will sell, convey,         
transfer and assign to SunnComm the Property and the Patent. DP will continue   
to prosecute all filed claims for SunnComm until all filed claims have been     
granted or denied by the US Patent and Trademark Office.                        

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2. COMPENSATION & SPECIAL RESTRICTIONS.                                         

Upon the signing of this Agreement the parties agree to the following:          

A. See Insert "A" attached.                                                     

B. SunnComm Agrees not to assign the asset to any third party for (5) five      
years unless written authorization to initiate such an assignment is given by   
DP.                                                                             

C. SunnComm agrees that should SunnComm become insolvent through bankruptcy or  
cease to function as a corporate entity through the closing of all offices,     
then SunnComm agrees that all intellectual property covered in this Assignment  
Agreement shall automatically revert to DP and that SunnComm shall execute any  
and all documents, instruments and assignment necessary to perfect this         
reversion.                                                                      

3. DURATION, DEFAULTS & TERMINATION. SunnComm and DP agree to abide by the      
obligations:                                                                    

A. This Agreement shall remain in effect for the lifetime of Patents, unless    
sooner terminated upon the mutual agreement of DP and SunnComm.                 

B. This Agreement shall expire simultaneously with the expiration of the        
longest-lived patent or the rejection or abandonment beyond further appeal of   
the last remaining patent application comprised within the patents, whichever   
occurs later, unless sooner terminated.                                         

C. If SunnComm fails to pay DP moneys or other consideration payable under the  
terms hereof, or if SunnComm violates or fails to keep or perform any other     
obligation, term, or condition, or covenant, hereof, or if SunnComm shall be    
adjudged bankrupt or become insolvent or make an assignment for the benefit of  
creditors, or be placed in the hands of a receiver or Trustee in bankruptcy,    
then DP may, at its option, cancel and terminate this Agreement by giving       
thirty (30) days written notice specifying default complained hereof, provided  
however, that if SunnComm shall, within such (30) thirty days cure the default  
complained of, then the notice shall cease to be operative and this Agreement   
shall continue in full force and effective as though such default had not       
occurred, and provided further that if SunnComm shall within such (30) days     

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notify DP in writing that it disputes the asserted default, the mater shall be  
submitted to arbitration a hereinafter provided.                                

D. Termination of this Agreement granted herein shall not relieve SunnComm of   
its obligations to pay DP moneys and any other consideration due and unpaid at  
the time of termination. Termination of this Agreement shall not impair or      
prejudice any cause of action or claim that one party may have against the      
other party for any breach of this Agreement.                                   

2. FOREIGN PATENTS. Should SunnComm desire foreign patent protection SunnComm   
may at its own expense pay to file for patents in specified country's of which  
these Patents will be assigned to SunnComm.                                     

3. ARBITRATION. All disputes under this Agreement that cannot be resolved by    
the parties shall be submitted to arbitration under the rules and regulations   
of the American Arbitration Association. Either party may invoke this paragraph 
after providing 30 days' written notice to the other party. All costs of        
arbitration shall be divided equally between the parties. Any award may be      
enforced by a court of law.                                                     

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4. TRANSFER OF. RIGHTS. This Agreement shall be binding on any successors of    
the parties. DP retains the right to assign its interests in this Agreement to  
any other party.                                                                

5. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the        
parties and there are no other promises or conditions in any other agreement    
whether oral or written. This Agreement supersedes any prior written or oral    
agreements between the parties.                                                 

6. AMENDMENT. This Agreement may be modified or amended, if the amendment is    
made in writing and is signed by both parties.                                  

7. SEVERABILITY. If any provision of this Agreement shall be held to be invalid 
or unenforceable for any reason, the remaining provisions shall continue to be  
valid and enforceable. If a court finds that any provision of this Agreement is 
invalid or unenforceable, but that by limiting such provision it would become   
valid or enforceable, then such provision shall be deemed to be written,        
construed, and enforced as so limited.                                          

8. WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce any      
provision of this Agreement shall not be construed as a waiver or limitation of 
that party's right to subsequently enforce and compel strict compliance with    
every provision of this Agreement.                                              

9. NOTICE. All correspondence such as purchase orders, statements, payments,    
notices, etc. shall be considered as so delivered to DP or SunnComm when sent   
by registered mail, postage prepaid, within (10) days' written notice thereof   
delivered to:                                                                   

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If for DP: Designer Products                                                    
Attn: President                                                                 
6245 N. 24th Parkway, Suite 215                                                 
Phoenix, AZ 85016                                                               

If for SunnComm: SunnComm, Inc.                                                 
Attn: President                                                                 
668 North 44th Street, Suite 220                                                
Phoenix, Arizona 85008                                                          

12. APPLICABLE LAW. This Agreement shall be governed by the laws of the State   
of AZ.                                                                          

IN WITNESS WHEROF, the parties hereto have executed this Purchase Agreement, DP 
by causing it corporate seal to be hereunto affixed and duly attested, and      
SunnComm by causing it corporate seal to be hereunto affixed and duly attested, 
and these presents to be signed by its duly authorized officers, on the         
Effective Date first written above.                                             

Equity Earning Corp. d.b.a. Designer Products                                   

By: ____\s\______Dan B. Pool________ __05/26/00_______                          
Dan B. Pool Date                                                                

By: ___\ss______John D. Aquilino_____ ___05/23/00______                         
John D. Aquilino Date                                                           

SunnComm, Inc.                                                                  
By___\s\______Peter Jacobs ____ __05/23/00______                                
Peter Jacobs Date                                                               

IN WITNESS WHEREOF, the parties have hereunto caused their names to be          
subscribed, and have executed this Agreement in duplicate, each copy of which   
shall for all purposes be deemed original.                                      

[CAPTION]                                                                       
Exhibit 10.03                                                                   

ROYALTY ASSIGNMENT AGREEMENT                                                    

This ROYALTY ASSIGNMENT AGREEMENT (this "Agreement") is executed this 13th day  
of March, 2001, by JOHN AQUILINO ("Assignor") for the benefit of SUNNCOMM, INC, 
a Nevada corporation ("Assignee").                                              

AGREEMENT                                                                       

1.   For valuable consideration, Assignor hereby assigns, transfers and conveys 
to Assignee any and all of Assignor's right, title and interest in and to       
royalties and stock payable, or which may become payable, to Assignor pursuant  
to that certain Exclusive Marketing Agreement by and between Equity Earnings    
Corp., d/b/a Designer Products ("DP"), an Arizona corporation and Assignor,     

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84dated April 3, 2000, in connection with that certain Assignment Agreement by    
and between DP, as assignor and Assignee, as assignee dated May 23, 2000.       

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

3.   This Agreement may not be altered, modified or amended except by a written 
instrument executed by all parties hereto.                                      

IN WITNESS WHEREOF, this Agreement is entered into by the parties as of the     
date above written.                                                             

"ASSIGNOR"                                                                      

John                                                                            

[CAPTION]                                                                       
 Exhibit 10.04

MASTER DEVELOPMENT AGREEMENT
Agreement Number: 00080401
March 6, 2001 

THIS MASTER DEVELOPMENT AGREEMENT ("Agreement") is made and entered into this   
6th day of March, 2001 ("Effective Date") by SunnComm, Inc. (hereinafter        
"Sponsor"), a Nevada Corporation with offices at 668 North 44th Street, Suite   
220, Phoenix, AZ 85008, and BTEK Software, Inc. (hereinafter "Developer"), an   
Arizona Corporation with offices at 4636 East Elwood Street, Suite12, Phoenix,  
AZ 85040-1963.                                                                  

WITNESSETH THAT:                                                                

WHEREAS, Sponsor desires to engage Developer from time to time pursuant to one  
or more Work Statements ("Work Statement") to develop, create, test, and        
deliver certain programming materials as "works made for hire" as such term is  
defined in the U.S. Copyright Act, and to assign, convey and transfer to        
Sponsor any and all right, title and interest Developer may have in any and all 
intellectual property rights related thereto, including but not limited to,     
patent, copyright and trademark/trade secret rights, and Developer is           
interested in accepting such engagements and assigning, conveying and           
transferring such rights, subject to the parties' further agreement on the      
scope and terms of each such Work Statement; and                                

WHEREAS, Sponsor and Developer mutually desire to set forth in this Agreement   
certain terms and conditions applicable to all such engagements.                

NOW, THEREFORE, for and in consideration of the mutual promises and covenants   
contained herein, and for other good and valuable consideration, the receipt    
and sufficiency of which is hereby acknowledged, the parties agree as follows:  

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Section 1                                                                       

DEFINITIONS                                                                     
When used in this Agreement and in each Work Statement issued hereunder, the    
capitalized terms listed in this Section 1 shall have the following meanings:   

1.1  Code -- shall mean computer-programming code. If not otherwise specified,  
Code shall include both Object Code and Source Code. Code shall include any     
Maintenance Modifications or Basic Enhancements thereto created by Developer    
from time to time, and shall include Major Enhancements thereto when added to   
the Code in connection with a Work Statement issued hereunder.                  

1.1.1     Object Code -- shall mean the machine-readable form of the Code.      

1.1.2     Source Code -- shall mean the human-readable form of the Code and     
related system documentation including all comments and any procedural code     
such as job control language.                                                   

1.2  Confidential Information -- shall mean all: (i) non-public and/or          
proprietary information (including, without limitation, written, oral, visual   
or electronic information) owned, provided or disclosed by a disclosing party   
(regardless of whether in connection with this Agreement or otherwise),         
including, without limitation, trade secrets and formulae, (ii) all analyses,   
compilations, data, studies or other documents prepared by the recipient        
containing, or based in whole or part on, any such information, or reflecting   
its review of, interest in, or relationship with, the disclosing party and      
(iii) the terms of this Agreement.                                              

1.3  Deliverables -- shall mean all Code, Documentation, processes, systems,    
designs and other materials developed for or delivered to Sponsor by Developer  
under this Agreement and under any Work Statement issued hereunder, including   
any and all right, title and interest Developer may have in any intellectual    
property rights related thereto, including but not limited to, patent, and      
copyright                                                                       

1.4  Derivative Work -- shall mean a work that is based upon one or more        
preexisting works, such as a revision, modification, translation, abridgment,   
condensation, expansion, or any other form in which such preexisting works may  
be recast, transformed, or adapted, and that, if prepared without authorization 
of the owner of the copyright in such preexisting work, would constitute a      
copyright infringement. For purposes hereof, a Derivative Work shall also       
include any compilation that incorporates such a preexisting work.              
1.5  Documentation -- shall mean user manuals and other written materials that  
relate to particular Code, including materials useful for design (e.g., logic   
manuals, flow charts, and principles of operation). Documentation shall include 
any Maintenance Modifications or Basic Enhancements thereto created by          
Developer from time to time, and shall include Major Enhancements thereto when  
added to the Documentation in connection with a Work Statement issued           
hereunder.                                                                      

1.6  Enhancements -- shall mean changes or additions, other than Maintenance    
Modifications, to Code and related Documentation, including all new releases,   
that improve functions, add new functions, or significantly improve performance 
by changes in system design or coding.                                          

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861.6.1     Basic Enhancements -- shall mean any Enhancements that are not Major  
Enhancements.                                                                   

1.6.2     Major Enhancements -- shall mean changes or additions to Code and     
related Documentation that (1) have a value and utility separate from the use   
of the Code and Documentation; (2) as a practical matter, may be priced and     
offered separately from the Code and Documentation; and (3) are not made        
available to any of Developer's customers without separate charge.              
1.7  Error -- shall mean any error, problem, or defect resulting from (1) an    
incorrect functioning of Code, or (2) an incorrect or incomplete statement of   
diagram in Documentation, if such an error, problem, or defect renders the Code 
inoperable, causes the Code to fail to meet the specifications thereof, causes  
the Documentation to be inaccurate or incomplete in any material respect,       
causes incorrect results, or causes incorrect functions to occur when any such  
materials are used.                                                             

1.8  Maintenance Modifications -- shall mean any modifications or revisions,    
other than Enhancements, to Code or Documentation that correct Errors, support  
new releases of the operating systems with which the Code is designed to        
operate, support new input/output (I/O) devices, or provide other incidental    
updates and corrections.                                                        

1.9  Discoveries -- shall mean any and all inventions, discoveries,             
improvements, designs, methods, systems, developments, know-how, ideas,         
suggestions, devices, trade secrets resulting from this Agreement and/or any    
Work Statement.                                                                 

1.10 Net Factory Sales Price - shall mean the gross retail selling price of     
each single Deliverable less:                                                   

(i)  import and export taxes, and excise and other sales taxes;                 

(ii) refunds for returned goods;                                                

(iii)     custom duties;                                                        

(iv) insurance and transportation costs, if separately billed, from the place   
of manufacture if in the U.S., or from the place of importation if manufactured 
abroad, to custom's premises or next point of distribution or sale; and         
(v)  if Products are made abroad, less trade discounts actually allowed but not 
including advertising allowances or fees or commissions paid to employees or    
agents of Sponsor.                                                              

1.11 Sales - shall occur when Sponsor renders its invoice to any purchaser or   
recipient, whether or not paid when shipped, unless payment in full or partial  
is received by Sponsor in advance of such shipment or delivery, in which case a 
sale is made when such shipment is received.                                    

1.12 Work Statement -- shall mean a purchase offer of Sponsor, a proposal of    
Developer, or another written instrument that meets the following requirements: 

1.   Includes substantially the following statement: "This is Work Statement    
Attachment XX under Master Development Agreement No 00080401                    

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2.   Is signed on behalf of both parties by their authorized representatives    

3.   Contains the following five mandatory items:                               

1)   Description and/or specifications of the services to be performed and the  
Deliverables to be delivered to Sponsor;                                        

2)   The name and address of a Technical Coordinator for each of Sponsor and    
Developer;                                                                      

3)   The amount, schedule, and method of payment;                               

4)   The time schedule for performance and for delivery of the Deliverables;    
and                                                                             
5)   Completion and acceptance criteria for the Deliverables.                   

In addition, when applicable, the Work Statement may include:                   

1)   Provisions for written and/or oral progress reports by the Developer;      
2)   Detailed functional and technical specifications and standards for all     
services and Deliverables, including quality standards;                         

3)   Documentation standards;                                                   

4)   Lists of any special equipment to be procured by Developer or provided by  
Sponsor for use in performance of the work;                                     

5)   Test plans and scripts; and                                                

6)   Such other terms and conditions as may be mutually agreeable between       
parties.                                                                        

In the event of conflicting or ambiguous terms and conditions between this      
Agreement and the Work Statement, subject Agreement shall control.              

Section 2                                                                       
CONTRACT ADMINISTRATION                                                         

2.1  Contract Coordinator. Upon execution of this Agreement, each party shall   
notify the other party of the name, business address, and telephone number of   
its contract coordinator (hereinafter "Contract Coordinator"). The Contract     
Coordinators of each party shall be responsible for arranging all meetings,     
visits, and consultations between the parties that are of a non-technical       
nature. The Contract Coordinators shall also be responsible for receiving all   
notices under this Agreement and for all administrative matters such as         
invoices, payments, and amendments.                                             

2.2  Issuance of Work Statements. The initial Work Statement(s) agreed to by    
the parties are set forth as attachments to this Agreement. Additional Work     
Statements, regardless of whether they relate to the same subject matter as the 
initial Work Statement(s), shall become effective, subject to Section 1.12,     
upon written execution by authorized representatives of both parties.           

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88Section 3                                                                       
CHANGES                                                                         
Changes in any Work Statement or in any of the Specifications or Deliverables   
under any Work Statement shall become effective only when authorized            
representatives of both parties execute a written change request.               

Section 4                                                                       
NOTICE OF DELAY                                                                 
Developer agrees to notify Sponsor promptly of any factor, occurrence, or event 
coming to its attention that may affect Developer's ability to substantially    
perform any Work Statement issued under this Agreement, or that is likely to    
occasion any material delay in delivery of Deliverables. Such notice shall be   
given in the event of any loss or reassignment of key employees, threat of      
strike, or major equipment failure.                                             

Section 5                                                                       
COMPENSATION                                                                    
Amounts and modes of payment for all services to be performed and Deliverables  
shall be set forth in each Work Statement. The parties shall agree to use one   
of the following modes of payment:                                              

5.1  Fixed Price. If Developer quotes a price for particular services or        
Deliverables and such price is specified without qualification in the           
applicable Work Statement, the amount quoted shall be deemed a fixed price      
("Fixed Price"). Unless the Work Statement provides for progress payments or    
deferral of payment after completion, Sponsor shall pay the full amount of the  
Fixed Price upon Developer's satisfactory completion of the specified services  
or upon Sponsor's acceptance of particular Deliverables. A Work Statement may   
alternatively provide for payment to be based on a Fixed Price for certain      
services to be rendered over a specified period of time. Unless otherwise       
specified in the Work Statement, such payment for periodic services shall       
accrue on a monthly basis and be prorated for any partial periods.              

5.2  Time and Materials. For services and Deliverables that are not suitable    
for payment on the basis of a Fixed Price, the Work Statement may provide for   
payment on the basis of time and materials ("Time and Materials"). Payment      
under this method shall be determined according to the hourly rates set for     
Developer's employees by skill level in the Statement of Rates set forth on an  
Attachment to the Work Statement. The Statement of Rates differentiates the     
employees of Developer assigned to Work Statements issued hereunder according   
to their skill level as a "designer architect," "software engineer,"            
"programmer," "programmer trainee," "administrative support clerk," or          
"technical writer."                                                             

5.3  Time and Materials Subject to Fixed Ceiling. For certain Work Statements,  
Time and Materials charges pursuant to the Statement of Rates may be authorized 
subject to a maximum aggregate amount, designated as the "level of effort"      
expected or imposed for particular services or Deliverables. Developer shall    
use all reasonable effort to complete the specified services and/or             
Deliverables for no more than such aggregate amount. Further, should Developer  
determine at any time that it might be necessary to exceed such aggregate       
amount; Developer shall immediately notify Sponsor in writing. In such notice,  
Developer shall set forth Developer's best estimate of the cost to complete the 
pertinent services and/or Deliverables.                                         

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89Following receipt of such notice, Sponsor shall either instruct Developer to    
halt work with respect to such services and/or Deliverables, to continue on a   
Time and Material basis, or to suspend work pending further negotiation of a    
Fixed Price for completion.                                                     
5.4  Sales Royalty. At the election of the parties, the Work Statement may      
provide for payment based upon a certain percentage of sales ("Sales Royalty")  
wherein Sponsor agrees to pay to Developer a percent of the Net Factory Sales   
Price on all Sales or other disposition of the Deliverables per the work        
statement.                                                                      

5.5  Statement of Rates. The hourly rates prescribed by the Statement of Rates  
shall be in lieu of compensation or reimbursement for any costs or burden       
incurred by Developer, including (without limitation) occupancy, supplies,      
utilities, payroll, management, and overhead. Rates quoted by Developer in its  
Statement of Rates are subject to change upon 30 days' advance notice, provided 
that any such change shall have no effect upon rates or charges for work        
already rendered or scheduled to be rendered within Thirty- (30) days of the    
issuance of such notice.                                                        

Section 6                                                                       
INVOICING                                                                       
Developer shall submit invoices to Sponsor for payment for work and/or          
Deliverables at such time or times as payment becomes due under each Work       
Statement. Invoices shall be due within 15 days of receipt, shall be addressed  
to Sponsor's Contract Coordinator, and shall be submitted no more frequently    
than monthly for charges due or accruing in each calendar month. All invoices   
shall specifically refer to the Work Statement to which they relate. An         
Administrative charge of 5% of the invoice shall be charged if not paid within  
10 days.                                                                        

Section 7                                                                       
EXPENSES                                                                        
Except as expressly agreed otherwise by Sponsor in a Work Statement, Developer  
shall bear all of its own expenses arising from its performance of its          
obligations under this Agreement and each Work Statement issued hereunder,      
including (without limitation) expenses for facilities, work spaces, utilities, 
management, clerical and reproduction services, supplies, and the like.         

Section 8                                                                       
SITE VISITS                                                                     
Developer shall, from time to time and upon reasonable notice, allow access to  
its premises during normal business hours by Sponsor for purposes of design     
review, "walkthroughs," and discussions between Sponsor and Developer's         
management concerning the status and conduct of work being performed under any  
Work Statements issued hereunder; provided, however, all information to which   
Sponsor is permitted access to shall be deemed Confidential Information and     
treated as such in accordance with the provisions of Section 11 of this         
Agreement.                                                                      

Section 9                                                                       
DELIVERY AND ACCEPTANCE                                                         
Developer shall deliver all Deliverables, upon completion, to Sponsor's         
Technical Coordinator for testing and acceptance. Developer shall memorialize   
such delivery in a Delivery Confirmation that sets forth the nature and         

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90condition of the Deliverables, the medium of delivery, and the date of their    
delivery. Sponsor's Contract Coordinator shall countersign such Delivery        
Confirmation so as to indicate its receipt of the contents described therein,   
and the Delivery Confirmation shall thereupon be transmitted to the parties'    
Contract Coordinators. Unless a different procedure for testing and acceptance  
is set forth in a Work Statement, Sponsor's Technical Coordinator shall         
commence acceptance testing following its receipt of the Deliverables. Upon     
completion of such testing, Sponsor shall issue to Developer's Technical        
Coordinator within the time indicated in the Work Statement for acceptance, a   
notice of acceptance or rejection of the Deliverables. In the event of          
rejection, Sponsor shall give its reasons for rejection to Developer's          
Technical Coordinator in reasonable detail. Developer shall use all reasonable  
effort to correct any deficiencies or nonconformity's and resubmit the rejected 
items as promptly as possible.                                                  

Section 10                                                                      
OWNERSHIP AND RIGHTS                                                            
10.1 Work-for-Hire. Developer agrees that the Deliverable(s) have been          
specially ordered or commissioned by Sponsor, and accordingly, that said        
Deliverables shall be considered a "work made for hire" as contemplated by 17   
U.S.C. 101 et seq.; and that Sponsor shall be considered the author of the      
Deliverables and by virtue of this writing, the Deliverable is the sole         
property of Sponsor free and clear from all claims of any nature relating to    
Developer's contributions, including the right to copyright same in the name of 
Sponsor as author and proprietor thereof and any termination rights thereto. In 
the event that: (a) the Deliverable is determined by a court of competent       
jurisdiction not to be a work made for hire and/or (b) there are any rights     
which do not accrue to Sponsor as a work made for hire, this Agreement shall    
operate as an irrevocable grant, transfer, sale and assignment to Sponsor of    
all right, title and interest, including all copyrights (and all renewals,      
extensions and revisions thereof) in the aforesaid Deliverable, in any media    
and for any purpose now or hereafter known.                                     

10.2 Underlying Technology. Notwithstanding anything to the contrary contained  
herein, the Deliverables shall include the software, technology and/or code     
created by Developer, except to the extent such software, technology and/or     
code is subject to the rights of third parties. Further, it is expressly        
understood that Developer hereby transfers any and all of its right, title and  
interest in and tothe underlying technology, know-how, trade secrets or         
processes associated with the Work, including but not limited to any and all    
patent rights pertaining thereto.                                               

Section 11                                                                      
CONFIDENTIAL INFORMATION                                                        
11.1 No Confidential Information of Developer Unless Specified. It is           
understood and agreed that Sponsor does not wish to receive from Developer any  
Confidential Information of Developer or of any third party and any information 
provided to Sponsor in the course of entering into this Agreement or any Work   
Statement or performing work under any Work Statement issued hereunder shall    
not be deemed Confidential Information of Developer unless specifically         
identified as Confidential Information by Developer. In such case, Developer    
shall designate such information as Confidential Information upon or prior to   
disclosure. All materials containing confidential information must have a       
restrictive marking of the disclosure at the time of disclosure, or if          

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91disclosed orally, identified as confidential at the time of disclosure.         
Notwithstanding the foregoing, all information disclosed by authorized access   
to a database, internal web site, server or computer network is Confidential    
Information. With respect to any Confidential Information of Developer          
delivered or divulged to Sponsor, Sponsor shall accord such Confidential        
Information the same protection it accords its own Confidential Information,    
but in no event less than a reasonable standard of care.                        

11.2 Confidential Information of Sponsor. From time to time Sponsor may provide 
its own Confidential Information to Developer in connection with the work to be 
performed by Developer under Work Statements issued hereunder. Sponsor shall    
designate such information as Confidential Information upon or prior to         
disclosure in accord with Section 11.1 above. In addition, the preparation and  
specifications of the Deliverables shall in all instances be treated as         
confidential. With respect to any Confidential Information of Sponsor delivered 
or divulged to Developer, Developer shall accord such Confidential Information  
the same protection it accords its own Confidential Information, but in no      
event less than a reasonable standard of care.                                  

11.3 Nondisclosure and Use. This section shall apply to all Confidential        
Information disclosed during the period that begins on the Effective Date       
hereof and ends five (5) years thereafter. For the term of this Agreement, the  
parties shall (i) use the same care and discretion to avoid disclosure of the   
Confidential Information as they would use with their own similar information   
that they did not want disclosed or used improperly; (ii) shall not disclose    
any information to third parties; and (iii) shall use the Confidential          
Information only in connection with the express purpose of this Agreement and   
all Work Statements.                                                            

The parties agree to exert best commercial efforts: (i) not to make public or   
authorize any disclosure or publication of Confidential Information, except as  
expressly agreed to in writing; (ii) to take all reasonable and necessary steps 
to enforce this Agreement and to assure that all principals, officers, agents,  
employees, representatives, consultants or any other persons affiliated in any  
manner with the parties do not disclose, or make public, or authorize any       
disclosure or publication of any Confidential Information; (iii) not to use the 
Confidential Information for any purpose other than the purposes related to     
this Agreement and Work Statements; (iv) to advise each other in writing of any 
misappropriation or misuse by any person or entity of Confidential Information  
immediately upon the notice thereof.                                            

The parties may disclose the Confidential Information to their respective       
officers, principals and employees only to the limited extent necessary to      
affect the purpose of this Agreement and Work Statements. To the extent that    
the parties desire to make disclosure to any persons other than its officers,   
principals or employees, as a condition precedent to disclosure, said disclosee 
must execute a confidentiality/non-use agreement in a form substantially        
similar to this Agreement.                                                      

11.4 Exceptions. Notwithstanding the provisions of Sections 11.1, 11.2 and      
11.3, the receiving party shall have no liability to the disclosing party with  
regard to Confidential Information which:                                       

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1.   was generally known and available in the public domain at the time it was  
disclosed or becomes generally known and available in the public domain through 
no fault of the receiving party;                                                

2.   was known to the receiving party at the time of disclosure as shown by the 
files of the receiving party in existence at the time of disclosure;            
3.   is disclosed with the prior written approval of the disclosing party;      
4.   was independently developed by the receiving party (or by its employees or 
agents who have not been exposed to such Confidential Information) without any  
use of Confidential Information;                                                

5.   becomes known to the receiving party from a source other than the          
disclosing party without breach of this Agreement by the receiving party and    
otherwise not in violation of the disclosing party's rights; or                 
6.   is disclosed pursuant to the order or requirement of a court,              
administrative agency, or other governmental body; provided, that the receiving 
party shall provide prompt, advance notice thereof to enable the disclosing     
party to seek a protective order or otherwise prevent such disclosure and the   
disclosure shall be only to the extent of the order or requirement.             

Section 12                                                                      
WARRANTIES                                                                      
12.1 Warranties. Developer represents and warrants that the Deliverables shall: 
meet or exceed any specifications referred to in any Work Statement; be of      
merchantable quality; be free from all material defects in material and         
workmanship; and shall not infringe upon nor be subject to the rights of any    
third parties. Developer further represents and warrants that it has the right  
and authority to convey to Sponsor all intellectual property rights             
contemplated hereunder free and clear of any and all liens and encumbrances.    
The exclusive remedy for breach of this warranty shall be repair or replacement 
of the affected Deliverables, at Developer's option.                            

Any warranties in this Section 12 are to the Sponsor only, and are contingent   
upon the proper use for which the Deliverables are intended, and do not cover   
Deliverables which have been modified in any way.                               

EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN, AND EXCEPT AS TO TITLE, THERE ARE  
NO OTHER WARRANTIES, EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, DESIGN,    
FUNCTIONING, OF SPONSOR'S OR ANY SUBSEQUENT PURCHASER'S USE, MERCHANTABILITY,   
FITNESS FOR ANY PURPOSE OR USE OF THIS PRODUCT, FREEDOM FROM INFRINGEMENT OR    
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT TO THIS PRODUCT.   
DEVELOPER SHALL NOT BE LIABLE TO SPONSOR OR ANY SUBSEQUENT PURCHASER FOR ANY    
INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, LIABILITY, LOSS OR      
DAMAGE, INCLUDING, WITHOUT LIMITATION (INCLUDING STRICT LIABILITY AND TORT)     
CAUSED OR ALLEGED TO HAVE BEEN CAUSED BY THE USE OR INABILITY TO USE THE        
PRODUCT.                                                                        

Section 13                                                                      
TERM AND TERMINATION                                                            
13.1 Term of Agreement. This Agreement shall be effective upon the date         
specified at the beginning hereof and shall remain in force for a period of Six 
(6) months, unless otherwise terminated as provided herein. However, this       
Agreement shall continue to remain in effect with respect to any Work           

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93Statements already issued hereunder at the time of such termination, until such 
Work Statements are themselves terminated and performance thereunder is         
completed.                                                                      

13.2 Termination of Agreement. Either party may terminate this Agreement upon   
not less than 15 days notice to the other party. However, this Agreement shall  
continue to remain in effect with respect to any Work Statement already issued  
hereunder until such other Work Statement is itself terminated and/or           
performance thereunder is completed.                                            

13.3 Survival. In the event of any termination of this Agreement, Sections, 10  
through 15 hereof shall survive and continue in effect and shall inure to the   
benefit of and be binding upon the parties and their legal representatives,     
heirs, successors, and assigns.                                                 

Section 14                                                                      
INDEMNIFICATION                                                                 
14.1 Indemnification of Developer by Sponsor. Sponsor shall hold Developer      
harmless from and indemnify and defend Developer and Developer's subsidiaries,  
affiliates, respective directors, officers, employees, agents and assigns from  
and against any suits, actions, claims, losses, demands, damages, liabilities   
and causes of action of every kind or character and nature as well as costs and 
expenses incident thereto (including reasonable attorneys' fees) arising out of 
Sponsor's business relationship with Designer Products, Inc., whether or not    
related to this Agreement.                                                      

Section 15                                                                      
MISCELLANEOUS                                                                   
15.1 Force Majeure. Neither party hereto shall be responsible for any failures  
to perform its obligations under this Agreement (other than obligations to pay  
money) caused by an event reasonably beyond its control, including but not      
limited to, wars, riots, labor strikes, natural disasters, or any law,          
regulation, ordinance, or other act or order of any court, government, or       
governmental agency. Obligations hereunder, however, shall in no event be       
excused but shall be suspended only until the cessation of any cause of such    
failure. In the event that such force majeure should obstruct performance of    
the Agreement for more than one (1) month, the parties hereto shall consult     
with each other to determine whether this Agreement should be modified. The     
party facing an event of force majeure shall use its best endeavors in order to 
remedy that situation as well as to minimize its effects. A party experiencing  
an event of force majeure shall notify the other party as soon as possible      
after its occurrence.                                                           

15.2 No Agency. Developer, in rendering performance under Work Statements       
issued hereunder from time to time, is acting solely as an independent          
contractor. Sponsor does not undertake by this Agreement or otherwise to        
perform any obligation of Developer, whether by regulation or contract. In no   
way is Developer to be construed as the agent or to be acting as the agent of   
Sponsor in any respect, any other provisions of this Agreement or any Work      
Statements issued hereunder notwithstanding.                                    

15.3 Multiple Counterparts. This Agreement may be executed in several           
counterparts, all of which taken together shall constitute one single Agreement 
between the parties.                                                            

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15.4 Section Headings; Exhibits. The section and subsection headings used       
herein are for reference and convenience only, and shall not enter into the     
interpretation hereof. The exhibits referred to herein and attached hereto, or  
to be attached hereto, including all Work Statements issued hereunder from time 
to time, are incorporated herein to the same extent as if set forth in full     
herein.                                                                         

15.5 Required Approvals/Further Instruments. Where agreement, approval,         
acceptance, or consent by either party is required by any provision of this     
Agreement, such action shall not be unreasonably delayed or withheld. Developer 
shall execute such further assignments, instruments and documents upon the      
request of Sponsor as may be reasonably necessary to effectuate the             
transactions contemplated under this Agreement.                                 

15.6 No Waiver. No delay or omission by either party hereto to exercise any     
right or power occurring upon any noncompliance or default by the other party   
with respect to any of the terms of this Agreement shall impair any such right  
or power or be construed to be a waiver thereof. A waiver by either of the      
parties hereto of any of the covenants, conditions, or agreements to be         
performed by the other shall not be construed to be a waiver of any succeeding  
breach thereof or of any covenant, condition, or agreement herein contained.    
Unless stated otherwise, all remedies provided for in this Agreement shall be   
cumulative and in addition to and not in lieu of any other remedies available   
to either party at law, in equity, or otherwise.                                

15.7 Authority of Developer. Developer has the sole right and obligation to     
supervise, manage, contract, direct, procure, perform, or cause to be performed 
all work to be carried out by Developer hereunder unless otherwise provided     
herein.                                                                         

15.8 Governing Law. This Agreement shall be governed by and construed in        
accordance with the laws of the State of Arizona.                               

15.9 Entire Agreement. This Agreement and the exhibits annexed hereto, together 
with the Work Statements issued from time to time hereunder, constitute the     
entire agreement between the parties. No change, waiver, or discharge hereof    
shall be valid unless it is in writing and is executed by the party against     
whom such change, waiver, or discharge is sought to be enforced.                

15.10     Notices. Under this Agreement if one party is required to give notice 
to the other, such notice shall be deemed given if mailed by U.S. mail,         
certified first class, postage prepaid, and addressed as follows:               

SunnComm, Inc., 668 North 44th Street, Suite 220, Phoenix, AZ 85008             
With a copy to: Gammage & Burnham, P.L.C., Two North Central Avenue, 18th       
Floor, Phoenix, Arizona 85004, Attention: William D. O'Neal, Esq.               
BTEK Software, Inc., 4636 East Elwood Street, Suite12, Phoenix, AZ 85040-1963   
With a copy to : Greenberg Traurig LLP, One East Camelback Road, Suite          
1100, Phoenix, AZ 85012, Attention: John Burton, Esq.                           

15.11     No Assignment. Neither party may, without the prior written consent   
of the other party, assign or transfer this Agreement or any obligation         
incurred hereunder, except by merger, reorganization, consolidation, or sale of 
all or substantially all of such party's assets. Any attempt to do so in        
contravention of this Section shall be void and of no force and effect.         

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9515.12     Compliance With Laws. Sponsor shall insure compliance with all laws   
and regulations applicable to this Agreement or performance under this          
Agreement, including, but not limited to, all local laws and regulations        
governing import/export, business practices (including advertising,             
competition/antitrust and the United States Foreign Practices Act), language    
requirements, product safety, consumer and purchaser protection and warranty.   
Sponsor shall be responsible for obtaining all approvals from governmental or   
other authorities, including without limitation, export licenses, in connection 
with this Agreement and any performance hereunder. The Sponsor shall be         
responsible for the payment of all costs of compliance, levies, taxes, fees or  
other obligations (including damages and/or fines). The Sponsor shall           
immediately notify Developer of all legal obligations or requirements and       
obtain Developer's prior approval of the Sponsor's plan for compliance.         

IN WITNESS THEREOF, Sponsor and Developer have caused this Agreement to be      
signed and delivered by their duly authorized officers, all as of the date      
first hereinabove written.                                                      

SPONSOR   DEVELOPER                                                             
SUNNCOMM, INC. BTEK SOFTWARE, INC.                                              

By:_________________________________    By:_________________________________    
John D. Aquilino, Chairman            Stanley Babowicz, President     

Date: _____________________________     Date: ______________________________    

Attachment 01 to Master Development Agreement # 00080401
WORK STATEMENT
0008040101                                                                      
Title: CD Software Sentinel                                                     
Date:  March 6, 2001                                                            

1.   GENERAL                                                                    
This is Work Statement Attachment 01 under Master Development Agreement No.     
00080401.                                                                       

Parties in Agreement:                                                           
-The Sponsor, SunnComm, Inc. at 668 North 44th Street, Suite 220, Phoenix, AZ   
85008                                                                           

- The Developer, BTEK Software, Inc. at 4636 East Elwood Street, Suite12,       
Phoenix, AZ 85040-1963                                                          

2.   NAMES OF TECHNICAL COORDINATORS                                            
SunnComm, Inc.                                                        
John D. Aquilino                                                      
602-267-7500                                                          
BTEK Software, Inc.                                                   
Stanley Babowicz                                                      
480-303-9394                                                          

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3.   SUMMARY OF PURPOSE FOR STATEMENT OF WORK                                   
General description of work or services:                                        
-This effort consists of Software Programming and is classified as work made    
for hire.                                                                       

4.   IDENTIFICATION OF PRE-EXISTING WORKS                                       
None                                                                            

5.   EQUIPMENT AND PROGRAMMING TO BE PROVIDED BY SPONSOR, IF ANY                
CD-Players, DVD Players, CD Recorders, Mastering equipment, and any other       
equipment deemed necessary by sponsor and developer for testing.                

6.   OTHER DEVELOPER RESOURCES                                                  
None                                                                            

7.   DESCRIPTION OF DELIVERABLES                                                
For purposes of this Work Statement, Deliverables and "Product" shall have the  
same meaning.                                                                   

7.1  SUNNCOMM WAV CIPHER                                                        
a.   Design and development of software program or programs containing          
proprietary encryption software that will encrypt selected files at a separate  
location causing said files to be encrypted and protected. The program(s) shall 
work in:  Windows (2000, NT, 98, 95) Mac OS 8.5, Linux 6.2, .WAV audio files    
44.1Mhz 16 bit Stereo Redbook PCM.                                              
b.   Design and development of proprietary encryption cipher that will encrypt  
and protect the executable of the program described herein.                     

7.2  SUNNCOMM SENTINEL COPY PROTECTION                                          
a.   Design and development of software program or programs containing          
proprietary CD audio copy protection for .WAV audio files 44.1Mhz 16 bit Stereo 
Redbook PCM. The specification produced will be used to produce music CD's in   
large quantities.                                                               

7.3  SUNNCOMM SENTINEL                                                          
a.   Design and development of software program or programs that will let the   
user choose the proprietary encrypted files, create a custom play list, decrypt 
the files and write them in a single stream to most standard CD-R Drives in any 
order they wish. Design and development of an authorization code scheme         
allowing the end user to create multiple copies will be placed into the         
software. The audio files shall be able to be played in most currently          
available Compact disk players. The program(s) shall work in: Windows (2000,    
NT, 98, 95) Mac OS 8.5, Linux 6.2. .WAV audio files 44.1Mhz 16 bit Stereo       
Redbook PCM.                                                                    

b.   Design and development of software program or programs containing          
proprietary Copy Protection method allowing for multiple levels of copy         
protection to be added to the CD-R to prevent the copying of files or the       
duplication of the disk. The program(s) shall work in: Windows (2000, NT, 98,   
95) Mac OS 8.5, Linux 6.2, .WAV audio files 44.1Mhz 16 bit Stereo Redbook PCM.  
c.   Design and development of proprietary encryption cipher that will encrypt  
and protect the executable of the programs described herein.                    

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977.4  SUNNCOMM PLAYER                                                            
a.   Design and development of software program or programs containing a        
proprietary code to "play" the SunnComm Wav Cipher encrypted files that reside  
on the local system. This program should decrypt the selected files on the fly, 
(in real time) in small intervals allowing the end user to listen to the        
program material. The purpose of the software should be to allow the end user   
the ability to listen to the music they have purchased on their personal        
computer while maintaining the integrity of the security protecting the data.   
The program(s) shall work in: Windows (2000, NT, 98, 95) .WAV audio files       
44.1Mhz 16 bit Stereo Redbook PCM.                                              

b.   Design and development of proprietary encryption cipher that will encrypt  
and protect the executable of the program described herein.                     

8.   CONSIDERATION TO DEVELOPER                                                 

a.   In accordance with Section 5.1 of the Master Development Agreement No.     
00080401, Sponsor agrees to pay Developer a Fixed Price in the amount of eight  
hundred seventy nine thousand dollars ($879,000.00) as partial consideration    
for the services rendered by Developer under Work Statement No. 0008040101.     

b. Additionally and in accord with Section 5.4 of the Master Development        
Agreement referenced in Section 8(a) above, Sponsor agrees to pay Developer one 
percent (1%) of the Net Factory Sales Price on all Sales or other disposition   
of the Deliverables.                                                            

c.   Sponsor agrees to grant stock options pursuant to Section 12 of this Work  
Statement.                                                                      

9.   TERMINATION:                                                               

This Work Statement may be terminated by mutual consent of both parties by not  
less than thirty, (30) days written notice delivered in accordance with Section 
13 of the Agreement. If terminated by Developer prior to final delivery,        
Developer shall refund the pro-rata balance of payments made in advance.        
Developer shall further deliver all work completed to that point including any  
and all documentation.                                                          

10.  PAYMENT SCHEDULE                                                           

As of March 1, 2001 Developer has received a total payment of $237,500.00. This 
contract will commence upon delivery of the signed work statement with          
additional payments to be made in accordance with the following payment         
schedule:                                                                       

SunnComm, Inc. Payment Schedule                                                 
Fixed Price Portion of Work Statement #0008040101                               
Payable to BTEK software, Inc.                                                  

Fixed Price Amount                                                              

$879,000.00                                                                     

Amount Received as of March 1, 2001               $237,500.00                   

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Balance Due Work Statement #0008040101            $641,500.00                   

Payment Schedule for March 2001                                                 
through May 2001                                                              

Mar-2001$25,000.00                                                              
Apr-2001$25,000.00                                                              
May-2001                                                                        

Promisory Note                                     $97,500.00                   

Paid by May 30, 2001                              $147,500.00                   

Balance Due as of June 1, 2001                    $494,000.00                   

Payment Schedule for June 2001 through April 2002                               

Jun-2001                   $35,000.00                                           
Jul-2001                   $35,000.00                                           
Aug-2001                   $40,000.00                                           
Sep-2001                   $40,000.00                                           
Oct-2001                   $47,000.00                                           
Nov-2001                   $47,000.00                                           
Dec-2001                   $50,000.00                                           
Jan-2002                   $50,000.00                                           
Feb-2002                   $50,000.00                                           
Mar-2002                   $50,000.00                                           
Apr-2002                   $50,000.00                                           

11.  SCHEDULE AND PERFORMANCE CRITERIA                                          

a.   Developer will provide finalized schedules within thirty- (30) working     
days of the execution hereof, which schedule Sponsor shall approve.             

b.   Developer will provide to Sponsor, via electronic communications, weekly   
status updates.                                                                 

c.   Developer and Sponsor shall meet bi-monthly at a time and place to be      
mutually agreed upon.                                                           

12.  STOCK OPTIONS                                                              

Sponsor agrees to grant to below-designated employees of Developer the          
below-identified numbers of Sponsor's restricted common stock upon achievement  
of certain milestones as follows:                                               

a.   To Mr. Stanley Babowicz                                                    

500,000 shares upon execution of this Agreement                                 
250,000 shares upon successful final testing and unit integration               
250,000 shares upon completion of deployment                                    

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99b.   To Sandra Yvonne Walters                                                   
75,000 shares upon execution of this Agreement                                  
37,500 shares upon successful final testing and unit integration                
37,500 shares upon completion of deployment                                     

c.   To Gail Janine Brown                                                       
12,500 shares upon execution of this Agreement                                  
12,500 shares upon successful final testing and unit integration                
. All shares shall bear a restrictive legend in accordance with the rules and 
regulations of the Securities and Exchange Commission. Said shares mentioned in 
12a,b,c in this paragraph shall be included in the next registration statement  
filed by the Company. Mr. Stanley Babowicz agrees that he shall not sell a      
total, in any one week period, that shall exceed one percent (1%) of his total  
Sunncomm, Inc. holdings during the first twelve (12) months of this agreement.  

14. ACCEPTANCE AND TESTING PROCEDURES                                           
Time for Sponsor to accept work will be Thirty- (30) days from receipt of work. 
Testing will entail Test case design, Component testing, Usability testing,     
Integration testing, Performance testing, System testing, Regression testing,   
and Unit testing of the applications.                                           
14. LOCATION OF WORK FACILITIES                                                 
Substantially all of the work will be conducted by BTEK at its regular office   
located in Phoenix, AZ.                                                         
-------------------------------------                                           

FOR SUNNCOMM, INC.  FOR BTEK SOFTWARE, INC.                                     

By:_________________________  By:__________________________                     
John D. Aquilino, Chairman    Stanley Babowicz, PresidentDate:        
_______________________  Date: ________________________Exhibit 10.05a           

WINDOWS MEDIA COMPATIBLE                                                        
LOGO LICENSE AGREEMENT                                                        

This Windows Media Compatible Logo License Agreement  ("Logo Agreement") is     
made and entered into by and between  Microsoft Corporation, ("Microsoft"), and 
the person or entity  identified in the table above ("Licensee") upon signature 
by  both parties.                                                               

1.   DEFINITIONS                                                                
(a)  "Effective Date" means the date upon which the  Logo Agreement takes       
effect, which is the later of the signature  dates below.                       
(b)  "Logo" means the "Windows Media Compatible"  logo depicted in the attached 
Exhibit A (incorporated herein by reference), or such additional or replacement 
logo(s) Microsoft may provide from time to time under this Logo Agreement. (c)  
 "Product" means Licensee's product(s) listed in Exhibit B (incorporated
herein by reference) that meet the applicable criteria set forth in Exhibit B.  

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2.   LICENSE GRANT & RESTRICTIONS                                               
(a)  Microsoft hereby grants to Licensee a worldwide nonexclusive,              
nontransferable, royalty-free, personal license to use the Logo solely in       
conjunction with the Product, and solely in the manner described in the         
specifications set forth in the attached Exhibit A, as such specifications may  
be prescribed by Microsoft from time to time. Licensee shall not assign,        
transfer, or sublicense this Logo Agreement (or any right granted herein) in    
any manner. All rights not expressly granted herein are reserved by Microsoft.  
(b)  This Logo Agreement does not grant by implication, estoppel or otherwise,  
a license to any Microsoft technology or proprietary right other than the       
permitted use of the Logo pursuant to Section 2(a).                             

3.   OWNERSHIP, IDENTIFICATION & USE                                            
(a)  Licensee acknowledges Microsoft's sole ownership of the Logo and the       
Windows Media trademark, and all associated goodwill; and that Microsoft        
retains all right, title, and interest in and to the Logo. All use of the Logo  
by Licensee will inure to the benefit of Microsoft. (b)     Licensee will not   
use the Logo in any manner that will diminish or otherwise damage Microsoft's   
goodwill in the Logo. Licensee will not adopt, use, or register any corporate   
name, trade name, trademark, domain name, service mark or certification mark,   
or other designation confusingly similar to the Logo.  (c)  Licensee will take  
reasonable steps to notify Microsoft of any suspected infringement of or        
challenge to the Logo of which Licensee becomes aware. Microsoft will have the  
sole right to, and in its sole discretion may, commence, prosecute, or defend,  
and control any action concerning the Logo.                                     

4.   QUALITY CONTROL                                                            
(a)  All Product distributed in connection with the Logo shall: (i) meet the    
Criteria set forth in Exhibit B (ii) be at least commensurate with the quality  
of products distributed by Licensee before the Effective Date, (iii) meet or    
exceed standards of quality and performance generally accepted in the industry, 
and (iv) comply with all applicable laws, rules, and regulations, and not       
violate or infringe any right of any third party ("Quality Standards").         
Licensee shall use the Logo solely in connection with Product that meets the    
Quality Standards. (b)   Licensee shall cooperate fully with Microsoft to       
facilitate periodic review of Licensee's use of the Logo and of Licensee's      
compliance with the Quality Standards. Licensee shall promptly correct and      
remedy any deficiencies in its use of the Logo and conformance to the Quality   
Standards upon reasonable notice from Microsoft.                                

5.   INDEMNIFICATION FROM LICENSEE                                              
Licensee will indemnify and defend Microsoft from and against any and all       
claims, damages, costs, and expenses (including reasonable attorneys' fees) and 
pay the amount of any adverse final judgment (or settlement to which both       
parties consent) arising out of or related to the Product in any manner;        
provided Licensee is notified promptly in writing of any claim, Licensee has    
sole control over its defense or settlement, and Microsoft provides reasonable  
assistance, at Licensee's expense, in the defense of the same.                  

6.   INDEMNIFICATION FROM MICROSOFT                                             
(a)  Microsoft will indemnify and defend Licensee from and against any and all  
claims, damages, costs, and expenses (including reasonable attorney's fees),    
and pay the amount of any adverse final judgment (or settlement to which both   
parties consent) resulting from, third party claim(s) (hereinafter "Indemnified 
Claims") that the Logo infringes any trademark rights of such third party;      
provided Microsoft is notified promptly in writing of the Indemnified Claim and 
has sole control over its defense or settlement, and Licensee provides          
reasonable assistance, at Microsoft's expense, in the defense of the same.      
(b)  In the event Microsoft receives information concerning an intellectual     
property infringement claim (including an Indemnified Claim) related to the     
Logo, Microsoft may at its expense, without obligation to do so:  (i) procure   
for Licensee the right to continue to distribute the alleged infringing Logo,   
or (ii) replace or modify the Logo to make it non-infringing, in which case,    
Licensee shall thereupon cease distribution of the alleged infringing Logo; or  
(iii) instruct Licensee to cease use of the Logo without providing a            
replacement.                                                                    
(c)  Microsoft shall have no liability for any intellectual property            
infringement claim (including an Indemnified Claim) based on Licensee's         
manufacture, distribution, or use of the Logo after Microsoft's notice that     
Licensee should cease use of such Logo, or begin use of a substitute Logo due   
to such a claim. For all claims described in this Section 6(c), Licensee agrees 
to indemnify and defend Microsoft from and against all damages, costs and       
expenses, including reasonable attorneys' fees.                                 
7.   DISCLAIMER OF WARRANTY & LIMITATION OF LIABILITY                           
(a)  MICROSOFT MAKES NO WARRANTIES                                              
EITHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE WITH RESPECT TO THE LOGO.       
(b)  EXCEPT AS PART OF A THIRD PARTY DAMAGE CLAIM FOR WHICH ONE OF THE PARTIES  
IS OBLIGATED TO INDEMNIFY THE OTHER, NEITHER PARTY SHALL BE LIABLE FOR ANY      
CONSEQUENTIAL, INCIDENTAL, INDIRECT, PUNITIVE OR SPECIAL DAMAGES (INCLUDING     
LOST PROFITS) ARISING FROM OR RELATED TO LICENSEE'S USE OF THE LOGO, REGARDLESS 
OF WHETHER SUCH LIABILITY IS BASED ON BREACH OF CONTRACT, TORT, STRICT          
LIABILITY, BREACH OF WARRANTIES, INFRINGEMENT OF INTELLECTUAL PROPERTY, FAILURE 
OF ESSENTIAL PURPOSE OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH   
DAMAGES.                                                                        

8.   TERM AND TERMINATION                                                       
(a)  The term of this Logo Agreement shall be a period of two (2) years         
commencing upon the Effective Date; provided however, that either party may     
terminate this Logo Agreement, with or without cause, upon thirty (30) days     
prior written notice.                                                           
(b)  From and after termination or expiration of this Logo Agreement, Licensee  
will immediately cease from all use of the Logo. However, unless this Logo      
Agreement is terminated for breach, and subject to Section 6, Licensee may      
distribute then- existing units of Product and advertising materials containing 
the Logo for a period of ninety (90) days from the termination date or          
expiration of the term, provided use of the Logo in connection with such units  
is in compliance with the terms and conditions of this Logo Agreement.          

9.   NOTICES                                                                    
All notices in connection with this Logo Agreement will be addressed as stated  
below and will be deemed given when:  (i) deposited in the mail, postage        
prepaid, certified or registered, return receipt requested; or (ii) sent by air 
express courier, charges prepaid. The parties shall fax a copy of any such      
notices to the fax numbers identified below on the same day.                    
MICROSOFT:     Microsoft Corporation                                            
One Microsoft Way                                           
Redmond, WA 98052-6399 USA                                  
Attention:     Windows Media Logo Department                                    
Fax:           (425) 936-7329                                                   
With Copy To:  Law & Corporate Affairs, Trademarks                              
Fax: (425) 936-4112                                                             
LICENSEE: Information listed at the top of this Agreement.                      

10.  MISCELLANEOUS                                                              
(a)  Entire Agreement. This Logo Agreement, including all Exhibits, comprises   
the entire party's agreement concerning  the subject matter hereof, and         
supersedes and merges all prior and contemporaneous communications. It may be   
amended only by written agreement signed by the parties. (b)     Governing Law. 
This Logo Agreement shall be governed by the laws of the State of Washington    
not withstanding the application of any conflict of law rules.  Licensee        
consents to the jurisdiction and venue in the state and federal courts in       
Washington. Process may be served on either party in the manner set forth in    
Section 9 for the delivery of notices or by such other method as is authorized  
by applicable law or court rule.                                                
(c)  Attorneys' Fees. In any action to enforce this Logo Agreement, the         
non-prevailing party shall pay the prevailing party's reasonable attorneys'     
fees, costs, and other expenses. (d)    No Waiver. No waiver of any breach of   
any provision of this Logo Agreement shall constitute a waiver of any other     
breach, and no waiver shall be effective unless made in writing, signed by the  
waiving party. (e)  Severability. If any provision of this Logo Agreement (or   
any other agreements incorporated herein) shall be held by a court of competent 
jurisdiction to be illegal, invalid or unenforceable, the remaining provisions  
shall remain in full force and effect.                                          
(f)  Survival. The provisions of Sections 3(a), 3(b), 7, 8(b), 9, and 10, as    
well as Section 5 with respect to Product(s) distributed during the term of     
this Logo Agreement and Section 6 for claims based on use of the Logo permitted 
herein prior to the effective date of termination or expiration of the term of  
this Logo Agreement, shall survive expiration or termination of this Logo       
Agreement.                                                                      

IN WITNESS WHEREOF, the parties hereto have executed this Logo Agreement by     
their duly authorized representatives. The individual signing on behalf of      
Licensee below hereby represents and warrants that he or she has full authority 
to sign this Logo Agreement and bind Licensee to perform all duties and         
obligations contemplated by this Logo Agreement.                                

MICROSOFT CORPORATION                                                           
LICENSEE                                                                        
Exhibit A                                                                       

Windows Media Compatible Logo License Agreement                                 
Specifications for Using the Windows Media Compatible Logo                      
Vertical Logo           Horizontal Logo                                         

Microsoft has established the following set of branding specifications to       
assist you in proper use of the Windows Media Compatible logo ("Logo").         
Microsoft reserves the right to change the Logo and/or these specifications at  
any time at its discretion.  You must comply with the specifications as amended 
from time to time.                                                              

Specifications for Logo use:                                                    
?    You must sign the Windows Media Compatible Logo License Agreement ("Logo   
Agreement") before using the Logo. ?    You have the option to use the vertical 
or horizontal version of the Logo. The Logo may only be used on packaging,      
collateral materials, documentation, and advertising, including Web             
advertising, for licensed Product, and not in any manner that may imply that    
non-licensed products meet the Quality Standards set forth in this Logo         
Agreement. ?   Your company name, logo, or product name must appear on any      
products or related materials where the Logo is used. The Logo must be smaller  
and less prominent than your Product name, trademark, logo, or trade name.      
?    The Logo may not be used in any manner that expresses or might imply       
Microsoft's affiliation, sponsorship, endorsement, or approval other than as    
contemplated by the Logo Agreement.                                             
?    You may not use the Logo in a manner that might suggest co-branding or     
otherwise create potential confusion as to the source of the Product or         
ownership of the Logo. You may not display the Logo in any manner that suggests 
that your Product is a Microsoft product, or in any manner that suggests that   
"Microsoft" , "Windows", or "Windows Media" are a part of your Product name.    
?    The Logo may not be included in any non-Microsoft trade name, business     
name, product or service name, logo, trade dress, design, slogan, or other      
trademark.                                                                      
?    Microsoft will provide you with artwork of the Logo. You may not alter     
this artwork in any way. None of the words may be abbreviated, translated or    
transliterated, as in non-English documentation.                                
?    The Logo may not be combined with any other symbols including, words,      
logos, icons, graphics, photos, slogans, numbers, or other design elements.     
?    The Logo (including by not limited to Microsoft's logos, logotypes, trade  
dress, and other elements of product packaging and web sites) may not be        
imitated in any of your materials.                                              
?    The Logo, or any element thereof, may not be used as a design feature in   
any materials.                                                                  
?    The Logo must stand-alone. A minimum amount of empty space must be left    
between the Logo and any other object such as type, photography, borders,       
edges, etc. The required border of empty space around the Logo must be 1/2x     
wide, where x equals the height of the Logo.                                    
?    Minimum size for the Logo is 1/2 inch high unless otherwise approved by    
Microsoft.                                                                      
?    The Logo must include the (tm) and (r) symbols as shown in this exhibit.   
?    The Logo shall be attributed to Microsoft Corporation in all materials     
where it is used, with the attribution clause: "Microsoft, Windows Media, and   
the Windows Logo are trademarks or registered trademarks of Microsoft           
Corporation in the United States and/or other countries." Four color            
applications The color version is the preferred way of reproducing the Logo.    
The Flag consists of a black frame with corresponding tails and four colored    
panes with corresponding tails. The color version can be reproduced only as     
described here. The pane colors must appear in the positions described and the  
tails must appear in the colors of the corresponding left-hand panes. The frame 
and accompanying words print in black. The four-color version must always       
appear on a white background. The designated colors are as follows:             
Pane      Color     Pantone        Four-color process  RGB (8-bit)    Hex#      
Upper left     Red  PMS 172        M65%+Y85%      255-51-0       FF3300         
Upper right    Green     PMS 360        C55%+Y80%      102-204-51     66CC33    
Lower left     Blue PMS 279        C70%+M30%      0-153-255 0099FF              
Lower right    Yellow    PMS 123        M20%+Y100%          255-204-0 FFCC00    

Black and white applications: Black and white reproductions of the Logo may be  
positive or reversed. If you have any questions please e-mail                   
wmlogo@microsoft.com.                                                           

Exhibit B                                                                       

Windows Media Compatible Logo License Agreement                                 
Criteria and Licensed Product                                                   

Criteria                                                                        
Product must fall under one of the categories below, and meet all of the        
criteria for that category to be eligible for the Logo. If product              
could fall under multiple categories, it must meet the criteria for the         
category closest to the nature and primary function of the product.             
(e.g. a product used for caching may only qualify for the Logo pursuant to the  
criteria for caching devices).                                                  

Storage Products. (Including but not limited to: removable media storage        
devices such as flash RAM or CD-R).                                             
All storage products must meet the criteria below to qualify for the Logo:      
?    Product is a solid state, flash, storage card which adheres to the SD      
Specification. OR, Product is a portable storage medium                         
which includes a unique serial number or other identifier that can be read and  
used by Microsoft's Digital Rights Management                                   
technology. AND                                                                 
?    Product Ships with a Windows Media Device Manager compatible service       
provider software component that enables the                                    
secure transfer of content in the Windows Media format, protected by Digital    
Rights Management to the portable media. AND                                    
?    Product makes use of Microsoft Windows Media software pursuant to a valid  
Windows Media Format Software Development                                       
Kit license agreement with Microsoft.                                           

Creation and Editing Software. (Including but not limited to: audio/video       
editors, encoding tools, conferencing gateways, digital music                   
applications, CD burners, video email, personal broadcasting applications,      
digital recording applications)                                                 
All creation and editing software products must meet the criteria below to      
qualify for the Logo:                                                           
?    Product is software that extends Microsoft's Windows Media Software, such  
as the Windows Media Tools, Windows Media                                       
Services, or Windows Media Rights Manager tools. OR                             
?    Product makes use of Microsoft Windows Media software pursuant to a valid  
Windows Media Format Software Development                                       
Kit or Windows Media Tools Software Development Kit license agreement with      
Microsoft to create and/or edit Windows                                         
Media formatted content with a .WMA or .WMV extension. AND                      
?    Product is not a solution for caching and/or distributing Windows Media    
formatted content.                                                              

Windows Media Services add-ons. (Including but not limited to: log reporting    
tools, playlist management software, scheduling                                 
applications, server monitoring and management applications, file storage       
systems)                                                                        
All extensions to Windows Media services must meet the criteria below to        
qualify for the Logo:                                                           
?    Product is software that extends Microsoft's Windows Media Services        
through the use of APIs, plug-ins or log files; AND                             
?    Product is not a solution for caching and/or distributing Windows Media    
formatted content.                                                              

Caching Devices.                                                                
All caching products must meet the criteria below to qualify for the Logo:      
?    Product facilitates the delivery of content in the Windows Media format by 
use of caching, replication, or distribution of media,                          
AND                                                                             
?    Product makes use of Microsoft Windows Media Technologies pursuant to a    
valid Windows Media Dedicated Caching                                           
Appliance License and Distribution Agreement with Microsoft.                    

Product                                                                         

Product Name                       Type of Product               Version Number 
(as applicable)                                                                 
Windows Media Compatible LLA (2.0) 1    6/30/2000                               
Windows Media Compatible LLA (2.0) 4    6/30/2000                               

Exhibit 10.05B                                                                  

MICROSOFT WINDOWS MEDIA FORMAT                                                  
SOFTWARE DEVELOPMENT KIT VERSION 7 LICENSE AGREEMENT                            
FOR COMMERCIAL USE- DECEMBER 2000 VERSION                                       

This Windows Media Format Software Development Kit Version 7 License Agreement  
For Commercial Use - December 2000 (the "Agreement") is entered into and        
effective as of _______, 2001 (the "Effective Date"), by and between Microsoft  
Corporation, a Washington corporation located at One Microsoft Way, Redmond, WA 
98052 ("Microsoft") and COMPANY, as described below ("Company").                

This Agreement is entered into with reference to the following information      
("Table") as well as the definitions set forth below:                           

[Licensed Applications are defined in Section 1. This box should be completed 
with a description of Company Licensed Applications.]                           
Term:                                                                           
Beginning on the Effective Date and continuing for a period of one (1) year.    
Announcement Date (if any):                                                     

1.   DEFINITIONS                                                                

When capitalized in this Agreement, the following terms have the meanings       
assigned to them by this Section 1. All other initially capitalized terms have  
the meanings assigned to them elsewhere in this Agreement.                      
1.1  "Affiliate" means, with respect to any legally recognizable entity, any    
other such entity Controlling, Controlled by, or under common Control with such 
entity. "Control," as used herein, means the possession of the power to direct  
or cause the direction of the management and policies of a legally recognizable 
entity, through the ownership of voting shares or by contract. Where such       
entity is a partnership, limited liability company, corporation, or similar     
entity and has partners, members, or shareholders with equal ownership          
interests or equal control interests, by contract or otherwise, then each such  
partner, member, or shareholder will be deemed to possess, directly or          
indirectly, the power to direct or cause the direction of the management and    
policies of that entity.                                                        
1.2  "Break Interoperability" means to: (i) Transcode, Convert or Encapsulate   
WMC Content (whether Packaged or not) into or out of a disk-based or            
network-transmitted form that is not fully supported by, and interoperable      
with, the Redistributable Components; and/or (ii) to impair or disable programs 
or applications that can validly create, access, or utilize WMC Content         
(whether Packaged or not) by exposing a means or method by which such programs  
or applications access or utilize WMC Content.                                  
1.3  "Certificate" means a DRM Certificate and/or an SDK Certificate.           
1.4  "Codecs" means the audio and video compression/decompression algorithms    
used by or provided with the SDK to compress and decompress Content solely as a 
function of reading and writing WMF Content. As of the Effective Date, these    
compression algorithms are the Windows Media Audio codec, ACELP.net audio codec 
(which can not be used to enable products that provide telephony functionality, 
including bi-directional transmission of voice and/or sound such as             
audio-conferencing or computer integrated telephony), Windows Media Video       
codec, Microsoft's MPEG-4 version video codec, and the Windows Media screen     
capture codec, as described in the SDK.                                         
1.5  "Compromise Interoperability" means exposing a means or method (including, 
but not limited to, publicly defined interfaces or debugging information left   
in a Licensed Application) by which other programs, plug-ins, or applications   
can access or utilize:  (i) the function of the Redistributable Components; or  
(ii) Content extracted from WMC Content by the Licensed Application.            
Notwithstanding the foregoing, it will not in itself Compromise                 
Interoperability if Company establishes a plug-in software architecture for use 
with other functionality or features of the Licensed Applications and which is  
not used to access or utilize the functionality of the Redistributable          
Components or Content extracted from WMC Content.                               
1.6  "Confidential Information" means: (i) any pre-release software in object   
code form and any source code other than Sample Source; (ii) a Certificate when 
not statically linked as part of a Licensed Application, as more fully          
specified herein; (iii) any trade secrets and/or other proprietary non-public   
information not generally known relating to either party's product plans,       
designs, costs, prices and product names, software, finances, marketing plans,  
technical support requests, business opportunities, research, development or    
know- how, regardless of how obtained by the receiving party; and (iv) the      
terms and conditions of this Agreement. Notwithstanding the foregoing,          
"Confidential Information" will not include information that: (A) is or becomes 
generally known or available by publication, commercial use or otherwise        
through no fault of the receiving party; (B) is generally known and has been    
reduced to tangible form by the receiving party prior to the time of disclosure 
and is not subject to restriction; (C) is independently developed by the        
receiving party without the use of the other party's Confidential Information;  
(D) is lawfully obtained from a third party that has the right to make such     
disclosure; (E) is made generally available by the disclosing party without     
restriction on disclosure; or (F) is released in writing by the disclosing      
party for publication by the receiving party.                                   
1.7  "Content" means digital audio (including, but not limited to,              
timeline-synchronized audio, music, voice, or sounds), digital video, and other 
digital information including data, text (including, but not limited to, script 
command data and related metadata such as a song title or an artist's name),    
animation, graphics, photographs, and artwork, and combinations of any or all   
of the foregoing. 1.8    "Convert" means: (i) to decompose WMC Content into one 
or more pieces of Content, and then to recompose into any form other than WMC   
Content; or (ii) to remove any DRM protection from WMC Content for any purpose  
not explicitly authorized by the DRM Flags of the license for that content,     
including, but not limited to, writing that unprotected DRM content to disk or  
to a network. "Convert" does not mean to Normalize. 1.9     "Digital Device"    
means any standalone or removable CD-R or CD-RW or DVD-RAM or                   
other similar media device that can store Content.                              
1.10 "Distribute" means to use, reproduce, license, lease, sell, offer to sell  
or otherwise disseminate through any means now existing or later developed.     
1.11 "DRM" means Microsoft's digital rights management system for Windows Media 
Technologies that enables enforcement of business rules and license-based       
access to WMC Content, consistent with the terms and conditions of this         
Agreement.                                                                      
1.12 "DRM Certificate" means a Microsoft provided, unique-to-Company and/or     
unique to each Licensed Application sub-component of the Redistributable        
Components that enables, in accordance with Section 2, a Licensed Application   
to use the portions of Redistributable Components that manipulate WMC Content   
protected by DRM and WMC Content not protected by DRM.                          
1.13 "DRM Flag(s)" means the flag(s) describing license condition(s) for, and   
set by the creator or authorized licensor of, WMC Content protected with DRM as 
more fully described in Exhibit A. 1.14 "Encapsulate" means to place any form   
of containment around or to remove such containment from any portion or         
entirety of WMC Content, whether saved to disk or written to the network, with  
the exception of standard file-system and network protocol containment not      
specific to the form or function of the Licensed Application. For purposes of   
this definition of "Encapsulate," example protocol and standard file-system     
exceptions include, but are not limited to, the Windows File Allocation Table   
file system, and the TCP/IP network protocol.                                   
1.15 "Independent Contractor" means a third party temporary worker, company or  
other entity which is under written agreement with Company to develop,          
complete, or assist with the development or completion of research and          
development activities under the license rights granted under this Agreement,   
where such written agreement meets the terms and conditions of this Agreement,  
including, but not limited to, Sections 2, 5, 6, 7 and 8; provided, however,    
that "Independent Contractor" specifically excludes any entity that is a vendor 
of streaming and/or downloadable media technologies. The Distribution of a      
Licensed Application or selling services which involve streaming Content do not 
make an entity a "vendor of streaming and/or downloadable media technologies."  
1.16 "Licensed Application" means Company's application(s) or utilities created 
using the SDK to enable encoding, decoding, rendering, and/or playing WMC       
Content in streaming and/or downloadable formats, each of which (i) are not     
designed for or intended to be used as a replacement of the SDK for use by      
third parties to develop other software products or programs (e.g., software    
development tools); and (ii) are designed and intended for use solely on the    
Platforms. A list of Company's Licensed Applications is set forth in the table  
on page 1 of this Agreement.                                                    
1.17 "Normalize" means to perform adjustments on uncompressed audio or video    
Content for the primary purpose of enhancing the ultimate playback of such      
Content. For purposes of this definition, "adjustments" include, but are not    
limited to: (i) for audio Content, changing the volume level and removing       
noise; and (ii) for video Content, setting gamma correction and changing the    
contrast. 1.18 "Package" or "Packaged" means WMC Content that has been          
protected by DRM.                                                               
1.19 "Platforms" means Windows NT 4.0, Windows 9x, and Windows 200x operating   
systems (and Updates thereof, if any, and as may be provided by Microsoft       
pursuant to Section 4 during the "Term" as defined in the table on page 1 of    
this Agreement) on Intel x86 and compatible hardware platforms. "Platforms" do  
not include Windows CE or any other Microsoft or non-Microsoft operating        
systems, unless and to the extent they may be later supported by the SDK in     
Microsoft's sole discretion.                                                    
1.20 "Redistributable Components" means the Certificate(s) (provided separately 
to Company under the terms of Section 2), the Codecs, and the files located in  
the "Redist" folder, as installed by the SDK including such Updates thereof as  
may be provided pursuant to Section 4.                                          
1.21 "Sample Source" means any sample, human-readable code located in the       
"Samples" folder of, as installed by, the SDK, including any Updates thereof    
provided by Microsoft pursuant to Section 4. 1.22 "SDK Certificate" means a     
Microsoft-provided, unique to Company and/or unique to each Licensed            
Application, sub-component of the Redistributable Components that enables, in   
accordance with Section 2, a Licensed Application to use the portions of        
Redistributable Components that manipulate WMC Content not protected by DRM.    
The SDK Certificate does not enable manipulation of WMC Content protected by    
DRM.                                                                            
1.23 "SDK" means the Microsoft Windows Media Format Software Development Kit    
Version 7 and, as provided in Section 4, Updates thereof during the Term.       
1.24 "Transcode" means to alter the current encoding or form of Content encoded 
using Codecs, including by way of example but not limited to: (i) decompression 
of an audio or video stream and recompression using a different compression     
algorithm; and (ii) decompression of an audio or video stream and recompression 
using the same compression algorithm but with different settings.               
1.25 "Updates" means all subsequent public releases of software (including      
public beta releases), including public maintenance releases, error             
corrections, upgrades, enhancements, additions, improvements, extensions,       
modifications and successor versions. 1.26   "Windows Media Container" means    
the current version, and any Updates during the Term,                           
of extensible file storage format developed by or for Microsoft for authoring,  
editing, distributing, streaming, playing, referencing, or otherwise            
manipulating Content, as used by the Windows Media Technologies during the      
Term.                                                                           
1.27 "Windows Media Player" means any version of Microsoft's WMC Content player 
technology, which Microsoft supports on the Platforms during the Term. Optional 
third party plug-ins to the Windows Media Player that might be present on a     
user's machine are expressly not part of Windows Media Player.                  
1.28 "Windows Media Server" means Microsoft's streaming media services server   
technology, as supported by Microsoft, in its sole discretion, on some of the   
Platforms or on other operating system platforms during the Term. Optional      
third party plug-ins to the Windows Media Server that might be present on a     
server machine are expressly not part of Windows Media Server.                  
1.29 "Windows Media Stream" means: (i) real-time or on-demand WMC Content       
delivered across a network, including (without limitation) wired or wireless    
communications media, using IP Multicast, HTTP, MMSU, MMST, MSBD, or other      
protocols supported by Windows Media Technologies during the Term; and (ii) WMC 
Content files. For a Licensed Application, a Windows Media Stream can originate 
from, without limitation, a Licensed Application or third party application     
built with the SDK pursuant to a license from Microsoft, a Windows Media        
Technologies component, an HTTP server, a local or network shared file system,  
a Content Proxy Server, or a Cache Proxy Server. For purposes of this           
definition: (A) "Cache Proxy Server" means an application, under a license from 
Microsoft, (1) that is a server that streams or delivers WMC Content that has   
originated solely from a Windows Media Server, and/or (2) that performs caching 
and delivery functions solely for the purpose of enhancing network performance  
in delivering Windows Media Streams from a Windows Media Server to a Windows    
Media Player or Licensed Application; and (B) "Content Proxy Server" means an   
application, under a license from Microsoft, that is a server which streams or  
manages WMC Content for purposes of distribution and tracking Windows Media     
Streams.                                                                        
1.30 "Windows Media Technologies" means the currently shipping (and Updates     
thereof during the Term) versions of the Windows Media Player, Windows Media    
Server, Windows Media Encoder, Windows Media SDK and all its sub-components     
(including but not limited to, the SDK), and WMC Content creation tools that    
Microsoft may choose, solely in its discretion, to release as part of the       
Platforms. For purposes of this Section, "Windows Media Encoder" means the      
current version (and Updates thereof supported in the SDK during the Term) of   
Microsoft's Windows Media Technologies real-time encoder.                       
1.31 "WMC Content" means Content, contained within the Windows Media Container, 
and optionally Packaged. WMC Content includes, but is not limited to WMF        
Content.                                                                        
1.32 "WMF Content" means Content encoded solely with Codecs, contained within   
the Windows Media Container, and optionally Packaged                            

2.   LICENSE GRANT & RESTRICTIONS                                               
2.1  SDK and Components License Grant. Expressly subject to the restrictions in 
Section 2.3, Microsoft hereby grants Company a limited, non-exclusive,          
non-assignable, worldwide, nontransferable, royalty-free, fully paid up, right  
and license during the Term to:                                                 
(a)  Use, copy, and install (i) an unlimited number of copies of the SDK and    
its components on computers located at premises owned or leased by Company and  
its Affiliates, and (ii) copies of the SDK and its components on computers      
located at premises owned or leased by Company's Independent Contractors in a   
number reasonably necessary to carry out development work for Company           
consistent with this Agreement; provided that such copies may be used in        
accordance with this Section 2.1(a) solely to develop Licensed Applications,    
and, if Company so elects, to develop and Distribute Company-owned and          
Company-licensed WMC Content; and                                               
(b)  Distribute and have Distributed the Redistributable Components solely as   
part of the Distribution of a Licensed Application.                             
2.2  Sample Source License Grant.  Expressly subject to the restrictions in     
Section 2.3, Microsoft hereby grants Company a limited, non-exclusive,          
non-assignable, worldwide, nontransferable, royalty-free, fully paid up, right  
and license during the Term to:                                                 
(a)  Use, copy, modify, create derivative works and install (i) an unlimited    
number of copies of the Sample Source on computers located at premises owned or 
leased by Company and its Affiliates and (ii) the Sample Source on computers    
located at premises owned or leased by Company's Independent Contractors in a   
number reasonably necessary to carry out development work for Company           
consistent with this Agreement; provided that such copies may be used in        
accordance with this Section 2.2(b) solely to develop Licensed Applications;    
and                                                                             
(b)  Distribute and have Distributed the object code only versions of the       
Sample Source including any modifications or derivative works thereof, solely   
as part of the Distribution of a Licensed Application.                          
2.3  License Restrictions and Requirements.                                     
(a)  Preservation of Interoperability. Except solely as expressly permitted in  
Sections 2.3(a)(i), 2.3(a)(ii), and 2.3(a)(iii), Company will neither develop,  
nor have                                                                        
third parties develop for Company, Licensed Applications which Break            
Interoperability or which Compromise Interoperability. Company will comply with 
the interoperability requirements set forth in Exhibit B as may be updated by   
Microsoft periodically during the Term.                                         
(i)  Limited Right to Transcode for MP3 Devices. Licensed Applications may      
Transcode audio Content, that was decomposed from WMF Content, into ISO         
MPEG-2 Layer-3 standard compressed audio and then Convert the WMF               
Content with that Transcoding into the MP3 file format (the "MP3 Content")      
solely for the purpose of immediately transferring such WMF Content to          
standalone digital devices, such as those which play MP3 and optionally other   
file formats ("MP3 Device"), provided that: (A) the MP3 Device does not         
natively support playback of Windows Media Content; (B) the DRM                 
restrictions in Section 2.3(f) are observed by Company; and (C) the MP3         
Content cannot be transferred, Transcoded, or used for any purpose other than   
local playback on such MP3 Devices in their normal and ordinary modes of        
operation. Notwithstanding the limited right to Transcode provided in this      
Section 2.3(a)(i), this Agreement does not cover use of the SDK to create       
Licensed Applications which run on platforms other than the Platforms,          
including MP3 Devices or other, similar digital devices. Any such use of the    
SDK requires a separate agreement with Microsoft.                               
(ii) Limited Right to Convert. Licensed Applications may Convert WMC Content    
not Packaged (or if Packaged, then WMC Content that is licensed as specified    
in the DRM Flags for such purpose) into the Redbook CD audio format solely      
for purposes of making permitted copies of such WMC Content on Digital          
Devices (and not in any other file format nor on any other devices).            
(iii)     Limited Right to Transcode for editing applications. A Licensed       
Application                                                                     
may Transcode Content solely to the extent the Licensed Application's primary   
function is to edit Content and provided that: (A) the Licensed Application     
requires user interaction for each Transcode (i.e., the Licensed Application    
does not perform batch Transcoding); (B) the Content editor is an offline       
editor                                                                          
(i.e., the Content is not sourced from a Windows Media Stream that is a         
network stream as defined in Section 1.29 (i)).                                 
(b)  Non-Malicious Intent. Licensed Applications shall not be specifically      
designed to                                                                     
degrade, overload, or stress any component of Windows Media Technologies.       
(c)  Usage of File Extensions & Metafiles. Each Licensed Application shall      
comply with                                                                     
the file extension and metafile usage and format requirements and guidelines as 
set                                                                             
forth in Exhibit C as may be updated by Microsoft periodically during the Term. 
(d)  Redistributable Components. Company's rights under Section 2.1(b) with     
respect to                                                                      
Redistributable Components are expressly conditioned upon its compliance with   
the                                                                             
following obligations:                                                          
(i)  Company will not authorize further Distribution of the Redistributable     
Components by end-users of Licensed Applications.                               
(ii) Company will not use Microsoft's name, logo or trademarks to market or     
promote any Licensed Application, except: (A) as expressly set forth in         
Section 2.3(d)(iii), or (B) as permitted by a separate agreement between the    
parties.                                                                        
(iii)     Company will include in the "About Box" for all Licensed Applications 
a                                                                               
copyright notice which states the following: "Portions utilize Microsoft        
Windows Media Technologies. Copyright (c) 1999-2000 Microsoft                   
Corporation. All Rights Reserved."                                              
(iv) Company will not use the Redistributable Components or any other part of   
the                                                                             
SDK to create a new Licensed Application that substantially duplicates the      
server functionality of any version of the Windows Media Server.                
(v)  Company will not use the Codecs or any part of the Codecs in any Licensed  
Application or otherwise except as part of the Redistributable Components.      
(e)  Default Encoding Format. If a publicly Distributed Licensed Application    
supports                                                                        
multiple encoding formats and "Windows Media Format" is not set as the default  
encoding format, then the Licensed Application will enable the user to specify  
a                                                                               
default encoding format for high quality encoding (e.g., importing music from a 
CD                                                                              
or other high quality uncompressed digital format) and the default encoding     
format                                                                          
options will include the high quality encoding options for WMF Content.         
(f)  DRM Restrictions. Each Licensed Application will comply with the DRM       
requirements set forth in Exhibit A as may be updated by Microsoft periodically 
during the Term.                                                                
(g)  Use of Certificates. Each Licensed Application will comply with the        
Certificate                                                                     
requirements set forth in Exhibit D as may be updated by Microsoft periodically 
during the Term. Microsoft may exercise its right to revoke, or instruct its    
licensees                                                                       
or agents to revoke on Microsoft's behalf, any Licensed Application Certificate 
pursuant to paragraph 3 of Exhibit D upon two (2) days written notice to        
Company.                                                                        
(h)  No Further Redistribution/No Reverse Engineering. Company will not         
Distribute or                                                                   
have Distributed the SDK or any component thereof, other than as expressly      
permitted in this Section 2. Company may not reverse engineer, decompile,       
disassemble or otherwise seek to discover the source code, components, Codecs,  
DRM, protocols or Windows Media Container of the SDK (other than the Sample     
Source), except and only to the extent that such activity is expressly          
permitted by applicable law notwithstanding this limitation.                    
(